How does our society value specific types of work? There is no single answer to that question, but with threats of strike action on the horizon issues such as pay equity are at the forefront of industrial action for a number of sectors of the workforce.

The Equal Pay Amendment Act 2020 came into force in November 2020. Its purpose is to address pay equity issues in the pay rates of sectors with female-dominated workforces. Minister for Women, Julie Genter described it as "one of the biggest gains for gender equity in the workplace since the Equal Pay Act 1972".

In some traditionally female-dominated occupations, wages have often been kept lower than that of traditionally male-dominated occupations. Pay equity settlements will put more money in the hands of some of our lowest paid workers.

Equal pay relates to women and men being paid the same pay to do the same job. Processes regarding equal pay were in place before this amendment. Pay equity is much broader, it relates to women and men receiving the same pay for doing jobs that are different, but of equal value - jobs requiring similar degrees of skill, responsibility and effort.

The Equal Pay Amendment Act 2020 introduces a practical and accessible process to raise and consider claims of systemic sex-based pay undervaluation in female-dominated occupations. The process aligns with the existing bargaining framework in the Employment Relations Act, so this will be familiar to both unions and businesses. Court action is the last resort, making pay equity claims more accessible to aggrieved employees.

An employee can raise a claim if they perform traditionally female-dominated work and there are factors that indicate the work is currently, or has historically, been undervalued. Female-dominated work is work performed by a workforce that is approximately 60 percent, or more, female. When considering current or historical undervalue, relevant factors include:

  • Origins and history of the work
  • Social, cultural or historical factors
  • Characterisation of the work as women's work

The employer must decide within 45 working days whether they consider the claim is an arguable pay equity claim. The Act states there is a low threshold to raising a claim. An employer must take a light touch approach when deciding whether a claim is arguable. Accepting the claim is arguable does not mean an employer agrees there is pay inequity, or there will be settlements. It simply means the parties can move into the assessment phase and good faith bargaining.

Unions can raise a claim on behalf of members who carry out undervalued work. The Union can represent member employees who perform the same or substantially similar work across multiple employers. If an employer believes they have genuine reasons based on reasonable grounds for not being a part of the process, they must provide those reasons in writing to the Union. It is possible for multiple unions to cover workers engaged by a single employer, and raise a claim together. Again, the employer has 45 days to consider whether it is an arguable pay equity claim.

A pay equity claim is settled when:

  • remuneration is determined that does not differentiate between male and female employees, and to which all parties agree to; and
  • a process is agreed to review the employee's remuneration so that pay equity is maintained. The agreed review frequency is also included.

A pay equity claim settlement may also include terms and conditions of employment other than remuneration, if the parties agree. The employee may not reduce any terms and conditions of employment of an employee who has raised a pay equity claim or who is covered by a union-raised claim for the purpose of settling that claim.

The agreement must be in writing and state:

  • It is a pay equity claim settlement
  • The names of the employer and the claimant
  • For union-raised claims, a description of the work to which the settlement relates
  • For individual claims, the employee's occupation and position
  • The remuneration, that the parties agree, does not differentiate between male and female employees
  • Other agreed terms and conditions
  • The process for reviewing remuneration, which may include:
    • Reconsideration of undervaluation factors
    • Assessment of the work
    • Assessment of comparators, to ensure that pay equity is maintained
    • The frequency of reviews which must be aligned with applicable collective bargaining rounds, or at least every three years
  • A summary of the method used to assess the pay equity claim
  • A description of the comparators that were considered by the parties

Multi-employer settlements must be recorded in a single multi-employer pay equity claim settlement that is signed by each union and each employer who is a party to the claim at the time of the settlement. Similarly, settlements for claims raised by multiple unions with a single employer must be recorded in a single settlement signed by the employer and each union that is party.

Each employer who is party to a settlement must ensure that a copy is delivered to the chief executive of the department of state that is responsible for the administration of the Act, as soon as practicable following settlement.

Dealing with pay issues and pay equity claims is complex and process driven. Employers will need to be mindful of the timeframes for responding to pay equity claims and we recommend taking advice early.

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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.