Government announces Fair Pay Agreement system

Published: 07 May 2021

The Government has announced the design of the Fair Pay Agreement system.

The Fair Pay Agreement system will bring together employers and unions within a sector to bargain for minimum terms and conditions for all employees in that industry or occupation. The proposed system will include support for bargaining parties to help them navigate the bargaining process and reach an outcome, as well as processes to ensure compliance.

Any union can initiate the Fair Pay Agreement process as long as they can demonstrate support from either 10% or 1,000 employees in the proposed industry or occupation. Bargaining for a Fair Pay Agreement can also be initiated via a public interest test in an industry or occupation where employment issues exist, such as low pay or limited bargaining power.

The Government also announced financial support for the system. This includes:

  • $250,000 each a year for 3 years for the New Zealand Council of Trade Unions and BusinessNZ to support their role in coordinating Fair Pay Agreements, identifying bargaining parties and helping to raise awareness about Fair Pay Agreements and the bargaining process.
  • Giving the opportunity for bargaining sides to receive a contribution of up to $50,000 towards the cost of bargaining. They may be able to seek additional funds where low union or industry body membership makes coordination difficult. They can also seek a bargaining support person to assist with the negotiations. Funding support is based on 4 Fair Pay Agreements each year. If more than 4 Fair Pay Agreements are initiated per year, support may need to be rationed or prioritised. It will be possible for parties to progress through the Fair Pay Agreement process without this support.

A Bill will be introduced later in the year. People will have the opportunity to comment on the Bill during the Select Committee process.

Contractors are not currently included in the system. Work is beginning shortly to address this and contractors will be included in a future amendment to the Act.

Read the Minister’s announcement on the design of the Fair Pay Agreement system(external link) – Beehive website

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