Fair Pay Agreements Bill passes into law
The Fair Pay Agreements (FPA) Bill has been passed into law, with the new bargaining system to take effect on 1 December 2022.
The Fair Pay Agreement system brings together unions and employer associations within a sector to bargain for minimum employment terms for all covered employees in an industry or occupation.
The Fair Pay Agreement process
There are several key steps to establishing a Fair Pay Agreement. A union initiates the process by applying to the Chief Executive of the Ministry of Business, Innovation and Employment for approval to negotiate a Fair Pay Agreement for a specific occupation or industry. Applications can be received from 1 December 2022, when the new system comes into effect.
If the application is approved, employee and employer bargaining sides may form, and the bargaining process begins. Once the bargaining sides agree, covered employees and employers can vote on whether they support the employment terms proposed and, if there is a majority (from both bargaining sides), the Fair Pay Agreement will be finalised and set as law.
Employment terms that must be in a Fair Pay Agreement
Certain employment terms are required to be included in a Fair Pay Agreement. This includes defining the work covered by the Fair Pay Agreement, the standard hours, minimum pay rates (including overtime rates and penalty rates), training and development, how much leave an employee can have and how long the Fair Pay Agreement applies for.
Representation during bargaining
Eligible unions that are approved to do so can bargain on behalf of employees covered by a proposed Fair Pay Agreement. These unions must also represent employees that are not members of a union.
Eligible employer associations, including industry associations, can bargain on behalf of employers covered by a proposed Fair Pay Agreement. These organisations must also represent employers that are not members.
Want to know more?
Find out more about Fair Pay Agreements and the bargaining process
More detailed guidance for employers, employees and bargaining sides will be made available once the Fair Pay Agreement Act is in force.
Find out more about the FPA legislation