Labour forges ahead with Fair Pay Agreements: 10 pct workforce support can spark negotiations

Unions will be able to spark pay negotiations if they have 10 percent workforce support now that Labour is forging ahead plans to implement Fair Pay Agreements (FPAs). 

FPAs are a set of terms and conditions - including wages and working hours - that employers in a particular sector must abide by, with the overall aim of raising standards.

Labour's FPA plans were foiled by its former Government coalition partner New Zealand First. But with a huge majority in Parliament, Labour is now pushing ahead to improve pay and conditions for essential workers. 

The FPA framework, released on Friday by Workplace Relations and Safety Minister Michael Wood, is the same system proposed by former Prime Minister Jim Bolger who led the FPA working group in 2019

The Government is drafting legislation, which will be introduced later this year, and is expected to pass in 2022. 

When it comes into force, any union will be able to initiate the FPA process as long as they can demonstrate support from either 10 percent or 1000 employees in the proposed industry or occupation. 

FPAs 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. 

All employees will be covered by FPAs, even if they aren't already part of a union. 

Both employees and employers covered by a proposed FPA will be able to participate in the process. In the case of employers, there will be a "small weighting towards small businesses" to "ensure they have appropriate voice" in the process.

Industrial action cannot occur during negotiations.

"Fair Pay Agreements will improve wages and conditions for employees, encourage businesses to invest in training, as well as level the playing field so that good employers don't get undercut and disadvantaged," said Wood. 

"For too long New Zealanders working in critical roles like cleaners, supermarket workers, and bus drivers whose work was essential to keep our country going during the pandemic, have been undervalued by our workplace relations system. 

"Fair Pay Agreements are about turning that around and ensuring that working Kiwis get a fair go again."

Workplace Relations and Safety Minister Michael Wood.
Workplace Relations and Safety Minister Michael Wood. Photo credit: Newshub / Zane Small

The Government will provide support to both Business NZ and the Council of Trade Unions to help them coordinate FPAs, as well as potentially providing a support person and direct financial assistance to bargaining parties. 

The Government will provide funding to support the bargaining of four FPAs each year. If more than four are initiated each year, the Government will determine which agreements receive the funding support. 

Over three years, $250,000 will go towards Business NZ and Council of Trade Unions to support their coordination role, bring bargaining parties to the table, and help raise awareness about FPAs and the bargaining process.

Bargaining sides will have the opportunity to receive a contribution of up to $50,000 towards the costs. They may be able to seek additional funds where low union or industry body membership makes it difficult. They can also seek a bargaining support person. 

FPAs will be supported by the Ministry of Business, Innovation and Employment (MBIE) and the Employment Relations Authority. The latter will play a role in determining conditions of an FPA in the event that bargaining fails twice. 

The FPA system will be similar to the Australian Modern Awards, with the main difference being that in Australia, terms and conditions are set by an independent commission, whereas FPAs will be bargained between employers and unions.

Business NZ contributed to the original FPA proposal report in 2019, but disagreed with the "compulsory" nature of the recommendations.

"Fair Pay Agreements would limit business flexibility, as a collective covering every business wouldn't be able to meet the needs of individual firms," said Business NZ CEO Kirk Hope.

"There would be risks to productivity because everyone would have to attend paid stop-work meetings to agree on their fair pay agreement. All employer representatives on the working group were concerned that about the consequences and costs of this."