Please note that this information is for general information purposes and doesn’t cover every aspect of the Fair Pay Agreements Act. For more detailed information on working through the Fair Pay Agreement system, refer to:
Information for bargaining parties
The Fair Pay Agreements system – an overview
The Fair Pay Agreements system brings together employer associations and unions 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.
Representation
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. Eligible unions that are approved to be an employee bargaining party bargain on the employee bargaining side. This includes bargaining for employees that are not members of the union. If you are covered by the proposed Fair Pay Agreement, the employee bargaining side must bargain on your behalf.
Eligible employer associations, approved to be an employer bargaining party, bargain on the employer bargaining side. The employer bargaining side must also bargain on behalf of employers that are not members of employer associations on the bargaining side. The employer bargaining side may also include specified employer bargaining parties representing state sector agencies.
The employee bargaining side must represent covered employees
The employee bargaining side must represent the collective interests of all covered employees. This means that for you and all covered employees, they must at a minimum:
- provide you with regular updates about the bargaining
- give you the opportunity to provide feedback about the bargaining
- during bargaining, consider your feedback and the feedback received from other covered employees
- advise you of any ratification vote
- consider whether all interest groups of covered employees are recognised and given the opportunity to provide feedback.
The employee bargaining side must also not do anything either directly or indirectly that is likely to mislead or deceive you or any covered employee.
The employer bargaining side has similar obligations to covered employers.
Representation of Māori
Both bargaining sides must use their best efforts to make sure Māori employees and employers are represented in the process. This includes by:
- getting and considering feedback from representatives of Māori employees and employers
- considering whether each bargaining side should include a person that represents the interests of Māori employees and employers.
Terms the Fair Pay Agreement must cover
A Fair Pay Agreement must include what work is covered by the Fair Pay Agreement, standard hours when the minimum base wage rate is paid, 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. It must also cover governance arrangements that apply when the agreement is in force and a process for varying the agreement.
The Fair Pay Agreement process
The general process to get a Fair Pay Agreement involves several steps, which are described below. However, in different situations the process will be different.
The general process is also shown in diagram form:
Fair Pay Agreement system diagram [PDF 249KB]
1. Initiation – The start of the process. A party collects evidence to show it meets one of the initiation tests and applies to the Ministry of Business, Innovation and Employment (MBIE) for approval to begin bargaining. For a new Fair Pay Agreement, the initiating party will be an eligible union.
2. Bargaining sides form – The employee side and the employer side form. If a bargaining side doesn’t form on one side, the default bargaining party can step in. If they choose not to, the Employment Relations Authority (the Authority) can determine the terms of the Fair Pay Agreement without any bargaining having occurred between the employee and employer sides.
3. Bargaining process – The sides will work to come to an agreement on a set of employment terms that are acceptable to each side.
Once the sides have agreed, together they will send the proposed agreement to the Authority so that the Authority can assess whether the agreement complies with the law, and whether there is any overlap of the work it applies to with any other existing Fair Pay Agreement.
If the bargaining sides can’t come to an agreement either side can apply to the Authority to fix the terms of the agreement.
4. Ratification vote – Once the Authority confirms the proposed Fair Pay Agreement is compliant with the law, covered employees and employers in that sector will be able to vote on whether they agree with the terms or not.
If a majority agrees from both bargaining sides, the voting process and result will be confirmed by MBIE and the Fair Pay Agreement will be finalised and set as law.
If two votes fail to get a majority, the proposed agreement may be fixed by the Authority.
5. Fair Pay Agreement is in place – Once a Fair Pay Agreement is passed into law, the employment terms of the Fair Pay Agreement apply to any covered employee where 25% or more of their work is covered by the agreement.
For more information about the process, refer to:
Overview of the Fair Pay Agreements process
Before bargaining starts
A union may contact you before the Fair Pay Agreement process starts
Unions start the process of bargaining for a new Fair Pay Agreement by applying to MBIE for approval to start bargaining (initiation). This union is called the initiating union. But before they apply, a union may contact you, even if you aren’t a member of the union, to see if you support them in applying to start the process for developing a Fair Pay Agreement.
To give approval to start bargaining, MBIE requires the union to meet an initiation test. The union must show that:
- at least 1,000 employees or 10% of employees that would be within the proposed coverage of a Fair Pay Agreement, agree with developing it or
- there is public interest in a Fair Pay Agreement for this industry or occupation(s).
