Designing a Fair Pay Agreements system discussion paper

We wanted more feedback on how Fair Pay Agreements could be initiated, including who can do it, how much support it needs and the role of any public interest tests.

Initiating parties: Workers would be able to initiate FPA bargaining. We asked whether employers should be able to do so too, and how to treat different employer types (like franchises or labour hire companies).

Representation test: Workers and businesses could initiate bargaining by demonstrating sufficient support. We’ consulted on whether a 10% threshold is appropriate, whether there should also be a numerical threshold (i.e. a set number of workers) and what this could be, and how this support can be measured.

Public interest: FPA bargaining could be initiated by meeting a public interest test. We have some ideas for the criteria this test could include. We also consulted on whether a public interest test should be required on top of a representation test, or a standalone way to commence FPA bargaining.

Notification: It’s important that affected workers and businesses know that FPA bargaining is being initiated. We wanted your views on who should be responsible for spreading the word.

We’re looking at how to define who is covered by a Fair Pay Agreement, and what scope there is for options to help vulnerable businesses or cater to regional labour market differences.

Defining coverage: We consulted on whether initiating parties decide who they want covered, and restricting this coverage to specified occupations within a sector, using officially recognised classifications (ANZSCO and ANZSIC). Multiple occupations or sectors could be included.

Renegotiating coverage: Parties may be able to agree to change who is covered during bargaining. We wanted to know if there should be restrictions on doing so, and whether initiation tests will need to be re-run if coverage significantly changes.

Exemptions: Time-limited exemptions may allow some businesses (like new entrants and SMEs) to better adapt to an FPA. We wanted feedback on what circumstances they may be warranted in and what restrictions should be placed on any exemptions.

Regional differences: We wanted further feedback on how FPAs could reflect regional labour markets, including through bargaining representatives, regional variations or a test that assesses regional impacts. We also consulted on whether there could be separate regional FPAs.

Contractors:  The Government is considering options for strengthening protections for dependent contractors under a separate project, including whether to extend an FPA system to contractors.

We want an efficient and effective process, so put forward options designed to help bargaining parties get a fair and representative outcome.

Scope: There are a wide range of terms and conditions an FPA could include. We consulted on what topics should be mandatory, and whether any should be prohibited. We also asked whether to offer more or less flexibility to bargaining parties on voluntary topics.

Representation: Unions and employer groups are the usual representatives for bargaining. We asked whether there could be representatives for non-unionised workers or other interests.

Costs: There will be costs involved with bargaining and we wanted views on the best way to share this fairly, including the possibility of a bargaining levy, government support, or  a  ‘costs where they fall’ approach.

Active support: Bargaining parties will likely need more support in FPA bargaining, compared to current enterprise-level negotiations. We looked at a ‘navigator’ service where a person would actively help parties and want your views on this.

Good faith: Parties are required to work with each other in good faith under current employment law. We consulted on whether this should also be the case for FPAs and if additional responsibilities might be needed under an FPA system.

Communication: Bargaining representatives will need to communicate with those they represent. We wanted your views on when and how this should happen.

It will be essential for there to be a system in place for dealing with situations where the bargaining parties cannot resolve an ongoing disagreement.

Dispute resolution providers: Under current employment law, parties can use mediation services, the Employment Relations Authority and the courts. We asked whether these services make sense for FPAs, and how they might work with a ‘navigator’ service designed to actively support bargaining.

Resolving a stalemate: If parties can’t reach an agreement, a public body may be required to determine the terms and conditions. Industrial action would not be permitted under FPAs, so there would need to be sufficient incentives to reach an agreement. We sought views on how this process could be managed and what appeal rights there could be.

We want FPAs to provide good outcomes for employers, workers and consumers. We’re looking at ways to minimise the potential negative consequences they may present, such as anti-competitive behaviour.

A market impact test: We considered options on having an independent government body analyse an FPA for potentially significant negative impacts. We wanted feedback on this option or other safeguards may be useful for preventing negative impacts.

We wanted more feedback on how to move from a bargained agreement to an enforceable set of minimum terms and conditions for workers and employers.

Ratification: We’re considering options for how an FPA comes into force through ratification (i.e. it would need more than 50% support from voters on the worker and employer sides). We want a fair and accountable process, so we sought feedback on this threshold and procedure.

Enactment: A ratified or determined FPA would need a legal mechanism to come into force. We’re considering putting FPAs into regulations, and consulting on whether the government should be allowed to change the terms when enacting it, to address loopholes, unclear language or inconsistency with other laws.

Enforcement: FPAs would set minimum terms and conditions for affected workers, so there would need to be a mechanism if workers aren’t receiving their entitlements. We asked how these could be enforced and what role the Labour Inspectorate could play.

Cost recovery: There will be costs involved in administering FPAs, such as administering any initiation or market impact tests. We asked whether and to what extent parties who benefit from an FPA should contribute to these costs.