What are Fair Pay Agreements?

With a new government set to take the reins of New Zealand shortly, change is on the way. One of these changes includes the probable abolishment of fair pay agreements, which came into effect in December 2022. 

 What are fair pay agreements? 

Essentially, fair pay agreements specify industry or occupation-wide minimum employment terms. In other words, FPAs set minimum standards or requirements for everyone working in an entire sector or occupation. For example, an FPA may mean that there is a minimum amount that people in an industry must be paid. There is a negotiation process between employers and unions to work out these details. Fair pay agreements were introduced by the Labour government to create a “new, modern, sector-based bargaining system that supports a fair, safe and productive workplace.” 

There are five stages to a Fair Pay Agreement with an initiation, representation, bargaining, ratification and determination. Currently, there are seven FPA applications underway.

What changes may be on the way? 

With the National Party coming to power in the 2023 election, fair pay agreements look to be heading out the door. The party has promised to repeal the Fair Pay Agreements Act 2022, believing that the Bill “undermines…a flexible labour market and will harm the economy.” This means that the current FPA applications that are underway have the possibility of being scrapped. 

If you need assistance with navigating your workplace rights as an employee or if you are unsure about what FPAs mean for you as an employer, please don’t hesitate to contact the Watermark Employment Law team. We are happy to assist you. 

Note: The information provided is correct and accurate as of the publication date of October 17, 2023. FPAs may have been repealed since the publication of this article.