The Fair Pay Agreements (FPA) Bill has been passed into law, with the new system of employment bargaining to take effect on 1 December
The Fair Pay Agreements system brings together unions and employer associations within a sector to bargain for minimum employment terms for all covered employees in an industry or occupation. This means that these organisations will meet to discuss and agree on a set of employment terms for the work being done.
Throughout the Fair Pay Agreement process you have responsibilities to keep employees covered by the proposed Fair Pay Agreement informed. What you are required to do by law is explained below.
Bargaining is between an employee side and an employer side
Fair Pay Agreement bargaining is between an employee bargaining side and an employer bargaining side. Eligible unions that are approved to be an employee bargaining party bargain on the employee bargaining side. This includes employees that are not members of the union. If an employee is covered by the proposed Fair Pay Agreement, the union(s) must bargain on their behalf.
Eligible employer associations, including industry associations, that are approved to be an employer bargaining party may bargain on the employer bargaining side. These organisations must also bargain on behalf of employers that are not their members.
Māori must be represented
Both bargaining sides must use their best efforts to make sure Māori employees and employers are represented in the process. This includes by:
- getting and considering feedback from representatives of Māori employees/employers and
- considering whether each bargaining side should include a person that represents the interests of Māori employees or employers.
Employment terms that must be in a Fair Pay Agreement
A Fair Pay Agreement must include what work is covered by the Fair Pay Agreement, standard hours, minimum pay rates (including overtime rates and penalty rates), training and development, how much leave an employee can have and how long the Fair Pay Agreement applies for.
Bargaining, voting and the Fair Pay Agreement becoming law
It will take time for both bargaining sides to come to an agreement on a set of employment terms they both agree with. Once the bargaining sides agree and the proposed Fair Pay Agreement is confirmed to be compliant with the law, covered employees and employers in that sector will be able to vote on whether they agree with the terms or not. If a majority agrees from both bargaining sides, the voting process and result will be confirmed by MBIE (Ministry of Business, Innovation and Employment) and the Fair Pay Agreement will be finalised and set as law.
More information about the Fair Pay Agreement process
The Fair Pay Agreement system [PDF 249KB]
Overview of the Fair Pay Agreement process
Your rights as an employer – employer association representation
If you are a covered employer, you have rights in the Fair Pay Agreement process including being kept informed about what is happening and being represented.
While unions that are employee bargaining parties represent the employee side in bargaining, the employer bargaining side is made up of eligible employer associations that have been approved to be employer bargaining parties. The employer bargaining parties represent the interests of all employers covered in the proposed Fair Pay Agreement, including those that are not part of an employer association. The employer bargaining side may be made up of several employer associations or just one.
As an employer covered by a proposed Fair Pay Agreement you will be kept informed throughout the Fair Pay Agreement process. The employer bargaining side needs to use its best efforts to:
- provide regular updates to you if you are a covered employer
- give you the opportunity to provide feedback during the bargaining process
- make sure Māori employers are represented in the process. This includes getting and considering feedback from representatives of Māori employers and considering whether to include a representative of the interests of Māori employers on the bargaining side
- consider all interest groups of covered employers
- advise of any ratification vote.
Your rights as an employer – no employer representation
If, after three months from approval to initiate bargaining, no bargaining party for the employer side has stepped forward, then the law provides a ‘default bargaining party’ for the Fair Pay Agreement process. The default employer bargaining party will be given one month to decide if they want to become an employer bargaining party. If the default bargaining party doesn’t want to, any employee bargaining party can apply to the Employment Relations Authority (the Authority) to make a decision on the Fair Pay Agreement terms. Decisions by the Authority are called a determination.
If this happens, the Authority will set the terms of the Fair Pay Agreement without any bargaining.
Working with your employees in good faith
Timing: Throughout the bargaining process and when the Fair Pay Agreement is in force.
