Fair Pay Agreements Bill – Our two cents
The Fair Pay Agreements Bill was introduced into Parliament on 29 March 2022 and is now going through the full parliamentary process. It has been in the wings since 2018 and this is one Bill that concerns us and many of our clients.
The Bill is now at the Select Committee stage and the Committee is due to report back to Parliament early October after reviewing all submissions. It is likely that this Bill will pass by the end of the year. The framework for the Bill is huge and confusing, it is mirrored from Australians Fair Work Pay Agreement and will become part of the Employment and Industrial Relations framework.
The purpose of the FPA is to establish a Framework for employers and employees to work together constructively to lift wages and productivity. The bargaining process can begin if at least 10% of a workforce or 1,000 employees agree to begin an FPA, or if it’s in the “public interest” to do so, such as in low paying industries. The new Act will allow Unions to negotiate compulsory, industry-wide minimum standards for base wage, ordinary hours, overtime, and penalty rates.
Our concern and many of our clients, is that the Bill will complicate and strain employment relationships and the union presence will be loud and grow rapidly with marketing campaigns to join. Majority of industry bodies and business communities have petitioned against this Bill, in our view it is not needed and will divide workplaces and society.
The increase in union presence will be a cost to businesses, with time-consuming bargaining. Also, since this will be new to a lot of SME’s they will be uncertain of how to have their say, which may drag negotiations out, impact productivity and bottom lines.
Our clients are reacting to CPI increases and looking at new incentives to retain team members – creating a clear Employee Value Proposition (EVP) to focus on retaining and attracting talent is key, particularly with the risk of FPA’s looming in the background.
We will keep you informed on the Bills progress; we are here to help prepare, guide and support you, it is likely it will pass and become effective late next year.
MBIE have a big section available on the FPA if you would like some additional reading – see here, and you can keep up to date on the Bill’s progress – see here.
Lara Hellier
Director / HR Partner