If you do support the proposed Fair Pay Agreement, the union may ask you to give them the following information:
- your full name and contact details
- what your job is
- your employer’s name
- the date you agreed to support the application and
- if the application is for an industry-based Fair Pay Agreement, to confirm the industry you work in.
The union is likely to need to give the information you provide them to MBIE to prove that they have the support to develop the agreement. However, they won’t give your contact details immediately, and only if MBIE requests these details. MBIE may request your contact details, so that they can contact you later to confirm you really do support the initiation of a Fair Pay Agreement.
A public submission process may be called for
When a union has applied to MBIE for approval to start bargaining, MBIE may invite public submissions. Submissions can only cover whether the application to start bargaining meets the:
- 10% representation test, or
- public interest test.
Information about these tests is described below. The submission 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:
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.
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.
Your rights and getting involved during bargaining as a covered employee
How to know if you are part of a proposed Fair Pay Agreement
If a proposed Fair Pay Agreement that covers the job you do is going to be bargained for, you should receive information in writing from your employer. This should contain information about the Fair Pay Agreement, including the name of the initiating union, and who you can contact at the union for more information.
Strikes and lockouts while bargaining for a Fair Pay Agreement is taking place
Strikes by employees and lockouts by employers related to bargaining for a proposed Fair Pay Agreement or a variation of a Fair Pay Agreement aren’t allowed during the process. But strikes and lockouts related to health or safety, or collective bargaining, can still take place.
Choosing whether to be involved in the Fair Pay Agreement process
Throughout the Fair Pay Agreement process, if you are a covered employee, you will be given information about how this process is going. To get this information, your employer needs to give your contact details to the initiating union unless you request that your details are not provided.
How the initiating union will use your contact details
The initiating union or employee bargaining side will use your contact details to get your input in the bargaining process and to send you updates. The contact details given to the union are your name, job title, employer, primary work location, and your work email address.
If you don’t have a work email address, they will provide your work phone number. If you don’t have either of these, they may give your personal email address – you can ask your employer which contact details they intend to share.
Your contact details should not be used for anything other than contacting you about the proposed Fair Pay Agreement. This contact may include information about where to find information on how to become a union member, but you don’t have to become a union member to be represented in the bargaining process.
How to stop your details being shared
Your employer should provide you with information about how your contact details can be used if they are provided to the initiating union and how you can request that your contact details are not shared.
If you don’t want your employer to give your contact details to the initiating union, and/or you don’t want to receive information about the bargaining process, you need to let your employer know in writing within 20 working days of receiving this information from them. If you don’t, your details will be passed on.
If you decide later to opt out, you still can by contacting the union. You can also opt back in by contacting the union if you have opted out.
If you opt out at this point, you will still have an opportunity to vote on the Fair Pay Agreement once bargaining is complete.
What happens if you choose not to have your contact details shared during bargaining
If you choose not to have your contact details shared with the initiating union, you will not be asked for your input on bargaining or receive updates about the progress of bargaining.
Your rights when taking part in the bargaining process
If you are a covered employee, during the Fair Pay Agreement bargaining process your employer must allow you to:
- attend two 2-hour meetings if organised by an employee bargaining party. If they occur during work you are entitled to get your normal pay for this time for up to 2 hours (if the first ratification vote fails, you will also be able to attend a further 2-hour meeting and be paid for this)
- discuss the Fair Pay Agreement with someone from one of the employee bargaining parties if they visit your place of work.
You will also:
- receive information during the bargaining process and be informed about how you can provide feedback and
- have the opportunity to vote on the proposed Fair Pay Agreement when bargaining is completed if 25% or more of your work is covered by the Fair Pay Agreement (see more about the vote below).
The ratification vote
When it’s time to vote on the terms of the proposed agreement, your employer must let you know your details will be shared again with the employee bargaining side so they can send you information about the agreement and the voting process. Even if you opted out of providing your contact details during bargaining, you can take part in the vote unless you choose to opt out of having your contact details provided to the employee bargaining side a second time.
