Fair Pay Agreements - Process Overview31 May 2022
Obviously it’s early days yet as the Bill has only had its first reading and further changes are likely through the Select Committee process. Even when Royal Assent is granted, the timelines for the process mean it will be some time before the first FPA hits the street, so to speak. Recently the Minister of Workplace Relations said he doesn’t expect the legislation to be passed much before the end of the year; and he doesn’t expect the first FPA to take effect before the end of 2023, or perhaps early in 2024.
There is talk of there only being four FPAs per year, but in reality there is no limit and there could be any number of applications. The Minister says the CTU is working on a priority order but, as you will see below, the Government will be able to control proceedings because MBIE will have the power to decide whether to approve any initiation of bargaining for an FPA.
The Bill, as currently drafted, is very complex with strict timeframes and documentation requirements. The process overview is as follows:
1. A union wanting to initiate bargaining for an FPA must make application to MBIE, in the approved format. This includes specifying the proposed coverage clause.
2. MBIE then assesses the application to check the clarity of the proposed coverage clause, any overlap with any other FPA or proposed FPA, and whether the Union meets the representation test (1,000 covered employees supporting the bargaining, or 10% of all covered employees supporting the bargaining).
3. Then MBIE publicly notifies its decision.
4. An employee bargaining side is formed within 3 months after gaining MBIE approval.
5. Following approval to initiate, within 15 working days the initiating union must identify which unions and employers are likely to be covered by the proposed FPA, and notify them of the initiation of bargaining. The Union must provide a form to every employer concerned, which they in turn must issue to every covered employee.
6. Following receipt of the above advice from the initiating Union:
- Within 15 working days the employer must notify each Union that has a member employed by the employer who would be covered by the FPA, of the initiation of bargaining.
- Within 30 working days the employer must provide each of its covered employees (ie not just Union members) with a copy of the above form.
- Within 15 working days, a Union that has members within coverage of the proposed FPA must send a notice to each employer that is a party to a current collective agreement with the union, if the collective agreement covers employees who are within coverage of the proposed FPA.
7. There are rules around providing certain employee information to the employee bargaining side.
8. Eligible employer associations (which must be an Incorporated Society and have at least one member that is a covered employer etc) may apply to MBIE for approval to join the employer bargaining side.
9. An employer bargaining side is formed within 3 months after MBIE approves the application from the initiating union. There are some specified employer parties such as the Public Service Commission if the FPA will cover public sector employees. An employer bargaining party must provide regular updates to all covered employers and provide opportunities for feedback.
10. Within 20 days after the 3 months period described above, each bargaining side must enter into an inter-party side agreement as to how the parties on each side will engage with each other; and appoint a lead advocate to represent the side in bargaining, chair the bargaining side when bargaining, and be the primary spokesperson for the bargaining side.
11. There are the usual provisions for union meetings and union access.
12. The general bargaining rules are similar to those under the Employment Relations Act.
13. There are a lot of rules about what happens should coverage overlap; and consolidation of bargaining where two or more applications cover the same work.
14. There is compulsory content that must be agreed (such as overtime and penal rates); and other content that must be discussed (such as training and health & safety).
15. Once a proposed settlement is reached, it must be assessed by the ERA for compliance, with rules about any overlap and the process for resolution of same.
16. Then it’s time for ratification. There are specified time frames and rules about information which must be provided to the bargaining parties and the covered employees. The parties must submit evidence of the process and verification to MBIE. MBIE also has the right to make certain editorial changes.
17. Finally, notice is issued by MBIE.
Similar rules apply in respect of variations and renewals of an FPA.
For further information call Tony Teesdale 021 920 323, Justine O'Connell 021 920 410 or Michelle Battersby 021 993 735