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In May of this year, the Government announced the possibility of a new Fair Pay Agreement System to be introduced into New Zealand employment law. The new system will be designed to allow employees to bargain minimum terms and conditions for all employees in their industry or occupation, and the system has been described as one of the biggest changes to workplace laws in several decades. Essentially, the purpose of the new system is to set industry wide minimum standards for employment terms and conditions. The Bill is expected to be introduced in late 2021, with the legislation coming into force in 2022.
Fair Pay Agreements could include things such as minimum pay rates, hours of work and leave arrangements across an industry as a whole. Once agreed, the terms of the agreement would apply to all workers in that industry. For example, all primary school teachers could seek to negotiate with all schools for a set of minimum terms to apply to them. Unions will negotiate the FPAs on behalf of employees, and to negotiate FPAs, the Union will need to have the approval of either 10% of the workers in the proposed coverage area, or 1,000 employees. Alternatively, if there is no Union, FPAs can be negotiated based on public interest.
The Government are also considering whether contractors will be covered by the FPA system. Contractors are not protected by employment laws in New Zealand such as leave entitlements. To include contractors in this new system may open up future changes to well-established legal principles. Although the FPA system will no doubt help to increase wages and minimum terms of employment for many industries, it is also likely to result in some downsides such as increase in consumer prices.
Watch this space! We will provide a further update as to the status on the new FPA System once the draft legislation has been published. For more information or employment advice, please contact a member of our employment team.