The noise in the media about the Fair Pay Agreements Act 2022 has been loud, with headlines blaring “the biggest shakeup in workplace relations”, “a law that will revolutionise workers rights”, and “radically expanded unions’ collective bargaining power”. The National party has said that if they get into power in the next election, they'll bin the Act.

In this article, we cut through this noise to focus on what these agreements are all about, what employers need to do about them right now, and how our ComplyWith content can help you.

What is a fair pay agreement and how could it affect your business?

A fair pay agreement is an occupation or industry-based agreement setting minimum employment terms for the employees it covers. For example, it could cover all baristas in bars (an industry-based agreement) or all baristas (an occupation-based agreement).

It will apply to all employees whose work is covered by the agreement (not just union members) if at least 25% of the employee’s work is covered by that agreement.

Employers will be required to give covered employees at least the terms in a fair pay agreement. For example, if an employer currently pays the minimum wage rate and the fair pay agreement sets a higher rate, the higher wage rate must be paid.

What do employers have to do now?

Employers don’t have to do anything right now. The ball initially sits with the unions and MBIE. Unions apply, and then MBIE decides if fair pay bargaining can begin.

The Act came into force on 1 December 2022. In practice, this means that unions can apply to MBIE for approval to start bargaining for a fair pay agreement. A union for workers in the hospitality industry has already applied.

Now that we are so close to the Christmas break, it’s unlikely that MBIE will approve the start of the first round of fair pay bargaining until the New Year.

What do employers need to do if fair pay bargaining starts?

An employer will be notified by a union if MBIE approves bargaining for a fair pay agreement that affects their employees.

Employers won’t carry out the bargaining themselves, this will happen between the union and an employer association (or the Employment Relations Authority if an employer association doesn’t step up).

How can ComplyWith help?

If you’d like to learn about what you need to do if fair pay bargaining starts in your industry, you can already find legal compliance content for the Fair Pay Agreements Act in the ComplyWith Obligations Register. You’ll find the Act in the Employment Category.



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