• Tony Teesdale

Fair Pay Working Group Report – Back to the Future!

Last month the Fair Pay Working Group released its report and confirmed the fears of many employers.  The Government is yet to draft legislation, so we will have to wait for the detail to see what we’re really dealing with here.

However, it seems certain there will be a system of bargaining that will result in a fair pay agreements (“FPAs”) for certain sectors or industries. While strike action would be unlawful, once bargaining is initiated an FPA must result because ultimately the Employment Relations Authority or a similar body would have the power to determine an outcome. There is an intention to streamline bargaining with timelines being set in legislation, so avoidance of an FPA by slowing the bargaining process will not be an option either.

The minimum threshold to commence the FPA process would only be 1000 or 10 per cent of workers in the nominated sector or occupation, whichever is lower. That’s hardly democratic to begin with. The process for determining whether the threshold has been met would be challenging. Then once an agreement is reached by the bargaining parties, ratification would be triggered by a simple majority of workers being in favour, which again may be a challenging exercise. Note that in both cases the reference is to “workers” not just “union members”.

Once in force the FPA would apply to all workers in the sector or industry concerned.  Imagine the debates about whether a particular business is included in the sector or industry concerned.

The Group also envisages the continuation of enterprise bargaining, but the terms and conditions of an enterprise agreement would have to be over and above the conditions of any applicable FPA. The process is likely to result in smaller/newer employers being forced to pay more than they are comfortable with; and a process of second-tier bargaining on top would be likely for those who the workers/unions consider can afford to pay more.

The Government continues to express the view that there will only be one or two FPAs before the next election. How they control that remains to be seen, but the real issue is what happens after that. When you factor in this and other issues like a capital gains tax, the next election is looming as one of very stark contrasts between the parties. 

In our opinion much of the report could be supported, bar the compulsion for an employer to be locked in and have their terms and conditions of employment set by other parties, including their competitors.  We’ve just witnessed a government u-turn on MECA bargaining under the Employment Relations Amendment Act, with employers now not compelled to join a MECA if their opposition is based on reasonable grounds. Either this change was disingenuous, knowing what was coming with FPAs, or perhaps the same sentiment may prevail when the FPA legislation is passed. 

Issue 96 March 2019