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What is The Fair Pay Agreements Bill and When Does It Come into Effect?

The Fair Pay Agreements Bill received Royal Assent on the 1st November 2022, but what is it, how will it affect employers and employees?

What is the Fair Pay Agreements Bill? The Fair Pay Agreements Bill is designed to improve employment conditions. It brings together unions and employer associates within a sector to bargain for minimum employment terms for all covered employees in an industry or occupation, rather than just between unions and certain employers.

What is the Process? The process starts by a union applying to the Chief Executive of the Ministry of Business, Innovation and Employment for approval to begin the bargaining. In order for it to be approved, at least 1,000 employees, at least 10% of all employees who would be covered by the proposed agreement must support the application to initiate bargaining. If the application is accepted then the employee and employer bargaining sides can form and the bargaining process begins. Eligible unions can bargain on the employee bargaining side whilst eligible employer associations such as industry associates can bargain on the employer bargaining side.

There are set employment terms that have to be included in the Fair Pay Agreement, these are:

  • Defining the work covered by the Fair Pay Agreement

  • Standard hours

  • Minimum pay rates including overtime and penalty rates

  • Training and development

  • How much leave an employee is entitled to

  • How long the Fair Pay Agreement applies for.

After the bargaining sides agree, covered employees and employers can vote on whether they agree with the proposed terms and if there is a majority (from both sides) then the agreement is finalised and set as law. If the two bargaining sides can’t come to agreement, or if the vote has failed twice then one of the bargaining sides can ask the Employment Relations Authority to make a decision about the Fair Pay Agreement terms.

When Does it Come into Effect? Applications for Fair Pay Agreements can be received from the 1st December 2022.

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