Responsibility: Like all interactions with your employees, you need to communicate and work with them in good faith. This means that you can’t mislead them or act in a deceptive way. This also means you can’t influence them about joining or leaving a union or how they may choose to vote on the terms of a proposed Fair Pay Agreement.
Provide information to unions your employees are members of
Timing: Within 15 working days of the initiating union telling you they have been given approval to start bargaining for a new Fair Pay Agreement.
Responsibility: If your employees covered by the proposed Fair Pay Agreement are members of a union not involved in bargaining, you must do your best to identify and inform those unions about the approval to initiate bargaining. You must also let them know where the notice from the Chief Executive of MBIE giving that approval can be found.
Provide information about the Fair Pay Agreement to your employees
Timing: You must give information to your employees as soon as possible, and no later than 30 working days after you received notice from the initiating union, or you were made aware of the approval to start bargaining in another way.
Responsibility: When the initiating union (the union that applies to start bargaining for a new Fair Pay Agreement), or another union not involved in bargaining, lets you know that the initiating union has been approved to start bargaining, they need to give you certain information, including:
- where to find the notice issued by the Chief Executive
- a statement for you to provide to your covered employees
- an opt out form (see below).
The statement you need to provide to your employees must be in plain language, and include:
- the fact that the initiating union has been approved to initiate bargaining
- the name of the initiating union and how to contact them
- how the proposed Fair Pay Agreement could affect your employee
- where to find more information about the proposed Fair Pay Agreement and bargaining process.
It is your responsibility to pass on the information above, including the statement, to your employees.
If the union doesn’t provide this information to you, it is your responsibility to prepare this and provide it to your employees in writing. You can find the information needed on the initiating union’s website.
Share an opt out form
Timing: You must give the opt out form to your employees as soon as possible, and no later than 30 working days after either you received the notice from the initiating union or you were made aware of the approval to start bargaining in another way (for example, seeing it in the newspaper).
Responsibility: The union must also provide you with a form approved by MBIE to allow your employees to opt out of the Fair Pay Agreement process if they choose to. You must give this form to your employees.
If any of your employees complete the form and want to opt out, they need to give the form back to you. You need to keep all completed opt out forms as a record for the duration of the bargaining process. Covered employees that have opted out of the process will still be covered by the Fair Pay Agreement if it is passed into law.
Prepare and provide an electronic record of employee contact details
Timing: No later than 30 working days after giving the opt out forms to employees but no earlier than 20 working days.
Responsibility: You must provide, in electronic form, to the initiating union the contact details of all your covered employees who have not opted out of the Fair Pay Agreement process.
You must make sure that you do not provide the details of anyone who has opted out of the process.
Allow employees to attend two 2-hour Fair Pay Agreement meetings
Timing: Two meetings no longer than 2 hours each during the bargaining process.
Responsibility: During the bargaining process, employee bargaining party representatives may need to meet with your employees that are within the cover of the proposed Fair Pay Agreement. You must allow your employees to attend these meetings and pay them for that time if the meeting occurs during work time.
The employee bargaining party is required to give you at least 14 days’ notice of the date and time of the meeting and work with you to make sure your business can continue to operate during that time.
Allow a representative of an employee bargaining party access to your workplace
Timing: Throughout the Fair Pay Agreement process.
Unless you have a certificate of exemption, a representative of an employee bargaining party can access your workplace without your consent if the primary purpose for their visit is to do with the Fair Pay Agreement. The representative must comply with any health, safety, and security processes in place at your workplace.
Exemption on religious grounds
You can apply for a certificate of exemption on the grounds that you are a practising member of a religious society or order, and your beliefs preclude membership of anyone outside that religious society or order.
Related information
Information about employers’ rights and obligations under the Fair Pay Agreement Law is also available in information sheet form:
Understanding Fair Pay Agreements – A quick guide for employers [PDF 267KB]
When a Fair Pay Agreement is in force
Once a Fair Pay Agreement is finalised and set as law, all employers covered must make sure their covered employees have terms that are the same as, or better, than those in the Fair Pay Agreement.
