Pay equity – the ‘sleeping giant’ of New Zealand employment law

ELM: In brief Kylie, can you tell us why pay equity in New Zealand is on the top of everyone’s employment law agenda right now; what has happened? Everyone we’ve spoken to of late has mentioned it to us.

Kylie: Pay equity has been the ‘sleeping giant’ of New Zealand employment law for some time now. Many industries can readily identify a position or occupation which is predominantly and historically staffed by women (take HR as an example….). The Terranova case confirmed that both equal pay and pay equity are covered by the Equal Pay Act and this, along with the proposed Bill, mean that it is an issue to which employees, unions and employers are very much alive.

ELM: What are the main impacts, even if only proposed, of this recent landmark settlement in the Terranova case?

Kylie: To be blunt, the money. The Terranova settlement has seen a significant increase to the hourly rate of aged care workers. Not a one off payment of compensation, but a lasting and permanent increase to hourly wage rates. This makes a claim from workers in similar positions more likely – indeed we have now also seen mental health workers bring proceedings. I am already seeing this issue raised in collective bargaining and other wage negotiations.

ELM: I understand that due to this there will be new ways for employers to deal with pay equity, equal pay and gender discrimination. From what you’re seeing, how do you think these frameworks will look, why, and how can employers best prepare for these?

Kylie: Consultation on a proposed Bill in this area has closed, but the final draft is yet to be released or presented to Parliament for debate. I expect that there is a lot of water to go under the bridge before we get to a final framework for dealing with pay equity. The current proposal has some real attractions – with pay equity, equal pay and gender discrimination issues making the most of the current mediation, facilitation and Authority investigation meeting processes.
In my view, the issue is the use of subjective criteria to identify a comparator. This is, however, an issue that is ingrained in all pay equity discussions – how do you decide what is fair and equitable? Equity is significantly more difficult to assess than equality. If the experience in overseas jurisdictions like the UK is anything to go by, there will need to be a body of case law before the legislation can be interpreted with any certainty.

ELM: You are covering this topic at the upcoming HR Law Masterclass in New Zealand this September. In reviewing the entire agenda’s topics, why would you like to see HR and ER executives attend the Masterclasses in Auckland and Wellington? Why are updates like this valuable?

Kylie: It is a great opportunity to keep up to date with developments in the law and to catch up with others facing similar issues. I find real value for my clients in getting a feel for what others are doing, not just in a legal sense, but also in relation to practical problems faced by many employers in New Zealand.