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Changes proposed to Pay Equity laws

A Member’s Bill currently going through Parliament is proposing to amend the Equal Pay Act 1972 and the Employment Relations Act 2000 to make publicly available statistical information relating to the pay of men and women to remove discrimination based on gender.

The Bill, sponsored by Green Party List MP Jan Logie, seeks to require employers to collect additional information to that which must currently be collected under s130(1) of the Employment Relations Act 2000.

Under this Bill, employers are not being asked to collect an onerous amount of additional information. The Bill proposes that in addition to the information already required to be collected, that the employer also keeps a record of the employee’s gender.

However, what employers need to be aware of is that the Bill will amend the Equal Pay Act 1972 to require them to retain the records required under s130(1) Employment Relations Act 2000 for a period of six (6) years and that those records must include the particulars of all equal pay determinations made by the employer for the purpose of implementing equal pay. This will place an active responsibility on the employer to be addressing gender based pay gaps. Further, the Bill will require employers to report these records to the Ministry of Business Innovation and Employment (MBIE) no later than 1 June each year, and that they must, on request of an employee or an employee’s representative (duly authorised in writing by the employee) disclose the aggregated data showing pay and gender for all employees doing the same kind of work.

So, while the requirement to record an employee’s gender is not onerous, employers will, upon passage of this Bill, need to be more active in reporting what they are doing to address pay inequality. Failure to keep or produce the records to MBIE or to an employee can be called upon as evidence that the employer prejudiced the ability of the employee to bring an accurate claim for pay equity. The Bill also provides that employer who fails or refuses to modify or eliminate pay rates or practices that are in contravention of the Equal Pay Act 1972 to be in breach of their good faith requirements of the Employment Relations Act 2000.

The Bill also increases the maximum penalties for breaches of the Equal Pay Act 1972 from $400 to $5,000 for an individual or from $1,000 to $10,000 for a company or other corporation.

So, what does this mean if the Bill gets passed into law?

Well, quite simply it would up the ante on closing the pay gap between men and women. In the 40+ years since the Equal Pay Act 1972 was implemented, there has been insufficient information in the public domain about pay rates for me and women employed in the same jobs and sectors. This has made it near impossible to determine whether pay discrimination on the grounds of sex has been removed. Recent research indicates that there has in fact been little movement in the pay gap. The gap in New Zealand is still around 12-14%, which is still too great. There is no real reason in today’s world why there should be any gap in pay. People should be paid the same for doing the same job.

This Bill would go some way to putting pressure on employers to no longer be complacent about Pay Equity. They will have to take a more active role in removing the gap within their organisation. By having to keep information on the gender of their employees as well as their pay (along with the other data required under s130(1) of the Employment Relations Act 2000), it should become inherently obvious to an employer if they have a pay gap. An employer should therefore be able to make their own determinations on what they need to do to remove or reduce the gap.

I would expect that if the gap is not huge, the Employer will be expected to be looking to remove the gap altogether. Where the gap is significant, the Employer will need to be able to demonstrate that they are actively reducing the gap. This may mean having to give different pay increases to female workers to ensure that they are closing the gap.

The information that they would be required to provide to MBIE and/or an employee, would be aggregated to ensure individuals privacy is not breached. However, by forwarding information to MBIE, as a nation we would start to get a national picture of pay gaps within sectors.

How long an employer will have to close a gap is not covered by the Bill. Should the Bill be passed into law, then questions will start arising. For example:

  • How long should it take to close the gap?

  • What is a significant gap?

  • Does that gap justify a stepped process to close?

  • Where does affordability come into the question?

No doubt there will be a myriad of other questions that come to mind. However, employers have had over 40 years to think about and act on pay equity. This Bill signals to employers that they’ve got to stop thinking about it and start acting on closing the gap. Under this Bill, doing nothing will not be an option.

The Bill was introduced on 23 March 2017, and is at its First Reading stage. Time will tell as to whether there is any cross-party support for making these changes, especially in an election year, to put any momentum to closing the pay equity gap.

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