Joanne Watson writes of the benefits of the Fair Pay Agreements legislation to the most vulnerable workers in Aotearoa New Zealand.

The passing of the Fair Pay Agreement legislation is the most significant social contract legislation this 53rd Parliament of New Zealand has passed and is likely to pass.

The Union movement has battled for years, and focused its campaign over the past two national elections for fair pay agreements.

Workers flooded onto Parliament grounds to be present for the historic passing of the Fair Pay Agreement Bill on 26 October 2022. It was met with cheers, song and haka. There was a collective sigh of relief.

Why? Because without this legislation the most vulnerable of workers cannot access fair terms and conditions of employment.

Award System

Historically New Zealand had an award system that set the minimum wages and conditions on an industry or profession basis. For almost a century the Conciliation and Arbitration Act fettered the inherent inequalities in the employment relationship with a tripartite approach protecting and recognising the important role unions have in ensuring fair terms and conditions are achievable. Those old enough will remember the awards that included rates for overtime, provision of uniform and safety equipment, clauses to prevent working in too hot or too wet conditions, or payments if the work had to continue regardless. It was a safety net.

Effect of Employment Contracts Act

In 1991 the Employment Contracts Act (ECA) swept away the focus on collective bargaining and opted for cut-throat industrial relations dressed up as the individualisation of employment. The ECA meant every worker was on an individual employment agreement that was in reality imposed — not negotiated, or a single-employer collective agreement. The ECA was a fatal blow to some unions, particularly those that represented women and the most vulnerable workers. Union membership plummeted and as a result so did wages, health and safety, training and working conditions.

Employment Relations Act

The Employment Relations Act (ERA) was enacted in 2000 to bring fairness back into the employment relationship by reversing the most draconian aspects of the ECA.

The important role of unions was again recognised, bargaining and the employment relationship was to be conducted in good faith, and multi-employer and multi-union bargaining reconstituted through new collective agreement provisions.

Where there is no union, or low union density, the employer still holds all the cards and the power. For many that means wages have continued to fail to make pace with productivity or the cost of living.

There are other statutory protections such as the Wages Protection Act 1983, the Holidays Act 2003 and the minimum wage system, but the ability to enforce the most basic of employment rights is often out of reach for the un-unionised or isolated worker. It takes time, energy, money and guts for an individual employee to stand up to some employers, even when the claim is just, for a lawful entitlement.

Part of the answer is a centralised or sector-based mechanism to provide for, and enforce the payment of, the most basic terms and conditions. It is a sad indictment of our society that this support structure is needed just as much now as it has ever been.

Protections of Fair Pay Agreements

The nature of work has changed but, in many ways, the same struggles remain as they did last century. The historic piecemeal work has given way to a “gig economy” with workers choosing, or to choose, to work for various employers and often in the same industry. Their hourly rate, safety and tools of trade are often solely at the discretion of the employer and to the detriment of the worker.

The Fair Pay Agreements (FPA) are a return to a negotiated baseline to stop undercutting and the race to the bottom. They are an absolute necessity to ensure people are fairly paid for their work and to provide a baseline for some of the most vulnerable in our communities — cleaning, supermarket, security, early childhood, public transport, and hospitality workers to name a few. This is their chance to have some security of employment and income.

Negotiations Across Entire Sector

The FPA introduces negotiations between unions and employers across an entire sector, rather than company by company.

Many employers will welcome the introduction as it will result in minimum pay (with variances for seniority, role and location), overtime, penalty rates, leave entitlements and training negotiated on an industry or sector-wide basis providing the certainty and consistency necessary for recruitment and retention.

It will stop unfair competition between employers.

The larger and better resourced employer can take the lead in the negotiations, reducing the human resources or administrative load of the small employer. All covered employers will be able to rely on a negotiated sector-wide minimum which in turn will enable the cross-sector collaboration which is particularly necessary for wages, training and development.

Not every employer or worker will be covered.

Requirements for Negotiations

In order for an FPA to be negotiated 1,000 workers or 10 per cent of the workers in that industry or occupation (whichever is the lowest) can require the employers into FPA negotiations. The unions and employers in that industry will negotiate and the majority of employees and employers is required to ratify. There are provisions for employers facing serious financial hardship.

If the unions and the employers cannot agree, or a deal is twice rejected by the employees or employers, then the Employment Relations Authority determines the minimum terms and conditions. If there is more than one FPA that covers a worker then the most favourable FPA will apply.

Check It for Yourself

For the reader who has persevered to the end of this article but is still sceptical about the need for fair pay agreements, I urge you to speak with a low-paid worker, a worker who works a number of jobs or someone who works for a number of employers just to pay the bills. Try asking them these questions.

Are they genuinely able to negotiate fair wages and conditions with their employer?

Have they needed to battle to get the minimum wage and then to battle again when the government raises the minimum wage? Do they have secure hours and employment? Have their hours ever been cut because they tried to enforce wage or their leave entitlements? Are they provided with the right PPE and tools to do their job or if they have to buy it themselves? Do they have to pay for their petrol to get from one cleaning job or caregiving job to the next? Do they have systems to report workplace hazards and does anything changes when they make a report? Do they stay silent rather than fight for their lawful entitlements because they fear their hours being cut or losing their job, sick leave, annual leave and statutory holidays?

And ask them this: Would you want a fair pay agreement setting minimum wages, overtime rates, leave entitlements, training, and hours of work in your sector of industry?

Tui Motu Magazine. Issue 277 December 2022: 14-15