Fair play = Fair pay?

All the things I could do… if I had a little money. Pay can be one of the most universally contentious issues within an organisation – it can have a huge impact on the bottom line of every business but unfair conditions can quickly lead to disgruntled employees.  

On 29 March 2022, the Fair Pay Agreements Bill (the Bill) was introduced to Parliament to some people’s delight and others’ dismay.  

The Bill was introduced to target sectors with systematically low pay and encourage competition through innovation rather than a race to the bottom. 

This Bill stands to be the largest overhaul of employment and business relations in over 30 years. While it is still before parliament, the Bill could re-introduce compulsory industry-wide awards that have not existed in New Zealand since the 1970s.  

Unsurprisingly, the New Zealand business community have put up a swift and strong reaction, criticising the Government for the numerous negative impacts the Bill will have on businesses.  

How are Fair Pay Agreements different from Collective Agreements? 

A fair pay agreement would set out legally enforceable minimum conditions of employment for all employees across an entire industry, regardless of whether those employees are a member of that union. 

Collective agreements on the other hand, only cover employees of a particular employer and only apply to those employees who are a member of that union.  

Why re-introduce industry-wide awards? 

The purpose of the Bill is to put a legally-binding floor under employees’ pay and conditions across an entire sector to solve the growing disparity between increasing productivity and stagnant wages. This will ensure that an employee's pay will meet their level of productivity.  

Additionally, the Government claims that the Bill will encourage competition through innovation and better products rather than the ‘race to the bottom’, achieved by underpaying employees, that is seen in so many industries.   

So, what’s all the fuss about? 

It’s argued that the Bill will drastically reduce employers' power when hiring people and that higher wages under FPA’s will drive business prices up for consumers. Businesses will not be able to walk away from bargaining with unions, instead, the Bill will force the will of unions onto already struggling businesses.