This page is part of a series of pages with information for bargaining parties in the Fair Pay Agreement system:
Detailed information for bargaining parties can be found in the guide below:
The Fair Pay Agreements system brings together unions and employer associations to bargain for employment terms for all covered employees in an industry or occupation. This means that these organisations will meet to discuss and agree on a set of employment terms for the work being done within an industry or occupation.
Bargaining is between an employee side and an employer side
Fair Pay Agreement bargaining is between an employee bargaining side and an employer bargaining side.
The employee bargaining side is made up of one or more eligible unions who are approved to be an employee bargaining party.
The employer bargaining side is made up of one or more eligible employer associations that are approved to be an employer bargaining party. It may also include specified employer bargaining parties, which represent specified state employers.
Both the employer and employee bargaining sides must bargain for both employees and employers that are, and are not, members of their organisations
Only eligible unions can apply to initiate bargaining for a new Fair Pay Agreement
Bargaining for a new Fair Pay Agreement can only be initiated by eligible unions who apply to the Ministry of Business, Innovation and Employment (MBIE) and get approval to initiate bargaining.
An eligible union, for the purposes of bargaining for a proposed agreement, a proposed variation, or a Fair Pay Agreement, is a union that has:
- at least one member who is a covered employee (an employee who performs work that is within the coverage of the proposed Fair Pay Agreement) and
- a constitution that enables the union to represent the collective interests of covered employees, whether the employees are union members or not. Constitution means:
- the rules of the union as registered under the Incorporated Societies Act 1908, or
- the union’s constitution as registered under the Incorporated Societies Act 2022.
When you apply on behalf of the union, you will be asked to send a copy of the union’s constitution to confirm that your union is eligible to apply.
The application must meet one of the initiation tests and provide clear information about the proposed coverage for the Fair Pay Agreement.
How to apply
A union representative must complete the application form and supply all the information and evidence requested in the form.
Information needed to support the application
Who will be covered by the Fair Pay Agreement
You need to specify in the application form whether the union wants to bargain for an occupation-based Fair Pay Agreement or an industry-based Fair Pay Agreement.
In Fair Pay Agreements, coverage means the work or type of work the Fair Pay Agreement applies to and therefore which employees are covered. For an industry-based agreement, coverage also includes the industry or type of industry that the proposed agreement applies to.
The coverage of a proposed Fair Pay Agreement must be clearly specified in your application to initiate bargaining so that employees and employers in that industry or occupation are able to determine if they are covered or not.
Occupation-based Fair Pay Agreement
An occupation-based Fair Pay Agreement applies to all covered employees within the specified occupation, regardless of what industry that employee works in.
For example, a proposed Fair Pay Agreement that covers all commercial cleaners is an occupation-based agreement. It would cover all commercial cleaners, and their employers no matter what industry they clean in.
The application form for approval to initiate bargaining will require the initiating union to include a description of the work as well as the Australian and New Zealand Standard Classification of Occupations (ANZSCO) code to help define the occupation.
If there isn’t an ANZSCO code that suits the occupation you are applying for, you can describe the occupation and explain in your application why a code isn’t appropriate.
Find out more about ANZSCO codes:
Industry based Fair Pay Agreement
An industry-based Fair Pay Agreement applies to all covered employees in the specified occupations within that industry and the type of work covered by the Fair Pay Agreement.
For example, a proposed Fair Pay Agreement that covers butchers and bakers in the supermarket and grocery industry is an industry-based agreement. It would cover all butchers and bakers that work in supermarkets and the grocery industry, and their employers.
Industry-based Fair Pay Agreements will also need to include a description of the work and reference both the ANZSCO code for each occupation within the industry and the relevant Australian and New Zealand Standard Industry Classification (ANZSIC) code in the application form.
If there isn’t an ANZSIC code that suits the industry you are applying for, you can describe the industry and explain in your application why a code isn’t appropriate. Likewise, if there isn’t an ANZSCO code that suits the occupation you are applying for, you can also describe the occupation and explain in your application why a code isn’t appropriate.
Find out more about ANZSIC codes:
Initiation tests and evidence
For an application to initiate bargaining to be approved, the initiating union must meet one of two initiation tests.
1. Representation test
The representation test is met when MBIE is satisfied that:
- at least 1,000 employees who would be covered by the proposed Fair Pay Agreement support the application to initiate bargaining, or
- at least 10% of all employees who would be covered by the proposed Fair Pay Agreement support the application to initiate bargaining.
An initiating union relying on the representation test will need to provide evidence that the representation test has been met. This evidence is set out in the application form and asks a union to provide certain details, including:
- the name of each supporting employee
- their occupation
- the name of their employer
- the date the employee agreed to support initiating bargaining, and
- if the application is for an industry-based agreement, the industry the employee is employed in.
