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employment

Equal Pay Act: Understanding pay equity

Key Takeaway

New Zealand's Equal Pay Act 1972, significantly updated by the 2020 Amendment, mandates that men and women receive equal pay for performing work of equal value, regardless of the job's nature. It establishes a process for raising and resolving pay equity claims, ensuring wages are not influenced by gender-based undervaluation of work.

Understanding Pay Equity in New Zealand

Pay equity is a fundamental principle in New Zealand employment law, ensuring that employees receive fair remuneration for their work, free from discrimination based on sex. While often confused with 'equal pay for equal work', pay equity extends this concept to ensure that work predominantly performed by women is not undervalued simply because it is considered 'women's work'. The primary legislation governing this area is the Equal Pay Act 1972, significantly amended in 2020 to clarify and strengthen the framework for pay equity claims.

What is Pay Equity?

Pay equity means that employees should receive the same pay for work of equal value, regardless of their sex. This differs from 'equal pay for equal work', which typically refers to men and women performing the same or substantially similar job roles. Pay equity addresses situations where different jobs, often in different industries or sectors, are found to have the same value based on skill, effort, responsibility, and working conditions, but are paid differently due to historical or systemic gender-based undervaluation [Source: Equal Pay Act 1972, s 13D].

The Equal Pay Act 1972

The Equal Pay Act 1972 was enacted to promote the principle of equal pay for women and men. Its initial purpose was to require employers to pay the same rate to female employees as to male employees where they performed the same or substantially similar work [Source: Equal Pay Act 1972, s 3].

Key provisions of the Act include:

  • General Duty: Every employer is required to provide equal pay for women and men in their employment [Source: Equal Pay Act 1972, s 3(1)].
  • Criteria for Equal Pay: When determining whether work is of equal value, factors such as skill, effort, responsibility, and working conditions are considered [Source: Equal Pay Act 1972, s 13D].
  • Prohibition of Discrimination: The Act prohibits an employer from discriminating on the basis of sex in respect of the rate of pay or any form of remuneration [Source: Equal Pay Act 1972, s 3].

The Equal Pay Amendment Act 2020

The Equal Pay Amendment Act 2020 was a significant update, clarifying the definition of 'work of equal value' and establishing a clear process for raising and resolving pay equity claims. This amendment addressed limitations in the original Act, particularly concerning occupations predominantly performed by women that were historically undervalued.

Key changes introduced by the 2020 Amendment include:

  • Claim Process: The Act now outlines a structured process for raising a pay equity claim, typically initiated by an employee or their union representative [Source: Equal Pay Act 1972, Part 2, s 13A(1)].
  • Good Faith Obligations: Both employers and employee representatives (such as unions) are required to act in good faith throughout the pay equity claim process. This includes cooperating, being responsive, and providing necessary information [Source: Equal Pay Act 1972, s 13B].
  • Assessing Work Value: The Act specifies that the work of claimants is to be assessed for its value by considering the skills, effort, and responsibility required to perform the work, and the conditions under which the work is performed [Source: Equal Pay Act 1972, s 13D(1)].
  • Comparison for Pay Equity: To determine if pay equity exists, the claim's work is compared to work performed by men in jobs that require similar skills, effort, responsibility, and working conditions, but are not predominantly performed by women [Source: Equal Pay Act 1972, s 13E]. The comparison aims to identify if historical or systemic gender-based undervaluation has occurred.

Employer Obligations

Employers have obligations under the Equal Pay Act 1972, including:

  • To pay men and women equally for work of equal value [Source: Equal Pay Act 1972, s 3(1)].
  • To act in good faith when responding to a pay equity claim from an employee or union representative [Source: Equal Pay Act 1972, s 13B].
  • To provide information relevant to a pay equity claim when requested in good faith [Source: Equal Pay Act 1972, s 13B(2)].
  • To take reasonable steps to ensure that their remuneration practices are free from sex-based discrimination [Source: Equal Pay Act 1972, s 3].

Employee Rights

Employees in New Zealand have rights under the Equal Pay Act 1972, including:

  • The right to receive equal pay for work of equal value, free from sex-based discrimination [Source: Equal Pay Act 1972, s 3(1)].
  • The right to raise a pay equity claim, either individually or through a union or representative [Source: Equal Pay Act 1972, s 13A(1)].
  • The right to have a pay equity claim assessed through a good faith process [Source: Equal Pay Act 1972, s 13B].
  • The right to seek resolution for unresolved pay equity claims through the Employment Relations Authority or the Employment Court [Source: Equal Pay Act 1972, s 14, s 15].

Enforcement and Remedies

Disputes regarding pay equity claims that cannot be resolved through negotiation may be referred to the Employment Relations Authority (ERA), which is an independent body that investigates and resolves employment relationship problems [Source: Employment Relations Act 2000, s 161]. Decisions of the ERA can be appealed to the Employment Court.

Possible remedies for a successful pay equity claim may include:

  • A declaration that the work is undervalued due to sex [Source: Equal Pay Act 1972, s 14(1)(c)].
  • An order requiring the employer to pay arrears of wages [Source: Equal Pay Act 1972, s 15(1)(a)].
  • An order requiring the employer to implement an equal pay rate [Source: Equal Pay Act 1972, s 15(1)(b)].

Relationship with Employment Relations Act 2000

The Employment Relations Act 2000 provides the overarching framework for employment relations in New Zealand. It governs how employment relationship problems, including those related to pay equity, are managed and resolved. The good faith obligations outlined in the Employment Relations Act 2000 apply to all aspects of the employment relationship, including pay equity negotiations and claims [Source: Employment Relations Act 2000, s 4].

When to Seek Independent Legal Advice

Understanding and pursuing a pay equity claim can be complex. Employees or employers who require specific guidance on their rights, obligations, or the process for making or responding to a pay equity claim should seek independent legal advice. Information and assistance can also be obtained from their union, from Employment New Zealand, or through a Community Law Centres.

Key Resources