The New Zealand Government recently introduced the Equal Pay Amendment Bill, which aims to enable women to lodge pay equity claims more easily. If enacted, the new law would impose certain obligations on an employer that receives an equal pay claim from an employee.

The bill follows recommendations that were released by the Joint Working Group, a New Zealand Government-established group that was appointed in October 2015 to develop and recommend pay and equity principles for workforces that include women-dominated occupations. The proposed legislation incorporates the Group’s recommendations regarding pay equity principles and provides a new process for employees to file “arguable” pay claims against their employer. A claim is considered “arguable” if it relates to work that is predominantly performed by women and is arguably undervalued.

Under the proposed bill, there is no requirement for the employee to file a claim with any external agency or tribunal. Accordingly, the new obligations would be triggered any time an employer receives an internal complaint from an employee. In that event, the bill would legally require an employer to notify all other employees who work in similar roles as the claimant. This notification must be provided within 20 working days. If the claim satisfies the “arguable” threshold, employers would then have 65 days from the date of receipt to undertake pay equity bargaining or mediation. This process would require the employer to discuss the nature of work and appropriate remuneration levels. Both parties would be required to provide information to support their positions during negotiations before proceeding to court.

As incorporated in the pending bill, the Group has recommended that employers rely on the “principle of comparators” when assessing claims. Under that principle, employers look to a claimant’s counterparts as the primary benchmark for evaluating and resolving pay equity claims. In other words, employers can rely on comparisons to employees who are in a similar situation as the claimant to determine what constitutes comparable work, including factors such as whether the work performed by a male counterpart is substantially similar and whether the work is different but involves the same or similar skills and responsibilities. Additional “comparators” (factors) may be relevant, depending on the determinations of the Employment Relations Authority.¹

A claim would be considered “resolved” once the parties reach agreement as to an appropriate level of remuneration that does not discriminate between male and female employees. There might also be an auditing process included in the final proposed legislation, which would include procedures for an employer to periodically review a claimant’s employment terms and conditions, following a claim, to ensure that the agreed remuneration is maintained. However, details of any processes that might require regular audits of an employer’s pay practices are yet to be finalized.

It is not yet clear whether the bill’s provisions would apply to all employers or whether there would be any threshold factor, such as size or industry, used to determine coverage.

The bill completed its first reading in the House of Representatives on October 16, 2018. The next step is for the bill to be debated in the House of Representatives and a determination made as to whether or not the parties can agree to advance the bill to the reporting stage. If the bill progresses, it will face further examination by a committee, and the public will also be invited to submit comments on the proposed law. The committee would then decide whether changes need to be made to the bill before it is ultimately voted on.

The committee report is currently scheduled for completion by April 16, 2019. As a result, if the bill continues to progress and is adopted, we could see the new law take effect in the second half of 2019. 

We will continue to monitor this situation and will provide additional updates as further information becomes available.