Equal Pay Amendment Bill ex Select Committee16 May 2019
The key changes are as follows:
“Pay equity claim settlement” means settlement of a claim that is recorded in a written statement between the parties, or in a determination of the Authority or Court.
“Work predominantly performed by female employees” means “work that is currently, or was historically, performed by a workforce of which approximately 60% or more members are female”.
“Terms and conditions of employment” is now clarified to include remuneration.
The original definition of the male comparator was male employees who have the “same or substantially similar skills, responsibility and service”. The reference to “service” is to be replaced by a reference to “experience” because service tends to refer to duration of time served whereas experience encompasses not just duration but also the quality of prior work experience.
Legal avenues to raise a claim
There are three avenues being a pay equity claim under the Equal Pay Act, a complaint under the Human Rights Act, or raising a personal grievance under the Employment Relations Act. However, the select Committee recommends that once an employee has formally lodged a personal grievance with the Employment Relations Authority the employee will no longer have access to the other options.
Restrictions on who may raise a claim
An employer choosing to extend the terms of a settlement to other employees who perform similar work must offer all the terms of that settlement, including back pay if applicable, in order to bar future pay equity claims by those employees.
Where an employer offers the benefit of a settlement to employees, regardless of whether or not they accept it, the employees lose the ability to raise a claim under the Equal Pay Act. However, they would still be able to seek resolution under the Human Rights Act or the Employment Relations Act.
The requirement to provide “evidence” to support a claim is arguable is considered too stringent and has been changed to a requirement to provide “information”.
The claimant is to be given the explicit choice up front in the application as to whether their details may be shared or must remain confidential.
The time frame for an employer to decide whether it considers a claim is arguable remains in essence the same, but is changed from 65 calendar days to 45 working days. Also, an employer may now extend the time to decide the matter, but only if there are genuine reasons based on reasonable grounds. This is considered a high threshold only to be used in limited circumstances.
In terms of resolving a pay equity issue, while historical undervaluation is a factor in determining whether a claim is arguable, when it comes to pay equity bargaining itself, it’s a matter of deciding if the work in question is currently undervalued.
Voluntary settlements already include the requirement for a review process. The same will now apply to determinations of the Authority.
Summary of method used
For future reference, a settlement must contain a record of the method used and any comparators used.
A copy of every settlement is to be lodged with the chief executive of MBIE.
Relationship to collective bargaining
While an unsettled pay equity claim is not a valid reason for not settling a collective agreement, the same now applies in respect of an uncompleted pay equity review.
Powers of the Authority
Given that determining whether a claim is arguable is intended to have a low threshold, facilitation by the ERA will only be possible if all parties agree to it. In other words an employer will not be able to use facilitation as a means to delay the process. Mediation would still be available, again by mutual agreement.
In situations where the Authority is considering an application for determination, it can now decide not to direct the parties to facilitation.
Limitation on back pay
No changes were made. However, the Bill now includes examples for clarity. In essence, claims commenced before the Bill is enacted may be backdated to the date the claim was made (to a maximum of 6 years). Claims raised within 5 years after the date the Bill is enacted may be backdated to the date the claim was raised, whereas claims made more than 5 years after the date the Bill is enacted will only be back dated to the date that is 5 years after the date on which the Bill is enacted.
Existing pay equity claims
Originally, the transitional provisions required existing claims that were unsettled to start the process again. Now existing claimants can:
- Raise a new claim under the Act, or
- Transition their existing claim to the new regime and continue bargaining, by entering into a written pay equity bargaining agreement before the enactment of the Bill. That agreement must also contain a statement that the parties consider the claim is arguable.
The changes are few in number and of limited effect. The main benefit is some progress being made to limit what many people consider could be a long drawn out process. This has been achieved by:
- Establishing a process for incorporating existing claims into the new regime, rather than having to start again, but only if that is achieved before the Bill is enacted.
- Removing the obligation for the Authority to direct the parties to facilitation before determining whether a claim is arguable.
- In similar fashion, establishing an option for the Authority to determine a claim without first directing the parties to facilitation.
The process remains slower than many people would like but, when all is said and done, these settlements will be momentous, so taking the necessary time to get the correct result is justified. It may also allow time for employers to figure out how to pay the significant cost of back pay on such settlements.
As you already know this is a hot topic. The pressure will continue to ramp up. In the US employers with 100 or more employees (and federal contractors with 50 or more employees) must file data annually concerning their gender pay gap and related matters; and similarly in the UK, employers with over 250 employees must file annual reports.