What is a Fair Pay Agreement?

Well, it’s in the name – kind of. Fair Pay Agreements are a way to agree what’s fair to pay people in any particular sector.

The word “pay” is too narrow. It’s also wider standards for how to treat people– fair conditions.

They will set a minimum standard of particular conditions for everyone working in that sector. They will not be a complete employment agreement. People will still have a collective agreement or and individual employment agreement, it’s just that nothing in that agreement will be allowed to be less than the Fair Pay Agreement

So, not all union members will have a Fair Pay Agreement in their sector. And many union members will see no change in their existing collective agreements either, because their collective will have better conditions than the minimum standards in a Fair Pay Agreement.

But for union members who work where their employer competes with other “un-unionised” employers – Fair Pay Agreements are big news. And they’re even bigger news for people who want to join a union in their job but haven’t been able to – it will be a way for them to get involved.

Because – for example - when a small cleaning contractor goes all out to win the contract, they offer the lowest price they can think of... and sort out how to make that work later. Inevitably the people actually doing the work end up paying for this.

No pay rises, employing new staff on lower rates, reducing hours to get the same work done, splitting shifts and not paying travel time between sites are all tactics cleaners have seen. And employers do similar in all sorts of industries - not just cleaning. The only common factor is – in the end – the person doing the work cops it.

We should be able to do better than that. And Fair Pay Agreements are one way.

A group of workers in a sector (1000 or 10% of the total) will be able to call for one. Then reps from both sides – working people and employers – will try to reach agreement about some standard conditions. When they have a proposal, all employees and employers will have a chance to vote on it.

If both sides vote yes – all good – those conditions become the minimum standard and no employment agreement in that sector – individual or collective - can drop below.

If either side votes no, they go back and have another go at negotiating. But if a vote by either side on the FPA rejects it again, the Employment Relations Authority steps up and decides on some standards. The rules are clear - once a Fair Pay Agreement process starts it has to finish with a Fair Pay Agreement.

That’s important because it’s what encourages employers to work together and bargain. If they don’t, they risk having no direct say when the Employment Relations Authority does it for them.

At the same time people cannot go on strike for a Fair Pay agreement. For a collective agreement, the chance you could tell your employer you’re not working until they settle, is an important incentive for an employer to sort it out.

A system where a court has final say is called arbitration. New Zealand has had compulsory arbitration before. For 93 years in fact, before a Labour Government did away with it in 1987. Then in 1991 a National Government wiped out the minimum standards set by arbitration with the Employment Contracts Act.

Fair Pay Agreements are a first step back towards balance for millions of working people. After 30 years where employers have found it easier to take away overtime rates, remove limits on hours of work and knock out rules they didn’t like – it’s a turning point. Every year about half of working people in New Zealand don’t get a pay rise – year on year its often the same people. They’ve been doing more and more (longer hours/harder work) - being “more productive” - but they don’t see their income, or their lives, improve. With Fair Pay Agreements there will be a new way to break that cycle.