What do employers need to know about pay equity?

By Rose McVeagh


The draft Employment (Pay Equity and Equal Pay) Bill is expected to be introduced to the house by the end of June and Employers should expect to see an outcome shortly after the election.

Draft Bill Overview

This comes following the Terranova case, where a Court of Appeal decision held that the Equal Pay Act 1972 required equal pay for work of equal value (pay equity), not simply the same pay for the same work (equal pay).

Under the current draft bill, any Employee or group of Employees would be able to raise a pay equity claim and Employers would need to follow an appropriate process.

First, a claim would be provided to the Employer in writing. The Employer would then need to notify other Employees who do the same or similar work, of the pay equity claim. Employers would need to determine whether the claim has merit, within 90 days. This decision would be based on whether the work has predominantly been performed by women, has historically been undervalued and whether the work is still undervalued.

From this point, there would be a process of assessment undertaken and an examination of the work being performed. A scale of comparators are likely to be used, examining other work to compare relevant factors. The parties would meet at the bargaining table and ideally both parties would agree on a settlement and way forward. There are no guidelines recommended in the bill so deciding on compensation, payment in arrears, future pay rates and timeframes would all be through bargaining and finalised by agreement. Good faith provisions would apply.

Should the parties not agree, a dispute could be escalated through mediation, the Employment Relations Authority and if agreement still isn’t reached, through the Courts.

High risk claims

Simplistically, claims are likely to come from Employees or groups of Employees who:

Work in female dominated roles and
The average rate of pay is lower than the average for all other occupations and
The work is either Government dominated or centrally funded environments.
These are roles like health and welfare support workers, child care workers, education aides and personal care workers. However, there may be Employees from many other occupations who choose to raise a claim.

Inevitably, there will be either Employees, groups of Employees or Employee advocates who make claims and right now there are 3,000 claims effectively ‘on hold’ because there is essentially a legal vacuum waiting for this bill.

It would pay for Employers and business owners to start thinking about what risk exists and what Employees a claim (with merit) could come from. Even better, front-footing this issue and re-assessing pay could be the smart option.

If you have any questions regarding how this Bill and subsequent legislation may impact on your business or workforce, please feel free to contact us directly.

Rose McVeagh, Russell Drake Consulting, 07 838 0018 or www.russelldrakeconsulting.co.nz


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