The Workplace Relations and Safety Minister, Brooke van Velden announced that Government is amending the Equal Pay Act 1972 (‘the Act’), which they plan to pass under urgency. The changes will take effect the day after Royal Assent. The changes will likely be welcomed news to employers and businesses who are affected by this area of law.
Equal pay is about sex and gender discrimination in relation to paid work. Pay equity is about women and men receiving the same pay for doing jobs that are different, but of
equal value. That is, jobs that require similar degrees of skills, responsibility and effort.
Pay equity is achieved when women and men are paid the same for work that is different but is of the same value, for example – care & support workers and mental health assistants who perform work that is different but is of equal value.
“New Zealand’s pay equity regime is an outlier internationally. The Act allows employees and unions to bargain a pay equity settlement with multiple employers. In most countries we compare ourselves to, people raise pay equity claims against their own employer only, or there are legal requirements on employers to proactively take steps to achieve pay equity,” says Ms van Velden.
Pay equity claims have been concentrated in the public sector, with a recent increase in the number of claims in the publicly funded sector. Costs to the Crown have become significant, with the costs of all settlements to date totalling $1.78 billion per year.
Ms van Velden says the Government is committed to an equal pay system that is fair, equal and sustainable. The Government considers the current legal settings concerning the raising and resolution of pay equity claims are not right, for example – Librarians comparing themselves to Transport Engineers, Administration Staff comparing themselves to Mechanical Engineers, etc.
These changes include:
- Raising the threshold of “predominantly performed by female employees” from 60 percent to 70 percent and requiring that this has been the case for at least 10 consecutive years.
- Ensuring there are reasonable grounds to believe the work is historically and currently undervalued, including a requirement for evidence.
- Further clarity and guidance on the use of comparators – work performed by men that is different to the claimant’s work but has similar skills, responsibilities, levels of experience, or working conditions to the claimant’s work.
- Employers being able to meet their pay equity obligations in a way that is sustainable for their business – for example through phasing of settlements.
Another area that is being changed relates to the scope for raising associated pay equity claims. The signal the Government has made is that Unions will be more limited in how they can scope their pay equity claims.
Any current claims in process will be stopped by the changes to the law and subject to the higher-threshold changes, including the applicable work and/or industries via the tightening and/or narrowing of how pay equity claims are managed.
The Government considers that the changes will make the equal pay system fairer and more focused on alleviating ‘genuine sex-based discrimination’.
These policy changes are positioned within the broader cost-saving measures that Government has introduced.