The Government's pay equity bill - the Equal Pay Amendment Bill (Bill), passed the Select Committee stage on 13 May 2019, and is awaiting its Second Reading in Parliament. The Bill seeks to improve the process for raising and progressing pay equity claims and to eliminate and prevent discrimination on the basis of sex in remuneration and terms and conditions of employment.
The draft legislation allows employees to raise a pay equity claim directly with their employer; bringing pay equity claims into the existing bargaining, mediation and dispute resolution framework under the Employment Relations Act 2000.
In its current form, the Bill would:
- Require employers to ensure that their pay rates do not discriminate on the basis of sex for employees who perform the same (or substantially similar) work;
- Require employers to ensure that there is no differentiation between pay rates for work performed exclusively or mainly by female employees, and pay rates that would be paid to male employees who do similar work, in similar conditions, requiring similar effort.
- Facilitate the resolution of pay equity claims by setting a low threshold, and outlining a process for a claim, including:
- The form in which a pay equity claim must be made, and its minimum content;
- A requirement that an employer who receives a pay equity claim acknowledge it and notify other employees who perform the same or similar work to that performed by the claimant; and
- A requirement that the employer form a view as to whether the pay equity claim is arguable.
If the employer, or the Employment Relations Authority, decides the pay equity claim is arguable, the Bill outlines a pay equity bargaining process, which is set out in detail and includes a duty of good faith on both parties. Parties must objectively assess whether the employee's work is (or has been) undervalued, recognising the importance of skills, responsibilities, effort and conditions that are (or have been) overlooked or undervalued in female-dominated work.
Pay equity claims are settled when a rate of remuneration is agreed by both parties as not differentiating between male and female employees, or where the Employment Relations Authority makes a determination that there is no differentiation or fixes the terms and conditions of employment.
A party is able to seek the Authority's assistance at any stage of the resolution process. However, the Authority may only accept a reference for facilitation where it accepts that facilitation may be useful to resolve the issue and either a party has (seriously and continuously) failed to comply with the duty of good faith and has undermined the claim's progress, and/or sufficient efforts have not resolved the claim.
By lowering the threshold for claims and bringing the resolution process under the existing dispute resolution framework under the Employment Relations Act, the emphasis is on a collaborative process and Court action becomes a last resort.
As this legislation moves through Parliament, employers should consider whether pay equity may be an issue in their industry. A point of emphasis in the proposed legislation is 'comparator professions', and employers might find it useful to consider whether there are professions and industries with similar work, skills, responsibilities and conditions that may serve as an indicator of potential levels of equitable pay.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.