Fair Pay Agreements Bill passes third reading

27 October 2022

Yesterday the Fair Pay Agreements Bill passed its third reading and will shortly receive Royal Assent.  The overarching policy objective attached to the bill is to enable employers and employees to collectively bargain industry-wide or occupation-wide minimum employment terms.  This is because at present, New Zealand’s employment relations and employment standards regulatory system only allows for collective bargaining at an enterprise level (i.e. between individual employers and unions). There is no mechanism for parties to co-ordinate collective bargaining across entire occupations or industries. The bill aims to address this gap.

There is a lot to be said about this bill, and it is fair to say that opponents of the bill have felt the need to carefully measure their response, for fear of being labelled "greedy", "exploitative" or "anti-employment rights".  

In May 2022, Clubs New Zealand made a submission to the Education and Workforce Select Committee stating our opposition to the Bill. At the conclusion of the Parliamentary process we still hold concerns, namely:

  • The speed with which the bill was passed, if history has taught us anything, legislation made in haste is bound to bring unintended consequences.
  • We do not believe that submissions opposing the bill were given due consideration during the select committee process. 
  • The bill is confusing and complex.
  • Employee right's in New Zealand are incredibly strong and come with a myriad of protections covering minimum wages, employment standards, processes and of course the requirement for both employers and employees to act in good faith at all times. Our employment law is not broken and what needs fixing does not require us to step back in time.
  • The bill provides a classic one size fits all approach.  There is little to no consideration given to business size, differing roles and responsibilities (i.e. where at least 25% of an employee's work is covered by a Fair Pay Agreement, that employee is covered by the Fair Pay Agreement), for profit vs not-for-profit.
  • The Bill is not “fair”. It will result in businesses being forced to adopt terms and conditions of employment that they do not have a direct ability to influence. Once a union successfully initiates bargaining (by meeting the relevant proposed threshold tests), all affected employers will be automatically involved in a process that will ultimately lead to a binding agreement between them and their employees.
  • There will absolutely be instances where very good employers are forced to offer terms of employment and wages they cannot afford.  The response to this will be to reduce the workforce or shut up shop.
  • We believe that the bill will not lead to increased productivity as claimed. 
  • We believe that many employees will not be aware that this Act compels employers to provide employee contact details to unions or employee bargaining party.  The bill also provides that MBIE may collect personal information under the Act.
  • It has been strongly argued that New Zealand is lacking behind our Australian counterparts when it comes to FPAs. It should also be noted that the Australian Fair Work Act permits Multi-Enterprise Agreements (similar to FPAs) – which are not popular. In addition, this style of bargaining could necessarily lead to widespread pattern bargaining resulting in increased wages without trade-offs for efficiencies or productivity.
  • Any bill or Act of Parliament that has the effect of compelling employers to participate in, or accept, FPAs – fundamentally misunderstand the employer-employee relationship in clubs. Particularly, there is no evidence that clubs possess too much bargaining power with their employees, or that shifting the bargaining power in the direction of employees will result in fairer wages.
  • Clubs New Zealand considers there is too little similarity between clubs let alone the wider hospitality businesses to achieve any benefits of FPAs. Due to the industry’s diversity, there is no effective “middle ground” between the enterprise and industry. Clubs alone differ from one another in the following respects:
    • Employees: Clubs range in size from being volunteer-run to more than 150 employee.
    • Operations: Clubs operate a mix of bars, restaurants and cafes, gambling facilities, catering, live entertainment, and sports. The facilities and activities operated by clubs, in turn, affect the workforce. For instance, clubs with golf courses engage greenkeepers, bowling clubs engage greenkeepers.
    • Purpose: The club industry comprises of bowling clubs, RSA clubs, sports clubs, workingmen's clubs, cosmopolitan club, yacht clubs, and community clubs.
    • Size: Clubs range in size, as measured by membership size, from less than 50 to more than 9,000.

Needless to say there are many factors that are influencing Clubs New Zealand's continued opposition of Fair Pay Agreements and support the oppositions commitment to seeing the legislation repealed.

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