News/Articles

The Equal Pay Amendment Bill moves closer to becoming law

Posted by:

The Equal Pay Amendment Bill is legislation
that will define how pay equity claims can be raised and resolved.

Last week the Select Committee issued its report on the Equal Pay Amendment Bill (the Bill). The Committee set out proposed changes to make the Bill workable, but did not recommend significant changes to the framework proposed in the first reading of the Bill. Having passed the Select Committee phase, the Bill now awaits its second reading.

Pay equity means that women and men who perform work of the same value are paid the same, even though the actual jobs performed may differ. It is different to equal pay, which is that women and men are paid the same for performing the same job.

Pay equity claims are particularly important to those workforces and occupations that have been predominantly performed by women, and where that has resulted in the under-valuation (and pay) of this work.

The Bill is intended to improve the process for raising and progressing pay equity claims, which target the elimination of discrimination on the basis of sex from terms and conditions of employment (including remuneration) for work done within female-dominated industries.

The Bill is intended to replace the present court-based approach to raising a pay equity claim, with a more accessible process that uses the existing bargaining framework under the Employment Relations Act (the Act).

Under the Bill, a pay equity claim will follow the following process (generally):

  1. a pay equity claim is raised with the employer, using information to support the view that the occupation is undervalued because it was historically predominantly performed by women.
  2. The employer must notify other employees who perform the same or substantially similar work as the claimant within 20 days.
  3. The employer must decide within 65 days whether it agrees that the claim is arguable.  (The Select Committee has proposed changing this timeframe to 45 working days).
  4. If the employer agrees there is an arguable claim, the employer and employee(s) enter bargaining.  The bargaining process uses established principles under the Act.  Appropriate comparator occupations will be considered, with a view to reaching agreement.
  5. If there is no agreement by the employer that there is an arguable pay equity claim, or, if there is a dispute that arises during bargaining, the usual dispute resolution processes can be used (mediation, facilitation, or proceedings in the courts). 

Outcomes of the process may include a settlement with new wages, or an agreement or determination that there is no pay inequity. The Bill sets out criteria from which the courts can also exercise discretion in relation to ordering back pay.

In progressing the Bill, changes recommended by the Select Committee include:

  • Providing clarity on the threshold for making an arguable pay equity claim, being a workforce that is, or historically was, approximately 60 percent or more female.
  • Removing the requirement to undergo facilitation before seeking a determination in disputes, thereby maintaining a low threshold to commence bargaining and provide the courts with greater discretion.
  • Requiring all settlements and determinations to be subject to a review process, to ensure ongoing pay equity.
  • Removing the Labour Inspectorate’s power to bring an action with the Authority to recover penalties in relation to pay equity. Instead, the Authority would be required to take into account improvement notice defaults when determining a penalty.

The Government has also announced a significant investment in pay equity guidance, tools and data to be delivered by the Ministry of Business, Innovation and Employment. These resources are intended to improve the understanding of the pay equity framework, and assist parties ability to make and consider claims. 

Andrea Twaddle

About the Author:

Andrea is an experienced specialist employment lawyer. She advises on contentious and non-contentious employment law issues, including privacy, and health and safety matters. Andrea undertakes complex employment investigations. She is a regular commentator on employment law issues and is frequently sought as a presenter at client and industry seminars, as well as for the provision of advice to other lawyers, professional advisors and leadership teams.