14 May 2021

Fair Pay Agreements bring a shift in industrial relations

From The Detail, 5:00 am on 14 May 2021
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Photo: RNZ/Rebekah Parsons-King

Workplace relations and safety minister Michael Wood has dished the detail on what the government's new Fair Pay Agreements will do, and how they might work.

His announcement of a blueprint for arguably the biggest development in industrial relations since the early 1990s was lost in the furore over the news about a wage freeze for public servants.

Grant Robertson went off the left-leaning script but as for Wood – “this is definitely a return to red meat Labour stuff,’ says Stuff chief political reporter Henry Cooke.

He says these agreements have been in the works for more than four years - Labour promised them in the leadup to the 2017 election - but progress was stymied by New Zealand First.

Today on The Detail, Emile Donovan sits down with Cooke to analyse how these agreements will work; what they'll mean for existing collective agreements; what the objections are; and the politics playing out in the background.

The Fair Pay Agreements are aimed at establishing a 'floor' in certain industries, Cooke says.

There's a particular focus on historically low-paid workers whose employers tender for business - like cleaning or security companies.

As things stand, a company could look to under-cut competitors by tendering a lower rate and paying staff less, or keeping things like breaks to a bare minimum.

Under the new legislation - which likely won't be in place until the middle of next year - Free Pay Agreement negotiations could be triggered if certain conditions are met.

Those conditions are: 1,000 workers in an industry asking for them; or 10 percent of the total number of workers in an industry.

There is also likely to be a 'public interest' condition, though this is yet to be settled on.

Once negotiations are triggered, a union representing workers in that industry will be tasked with taking on negotiations.

Various employers will be represented by a business interest group, such as Business NZ.

These parties will sit around a table and negotiate base conditions, like hours of work, wages, and breaks.

While an agreement is being worked out, workers will be forbidden from striking, and employers forbidden from walking away.

If the parties can't agree after two rounds of negotiating, the Employment Relations Authority will be given the job of sorting things out.

The difference between FPAs and collective agreements is that FPAs will apply to all workers across an industry, rather than a single employer.

They will also apply to all workers, regardless of whether or not they're actually a member of a union.

Henry Cooke says this puts workers and unions in an interesting position: even non-unionised workers will enjoy the benefits negotiated by unions on their behalf.

“Labour are really quite keen to not have this seen as kind of a simple way for union membership to get up. And also I think the unions would realise that kind of step would mean in some industries with very low union rates they would never get that 1,000 workers or 10 percent.”

But while the move doesn’t do anything to encourage people to join a union, that doesn’t mean there’s no point in joining a union.

“You can still get a collective agreement, a lot of people like the fact that their collective agreements give them say, another week of leave, or might give them healthcare coverage or a dental plan.

"What it does do is give unions a huge institutional role,” he says. They’ll not only get money for being the key negotiators but their purpose becomes embedded into legislation as a key actor for workers again.  

“You can see why unions are happy with this – they return to that role.”

Cooke says this move isn't a surprise - it's been in the works for several years.

But he says it's undoubtedly a move by the Labour Party to appeal to the party's working-class roots - which some have accused the party of abandoning in recent years.