Pay equity the problematic next step

22 August 2017

DianaOn 8 August 2017 the long awaited government Employment (Pay Equity and Equal Pay) Bill was aired for the first time in the House. The bill follows the historic $2 billion care worker settlement that came into effect on 1 July 2017, and purports to set the rules around any future pay equity claims. If passed into law it will repeal the 1972 Equal Pay Act and the 1960 Government service Equal Pay Act.

National MP and Minister Michael Woodhouse stated “The bill provides a practical and fair process for employees to follow if they feel they are not being paid what their job is worth. It will also make it easier for employees to file claims directly with their employers rather than having to go directly through the courts.”

As would be expected, not everyone shares the view held by Minister Woodhouse, with criticism coming from a number of quarters - but not unexpectedly from the Trade Union movement. While initially the bill was hailed as a breakthrough by the unions, they have issues with the way the bill has been drafted, claiming it puts barriers in the way of women in other industries seeking the same pay equity deal.

The CTU have appealed to all women in Parliament to vote against the first reading, saying the bill “would not get Kate Sheppard’s support”. NZEI has made the same call, saying the bill is “a mean spirited way to limit our access to justice and fair play, by putting stumbling blocks in the way of taking a pay equity claim”. The PSA have called the bill a “wolf in sheep’s clothing” in that it has “cherry picked the positive notes from the Joint Working Group’s recommendations and spun them alongside law changes that actually limit women’s ability to achieve pay free from discrimination”.

It was accepted that an update of equal pay law was overdue, with the current Equal Pay Act dating back to 1972. The Joint Working Group formed last year from business, government and union negotiators agreed on a set of Principles to guide pay equity negotiations.

Following the release of the draft bill, submissions were called for earlier this year. A read of the submissions from a diverse range of submitters reveals a number of issues with the bill, and some consistent themes raised by the submitters.

It must now be arguable whether the Bill does provide a better pathway and process towards equal pay.

What is provided for in the Bill?

The bill provides for three different types of claim:

  1. Equal pay claims, where the rate paid or the employee’s terms and conditions for the same or substantially similar work are alleged to discriminate on the basis of sex.
  2. Unlawful discrimination claims relating to terms and conditions other than remuneration.
  3. Pay equity claims, where the remuneration for female-dominated work allegedly contains an element of sex-based discrimination.

Claims may be made either under the new legislation or under the Human Rights Act 1993 but not both. Employees must not be treated adversely for making a claim on any one of the above grounds.

Equal pay claims are made to the Employment Relations Authority as wage arrears claims and are subject to a six-year limitation period from the date the claim is filed.

Unlawful discrimination claims also go to the Authority.

Pay equity claims are made to the employer.

The claimed problems with the Bill

Provisions of the bill seen as problematic are:

  1. It creates onerous requirements for women to prove merit in order to initiate a pay equity claim to progress.
  2. A new hierarchy of comparator roles limits the ability of women to choose appropriate male comparators to help determine the true value of their work. Comparators must be sought from the same employer; failing that, similar businesses; and failing that from the same industry. Only if all these options have been exhausted can a comparator be sought from a different industry.
  3. The right to back pay has been removed for pay equity claims, irrespective of the extent and nature of the discrepancy.
  4. Current claims would be judged retrospectively along with new claims under the proposed new legislation.

Where to from here?

At the time of writing this summary the first reading in the House had not concluded. In the normal course of events the bill would proceed to a select committee for a further consultation process to occur. Given that the House will soon rise to prepare for the General Election it is unclear what the bill’s fate will be.

Should you wish to discuss matters raised, or would like further advice or information on the bill please contact Diana Hudson | Managing Solicitor | 03 456 1804 | 021 816 469 |


Diana Hudson | Managing Solicitor


Legal Team


Diana Hudson | Managing Solicitor | 03 456 1804 | 021 816 469 |

David Browne | Solicitor | 03 456 1812 | 021 225 6938 |

Angela MacKenzie | Solicitor | 03 218 7962 | 021 756 809 |

Grant Walker | Advocate | 03 455 5165 |

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