If the union is relying on the 10% employee representation test, they need to provide evidence of how the 10% was calculated too.
MBIE may select a sample of employees and request their contact details so MBIE can contact them later to confirm their support for the application.
2. Public interest test
The public interest test is met when MBIE is satisfied that a specified portion of employees who would be within the coverage of the proposed Fair Pay Agreement:
- receive low pay for their work and
- meet one or more of the following criteria:
- have little bargaining power in their employment
- have a lack of pay progression in their employment (for example, pay rates only increase to comply with minimum wage requirements)
- are not adequately paid, when considering factors such as:
- working long or unsocial hours (for example, working weekends, night shifts, or split shifts)
- contractual uncertainty, including performing short-term seasonal work or working on an intermittent or irregular basis.
The following definitions from the regulations help define the public interest test.
The Fair Pay Regulations 2022 define low pay as:
- approximately 60% or more of the employees receive a rate of pay that is equal or close to the minimum adult rate of wage prescribed under section 4 of the Minimum Wage Act 1983 and
- approximately 30% or less of the employees receive a rate of pay that is close to, equal to, or higher than the median wage.
The regulations define little bargaining power as:
- approximately 20% or less of the employees are union members; or
- approximately 20% or less of the employees are employed under a collective agreement.
The regulations define lack of pay progression as:
…approximately 60% or more of the covered who have been employed in a role for a relatively long period receive a rate of wages that is, on average, no more than 20% above the rate of wages received by covered employees who have been recently appointed to the same role; despite —
- having completed relevant training; or
- having increased their relevant skills.
The regulations define inadequately paid as:
...at least 60% of the employees are not adequately paid when taking into account whether the employees—
- regularly work more than 40 hours per week, with the majority of the hours being worked in hight shifts, in split shifts, or during weekends; or
- regularly receive total wages that are not, for each employee, the same each week or each fortnight (as applicable); or
- are employed under a casual or fixed-term employment agreement.
Initiating union may need to provide more information
If MBIE thinks that the application doesn’t include enough information to decide whether to approve the application or not, they can ask the initiating union to provide more information.
Public submission process may be called for
MBIE may invite public submissions. Submissions are limited to whether the application for approval to start bargaining meets the 10% representation test or the public interest test the union used in their application. The submissions period will be at least 20 working days long, but not longer than 30 working days.
You can find out if any public submissions are open by checking the Fair Pay Agreements Dashboard on the MBIE website.
Approval of application
If the application is approved, within five working days MBIE will publicly notify that it has approved the application and will publish details including:
- the name of the applicant
- the initiation test relied on
- MBIE's reasons for approving the application, and
- coverage of the proposed Fair Pay Agreement.
Letting people know that the union has approval to start bargaining
Notice to all unions and employers
Once a union has been given approval to start bargaining, within 15 working days of receiving the approval, the initiating union must use its best efforts to identify and notify in writing:
- all unions that have members that it considers are likely to be covered employees and
- all employers that it considers are likely to have covered employees in the occupation or industry that the proposed Fair Pay Agreement relates to (and provide an email address to which they must send their covered employees contact details).
The notice must include:
- where to find the notice issued by MBIE – this can be found on the Fair Pay Agreements dashboard (MBIE website) (external link)
- a plain language statement giving information about the Fair Pay Agreement that employers can give to their employees, without redrafting it. This statement must include:
- that the initiating union has been approved to initiate bargaining
- that the initiating union and any other employee bargaining parties will represent all employees in the coverage of the Fair Pay Agreement, including those that are not union members
- that the employee is within the coverage of the proposed Fair Pay Agreement
- how the proposed Fair Pay Agreement could affect the employee and the work they do
- the name of the initiating union and how to contact them
- where to find further information about the proposed Fair Pay Agreement and the bargaining process
- the Fair Pay Agreements and Employee Contact Details Document, which includes information about sharing employee contact details with the initiating union, including how an employee can avoid having their details shared with the initiating union.
Notice in newspapers and on union website
The initiating union must publish a notice on their website (publicly available and free of charge) when they have received approval to start bargaining. The notice on the union website must include:
- that approval has been given to initiate bargaining
- where to find the notice issued by MBIE
- the statement for employers to provide to each of their covered employees
- the Fair Pay Agreements and Employee Contact Details Document, which sets out information about the sharing of employee contact details, including how an employee can avoid having their details shared.
The initiating union must also publish a notice of approval to initiate bargaining in daily newspapers in Auckland, Hamilton, Tauranga, Wellington, Christchurch and Dunedin.
The notice in newspapers must include:
- that approval has been given to initiate bargaining
- where to find the notice issued by MBIE
- where to find the notice published on the union website.