Labour loses Fair Pay Agreements partner Business New Zealand

Employer advocacy group Business NZ has confirmed it is refusing to be the Government's nominated partner in implementing 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 coalition partner NZ First. But with a huge post-election majority in Parliament, Labour confirmed in May it would push ahead to improve pay and conditions for essential workers.  

All employees are covered by FPAs under the scheme, even if they aren't part of a union, and any union can initiate the FPA process as long as it can demonstrate support from either 10 percent or 1000 employees in the industry or occupation.

Business NZ and the Council of Trade Unions were initially announced as coordinators to bring bargaining parties to the table and help raise awareness. Over three years, $250,000 would go towards the organisations for their support. 

But Business NZ CEO Kirk Hope said on Thursday his organisation was "not prepared to be part of a compulsory scheme that is unfair and out of touch with modern ways of working" and had "formally rejected" the Government's offer to be the default bargaining party for employers.

"Compulsory FPAs are unlawful under both current domestic and international employment laws and are totally out of step with how we need to work in 2021. They aren't needed, they remove the flexibility and autonomy of modern workplaces and won't improve pay and conditions for hardworking Kiwis.

"After thoroughly reviewing the latest proposal, we've formally refused the Government's offer. It's wrong for us to be part of a scheme that will do more harm than good to businesses and employees. That also means we have turned down $250,000 in Government funding."

Federated Farmers has already indicated it will not function as a mediator. 

The Ministry of Business, Innovation and Employment (MBIE) recognised "a number of significant risks" associated with FPAs, particularly how they are compulsory, documents unveiled to the public in July revealed.

Prime Minister Jacinda Ardern and Workplace Relations Minister Michael Wood.
Prime Minister Jacinda Ardern and Workplace Relations Minister Michael Wood. Photo credit: Getty Images

Officials also noted how the proposal lacked support from Business NZ. 

The preferred approach for MBIE was to "strengthen existing mechanisms in the employment relations system, combined with setting targeted sector-based minimum standards where there are problematic outcomes for employees". 

Workplace Relations Minister Michael Wood wasn't surprised Business NZ pulled support. 

"Business New Zealand have had a consistent position over a number of years being opposed to Fair Pay Agreements, so that's not any news," he told reporters. 

"We've continued to work cooperatively with them and constructively as we develop the policy to make sure that it's coherent and implementable and I thank them for that. But obviously, this is a very clear manifesto commitment that Labour campaigned on, and we intend to deliver."

Wood said there was a useful role for Business NZ if they wanted it.

"The particular announcement they've made today is that they don't want to be what's called a 'bargaining backstop'. In most cases we expect that employer sector groups will do the bargaining. Where that can't occur or where bargaining breaks down, then the Employment Relations Authority will play a role and we've resourced them to do that. 

"It is a little bit unusual that in this case Business New Zealand are indicating they don't want to do that. The consequence of that is that there might be some agreements that end up being determined by the authority rather than bargained by a representative of employers. But that is up to them."

Business NZ CEO Kirk Hope.
Business NZ CEO Kirk Hope. Photo credit: File

The NZ Council of Trade Unions will continue to support FPAs. 

"Fundamentally, FPAs are about putting in a minimum floor for wages and conditions. They prevent unscrupulous employers from forcing the costs of competition onto workers and their families," said president Richard Wagstaff. 

"Just as we have a minimum wage in New Zealand, Fair Pay Agreements will provide a statutory minimum. There will also be an ability to vary agreements regionally, to reflect local economic conditions. 

"All firms will still be required to negotiate individual or collective agreements with their staff and  in the process be free to negotiate with their employees for anything above this baseline. 

"An FPA simply provides a minimum floor on core conditions to prevent the race to the bottom we currently experience."