New Zealand has recently introduced controversial new employment legislation that is set to supercharge collective bargaining between employees (represented by unions) and their employers.

The new Fair Pay Agreements Act ('FPAA') establishes a new bargaining framework in New Zealand that facilitates industry/sector wide collective bargaining to establish minimum terms and conditions for all employees in a particular occupation or industry.

At present, collective bargaining is carried out on an enterprise basis only. In exceptionally rare cases, terms and conditions can be fixed by the NZ Employment Relations Authority if the employer and unions cannot agree. But in most cases, agreement is reached.

Under the new law, if the employer and union bargaining sides are unable to reach agreement after two votes, the Employment Relations Authority is empowered to fix the terms of a fair pay agreement, including the remuneration that must be paid to employees. Those terms would apply to all employees who perform the work covered by the fair pay agreement, regardless of who the employees' employer is, or whether the employees are members of a union or not.

The FPAA is controversial, and the opposition has committed to repealing the law should it be elected next year.

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