The Employment (Pay Equity and Equal Pay) Bill fails to deliver

The Government’s introduction of the Employment (Pay Equity and Equal Pay) Bill, following a multi-billion dollar settlement with aged care and disability support workers, has rightly attracted significant criticism. In this article, we explain why.

Background

The recent Care and Support Workers Equal Pay Settlement Agreement (following the “Terranova” litigation), and related legislation, resolved litigation pursued by support workers within the aged care, disability and home and community support sector. Led by the unions on behalf of claimant Kristine Bartlett, it was argued that her low hourly pay rate was a result of gender discrimination and inequity.

The Terranova litigation endorsed the view that the Equal Pay Act 1972 incorporates a pay equity regime, rather than dealing only with “equal pay”. Equal pay refers to women and men receiving the same remuneration for the same job. On the other hand, pay equity, refers to women and men receiving the same remuneration for doing different jobs, that are of equal value. The litigation indicated support for a broader interpretation of the Equal Pay Act, than had been previously applied.

In response to resolving the Terranova litigation and the resulting settlement legislation, the Government has introduced the Employment (Pay Equity and Equal Pay) Bill (“the Bill”). The Bill sets out a new process for employees to make claims in respect of pay equity and equal pay.

About the Bill

The purpose of the Bill “is to eliminate and prevent discrimination, on the basis of gender, in the remuneration and other terms and conditions of employment. In doing so, promote enduring settlement of claims relating to gender discrimination on pay equity grounds.” The Bill promotes the continuing settlement of pay equity claims and re-enacts the provisions of the Act relating to claims for equal pay and unlawful discrimination.

The Bill:

• prohibits employers from discriminating, on the basis of gender, in remuneration and other terms of employment;
• enables employees to make three types of claims (pay equity, equal pay and unlawful discrimination) based on gender discrimination; and
• sets out processes for resolving each type of claim.

However, there are fundamental flaws in the Bill, which will influence whether or not such intentions will be achieved.Fundamental flaws in the Employment (Pay Equity and Equal Pay) Bill

For any person or organisation advocating equal opportunity, including equal pay and pay equity, the Bill will likely, not be good enough. New Zealand has waited for decades for effective legislation that will deliver pay equity in the public and private sectors. Therefore, it is essential that any new legislation is effective. Its implementation may have significant economic consequences. The Bill drew significant criticism during the consultation phase, yet those concerns remain unresolved.

Equal pay and pay equity are fundamental human rights expressed in international treaties. However, this is not addressed by the Bill, nor explanatory information to the introduction of the Bill.

There are drafting inconsistencies within the Bill, likely to create ambiguity. For example, there is inconsistency in the wording for discrimination. Simply, the language should reflect consistency with current legislation; the Human Rights Act and the Employment Relations Act.

Significant issues arise from the relatively arduous and unachievable process proposed to find a comparator of low pay due to gender discrimination, and from the hierarchy of comparators listed. A key aspect of the interpretation of the Equal Pay Act in the Terranova litigation was that parties could look beyond the immediate employer or industry if an appropriate comparator was not found. Difficulties in identifying an appropriate counterfactual from within the same industry was acknowledged as being potentially counterproductive, because of distortions in the pay rate of male employees by systemic undervaluation.

There is broad scope for a claim with regard to what will constitute “merit”. This appears to place a significant burden on claimants. There is a lack of detail regarding what evidence an employee is obligated to provide to reasonably support the assertion of merit. There is also a lack of clarity regarding an employer’s ability to decline a claim as not having merit.

The Bill introduces a duty to provide information on request that is reasonably necessary to support or substantiate claims or responses to claims made for the purpose of bargaining. However, the Bill lacks a mechanism for determining what is “reasonably necessary” and/or how a dispute about a refusal to provide information will be addressed.

Penalties are not consistent with those in the Employment Relations Act and Holidays Act.

There is a lack of clarity generally with regard to time barred claims. There are fiscal limitations and implications for New Zealand if legislation enables large back pay claims which involve parties engaging in complex and costly resolution processes.

Conclusion

The Bill is a disappointing reaction to the settlement of the Terranova claim. The focus should have been on developing the principles of the Joint Working Group on Pay Equity and how these would be implemented, rather than introducing a Bill that will have the effect of acting as a barrier to future claims.

(This article was written by DTI Lawyers Director Andrea Twaddle, who is a specialist in pay equity and equal pay issues)

Please note the Employment (Pay Equity and Equal Pay) Bill was withdrawn in November 2017.