The Equal Pay Amendment Act which passed recently with unanimous Parliamentary support is about righting the historical undervaluation of female-dominated workforces. It is also about providing a pathway for settlement of pay equity disputes without people having to sue their employer.

In announcing the new law, Workplace Relations Minister Andrew Little said “most people do not want to take their employer to Court if they can avoid it. This bill makes it easier to raise a pay equity claim, and encourages collaboration and evidence-based decision making to address pay inequity, rather than relying on an adversarial court process.”  

It is commonly assumed that pay equity and equal pay mean the same thing, but this is not the case.

“Equal pay” generally refers to whether men and women are receiving the same pay for doing the same job. This is different to “pay equity” which considers whether men and women should receive the same pay for doing different jobs that are of equal value (similar skills and experience, responsibilities, working conditions, degrees of effort).

Although the amended legislation is called the Equal Pay Act, it now incorporates this concept of pay equity. The law already required equal pay – i.e. that employers not pay people differently on the basis of sex. But the amendments mean that it should now be easier for women in female-dominated workforces to achieve pay equity, which is far broader.

This all came about due to the 2012 claim brought by Kristine Bartlett, an aged care worker from Lower Hutt, who argued that she was underpaid because aged care work is predominately performed by women. Ms Bartlett’s case went all the way to the Supreme Court and ultimately resulted in findings that she had been underpaid due to gender discrimination.

The government stepped in and negotiated a settlement with the relevant unions to prevent further legal action. The wages of 55,000 people (primarily women) working in residential aged care, disability support services and home support services were increased as a result.

The Bartlett decision was a landmark one for New Zealand as it extended the application of the Equal Pay Act 1972 from just equal pay for the same job, to equal pay for work of equal value. The Equal Pay Amendment Bill was subsequently introduced to incorporate a system for raising and resolving pay equity claims into the Equal Pay Act to reduce the need for lengthy litigation to resolve pay inequities.

Under the new Act, pay equity claims can be raised by multiple unions with multiple employers across an industry where employees are doing the same work. Whilst the process of bargaining for a multi-union, multi-employer pay equity settlement will likely be challenging, it should ensure that pay equity progress can be made industry-wide rather than in a piecemeal fashion.

Unions will play a key role in resolving pay equity claims and, unusually, will also represent non-union members in bargaining, unless non-union members choose to opt out. Unions may not require fees to be paid by non-union members covered by a claim, but may request a voluntary contribution towards the costs of the bargaining.

If a pay equity claim is raised and the employer agrees that it is arguable, the parties are to undertake an assessment of the work in question, considering comparator workforces. Appropriate comparator workforces will be ones where the job itself may be different but the required skills, responsibilities, working conditions, and degrees of effort are substantially similar.

As an example, Customs Officers and Corrections Officers were two of the comparator workforces considered in resolving the pay equity claim raised by Teacher Aides. Whilst the roles of Customs Officers or Corrections Officers and Teacher Aides are clearly very different, the responsibilities, tasks, skills, degree of effort required, and conditions of work were assessed as being similar, and therefore, pay rates should also be comparable.

Under the new Act, if the parties agree that there is a pay equity issue, they are then required to work together to determine what fair remuneration would look like.

If the union and employer parties can reach an agreement it must be ratified by the employees covered by the settlement, and will then become part of their terms of employment.

There is also a process which will apply if the parties cannot reach a settlement, which involves the Employment Relations Authority providing facilitated bargaining and potentially fixing the terms of the agreement.

Over the past few years there have been some significant pay equity settlements achieved, including Care and Support Workers in Aged Care and Teacher Aides.

These settlements have typically taken a long time to conclude partly because they affect thousands of workers, but also because up until now there has been no clear legislative framework for how to negotiate and implement them.

The new Act is a significant step towards achieving pay equity in New Zealand and is long overdue. There will no doubt be workers in a broad range of female dominated industries now taking action to seek redress for historical wrongs.