If you don’t want your details shared, you will need to notify your employer in writing within five working days, even if you already did this at the start of bargaining. If you ask for your contact details to not be shared at this stage, it’s important to note you won’t get to vote on whether you are for or against the proposed Fair Pay Agreement.
If you want to vote, you don’t need to do anything until the vote. Your details will be shared with the employee bargaining side and at least five working days before the vote you will be given:
- a copy of the proposed Fair Pay Agreement and
- a plain language summary of the agreement.
You will also be given information about how the process to vote will work.
Even if you don’t take part in the bargaining or vote process, if a quarter or more of your work is covered by the Fair Pay Agreement and it is finalised and made into law – your employer must give you the employment terms in the Fair Pay Agreement as a minimum.
Who gets to vote?
Employees may vote if 25% (a quarter of their time at work) or more of the work they do is covered by the Fair Pay Agreement.
If the employee’s work is also within the coverage of another Fair Pay Agreement already in place, employees can only vote on the proposed Fair Pay Agreement if it will cover a greater portion of the employees’ work.
Each eligible employee gets one vote.
Employers get one vote for each employee that would be covered by the proposed Fair Pay Agreement, unless the employer has fewer than 21 employees. If they have less than 21 employees their vote is weighted. Employers with less employees are given more weight to their votes at ratification than large employers.
What it means for you after a Fair Pay Agreement is in place
A finalised Fair Pay Agreement applies to all covered employees
If 25% or more of the work you do is covered by a proposed Fair Pay Agreement, it will apply to you once it is finalised and passed into law. However, if multiple Fair Pay Agreement’s cover 25% or more of the work you do, the Fair Pay Agreement that covers the greatest portion of your work will apply.
When passed into law, any employee that a Fair Pay Agreement applies to is entitled to the minimum employment terms set in the Fair Pay Agreement. If a Fair Pay Agreement applies to an employee, it also applies to their employer. Even if your employment agreement has different terms, you are entitled to the terms of the Fair Pay Agreement as a minimum. If your employment agreement includes terms on the same matters but the term is better in the employment agreement than the minimum terms in the Fair Pay Agreement, the terms in your employment agreement will continue to apply.
This also applies to employees who are not union members, and employees who opted out of having their contact details shared during the Fair Pay Agreement process. It also applies to employees and employers who chose not to vote for or against the agreement.
An employer can’t engage you as a contractor to avoid a Fair Pay Agreement
When a Fair Pay Agreement is in force, an employer can’t engage you as a contractor rather than hire you as an employee to avoid a Fair Pay Agreement. If they did, they could have a penalty imposed on them by the Employment Relations Authority.
Terms may differ between groups of employees
The Fair Pay Agreement may include different pay rates or leave entitlements for different groups of employees, this difference can be based on:
- the different jobs employees do
- the role of the employees within an occupation (for example differing by seniority)
- the district the employees live in. For example, if employees live in a district where the cost of living is lower (a rural area where the rent is cheaper than the rent in a city).
The minimum base wage rate may also differ to account for:
- employees just starting out in employment (aged between 16-19 and have not been employed for more than 6 months by any employer) or
- employees being trained.
Minimum wage exemption permits will also still be relevant. If there is a permit in place that specifies a base wage rate, then that will apply instead of the Fair Pay Agreement. If the permit states a percentage, then that percentage will be of the base wage in the Fair Pay Agreement rather than the national minimum wage.
Disagreements with your employer about Fair Pay Agreements
If you have questions about a disagreement, you can call or email our Service Centre for help using the details below:
- Email us a query
- Phone 0800 20 90 20.
For disagreements that aren’t related to coverage you can also use the Early Resolution and Mediation services through MBIE.
Read more about these services:
Once the Fair Pay Agreement is in force, if you and your employer disagree over whether you are covered, then our Labour Inspectorate or the Employment Relations Authority can help work out whether you are covered, and if you can’t reach an agreement, then they can determine the disagreement.
Related information
Information about employees’ rights under the Fair Pay Agreements Act is also available in quick guide form and in a number of different languages:
Quick guides – Understanding Fair Pay Agreements
Further information
Up to date information about Fair Pay Agreements that have been applied for, approved or in force:
Fair Pay Agreements dashboard – MBIE (external link)
Information about the duties and rights of employers during the bargaining process:
Employer responsibilities and rights in the Fair Pay Agreement system