Legislation Update - April 2022

Updated: Apr 7


This blog covers three pieces of proposed legislation


Fair Pay Agreements

On 29 March 2022 the Labour Government introduced the Fair Pay Agreements Bill. As discussed in a previous blog, this Bill will introduce the ability for unions to initiate bargaining for an industry or sector agreement that sets out minimum binding standards for both employees and employers in a particular sector or occupation. FPAs will set minimum wage rates, ordinary hours, overtime, and penalty rates within specific industries or occupations.


The easiest explanation of Fair Pay Agreements (FPA) is available on MBIE's website in graphical format.


Only a union will be able to apply to the CEO of MBIE to initiate bargaining for FPA. MBIE will only approve the initiation of bargaining if the Chief Executive is satisfied that the union’s application for that FPA meets:

  1. the representation test threshold requirements, of either 1,000 employees or 10% of the employees in proposed coverage support the initiation of bargaining for the proposed FPA; or

  2. a public interest test, based on certain criteria that are applied to the employees who would be covered by the proposed FPA (such as low pay for their work, little bargaining power, or lack of pay progression); and

If the coverage substantially expands over the course of bargaining, then the relevant representation or public interest test will need to be re-tested.


The union initiating bargaining defines the work that the FPA is to cover, but this coverage can change during the bargaining process. The coverage must be described as either industry-based (an ‘industry FPA’) or occupation-based (an ‘occupational FPA’).


All employers and employees within the proposed coverage are covered by a FPA. However, an FPA can differentiate between employees located in different regions. An employer's business can also be exempt where it is in significant financial hardship.


Negotiations for FPAs will be between a union body and an employer association and these parties must negotiate in good faith.


If the parties are unable to set the FPA, then the Employment Relations Authority may set the terms that will apply.


For a FPA to be finalised, it must be:

  1. assessed and approved by the Authority (through a “vetting” process to ensure compliance with the FPA requirements);

  2. ratified through a voting process by the covered employees and covered employers, which is verified by MBIE; and then

  3. brought into force by the Chief Executive of MBIE through secondary legislation.

Ratification will require a majority of employees and employers to respectively vote in favour of the proposed FPA. Employers will have one vote per employee in coverage, with slightly higher vote weighting for employers with less than 20 employees in coverage. Parties can return to bargaining if the first ratification vote fails, but the FPA must go to the Authority for determination if a second vote fails.


A finalised FPA will apply to all employers within its coverage, regardless of whether that employer participated in the bargaining or ratification process.


On reviewing other employment related Bills yet to be put through the legislative chamber, there are two proposed pieces of legislation that will be of interest to employers.

Matariki

The first is the long awaited Matariki Public Holiday Bill, that sets out a 12th public holiday for New Zealand. Matariki is an abbreviation of ‘Ngā Mata o te Ariki Tāwhirimātea’ (‘The Eyes of the God Tāwhirimātea’) and refers to a large cluster of stars, also known as the Pleiades. The predawn rising of Matariki in the mid-winter sky marks the changing of the seasons and the beginning of the Māori New Year. Some iwi recognise this time of year by the appearance of Puanga, also known as Rigel. There are also regions where the setting of Rehua, also known as Antares, is used to identify the change of seasons.


A Matariki public holiday will be our first public holiday that recognises Te Ao Māori.


While dates have been set for celebrating Matariki, commencing 24 June 2022 through to 2052, the legislation providing for this new public holiday is, at the time of preparing this blog, still to pass through Parliament into law. You can read the Bill here, and see an explanation and background to the Bill here.


ADDENDUM 8 April 2022: The Matariki Public Holiday Bill passed its third and final reading in Parliament on 7 April 2022 and is now awaiting Royal Assent from the Governor General. Once this Assent has been signed, this Bill becomes law and legally introduces Matariki as New Zealand's 12th Public Holiday.


PGs for Sexual Harassment

The second piece of legislation is the Employment Relations (extended time for personal grievance for sexual harassment) Amendment Bill.


This Bill was a Member's Bill (Dr Deborah Russell - Labour MP for New Lynn) introduced on 21 October 2021. The Bill has yet to proceed to its first reading. This Bill, if passed into law, will amend the Employment Relations Act 2000 to allow for a personal grievance for sexual harassment to be raised within 12 months from the date when the alleged action amounted to a personal grievance, or came to the attention of the employee, whichever is the later. The current time period for raising any personal grievance is 90 days.


This change will only affect grievances that arise from sexual harassment and will only apply to such grievances from the date the Bill comes into force. Any personal grievance that is before the Employment Relations Authority or Court on the date of the bill becoming law will still be heard under the 90-day rule. You can read the Bill here.



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