Amendments to the Equal Pay Act 1972

An employee or union (on behalf of its members) can raise a pay equity claim if it is 'arguable' meaning the work is (or was historically) predominantly (60%) performed by female employees, and the work is currently or has been undervalued. 

The threshold for raising a pay equity claim is low, with claims only needing to be ‘arguable’.

This has resulted in claims progressing even when there was no strong evidence of undervaluation.

A pay equity claim can be raised if there is evidence that it has 'merit' meaning the work has been and is currently undervalued. The work must also have been predominantly (70%) performed by female employee for at least 10 years. 

Unions must provide evidence about how the work is the same or substantially similar.

Help ensure a more considered assessment on whether a pay equity issue may exist when a claim is raised.

Support employers to determine whether the scope of a claim is appropriate when raised

If the employer considers that a claim is arguable, the parties must proceed to pay equity bargaining.

This includes an assessment of the work of the claimant and the work of appropriate comparators.

The Act does not sufficiently set out the rules for comparators. This can lead to comparators being chosen even where the work is very different to the claimant.

Employers have limited tools to contest broadly scoped claims.

There is a high threshold for employers to opt out of a multi-employer claim.

Introduce a hierarchy of comparators.

Add more detail to the process for assessing undervaluation.

Allow employers to provide notice that the work is not the same or substantially similar. The claim is then discontinued, and claimants can rescope the claim and raise a new claim(s).

Allow employers to opt out of a multi-employer claim without needing a reason.

Choosing comparators in close proximity to the employer reduces the level of judgement needed when undertaking the comparison.

It will signal that factors that do not contribute to sex-based differences should be considered.

Gives employers further tools to contest broadly scoped claims.

Pay equity settlements must include:

• remuneration that resolved the pay equity issue
• a pay equity review process.

The short timeframe of the review cycle makes it difficult to determine whether any differences in pay are due to pay equity issues having re-emerged, or to short-term labour market dynamics.

Remove the requirement and ability for settlements to include a review clause.

Enable a claim to be re-raised 10 years after a settlement if it meets the new requirements.

Continues to provide a way to address any new sex-based undervaluation which may develop over time.

If the parties cannot agree, parties can lodge a dispute with the Employment Relations Authority.

The Authority may award backpay if asked to fix remuneration. Remuneration cannot be phased in.

The current settings do not provide the right incentives for parties to resolve pay equity claims themselves.

There can be disruption of employers’ operations due to the cost of pay equity settlements.

Amend the threshold to apply to the Authority to fix remuneration.

Remove ability for the Authority to award backpay.

Allow parties to agree to phase in remuneration. 

Allow the Authority to decide on phasing when parties cannot agree on phasing. 

If the Authority is asked to fix remuneration, it must be phased in.

Ensures parties only apply to the Authority to fix remuneration where they are unable to resolve the issues themselves.

Parties would still be able to reach an agreement on backpay on their own but cannot get an Authority decision if they are unable to agree.

The ability to phase enables employers to manage pay increases in a manner that is sustainable.