Fair Pay Agreement Bill

The Fair Pay Agreement Bill recently passed its first reading in Parliament. This Bill, if enacted into law, may result in the biggest shake up to the employment sector since the Employment Contracts Act 1991.

Currrently, when entering into new employment, you negotiate your own terms and conditions with your employer, or a union negotiates on your behalf, and based on those negotiations you will get your terms of employment. The only minimum standards are those set out in the Employment Relations Act, being, for example, minimum wage entitlements and minimum leave entitlements.

The new system proposes to introduce an industry wide bargaining system.

How would the Fair Pay Agreement process work?

This is done through an award system. Each industry will have a specific award, which sets out minimum terms and conditions of employment that apply to that specific industry. No one can be employed on terms and conditions less favourable than those set out in the award.

Before an award can be reached, the union representatives and industry representatives enter into negotations in an attempt to reach an agreement on minimum terms and conditions over the entire industry. The Bill requires that the award reached specifies a minimum entitlements in regards to:

  • Wage rates;
  • Ordinary hours; and
  • Overtime and penalty rates.

Once a Fair Pay Agreement has been bargained over, it is then reviewed by the Employment Relations Authority to ensure that it is reached in accordance with the Act. The Agreement is then voted on by all employees in the industry, and the majority rules.

A form of compulsory unionism?

Some have compared the Fair Pay Agreement Bill to compulsory unionism, however, before the Fair Pay negotiation process can begin, 10% or 1,000 employees in an industry must support initiating bargaining for the Fair Pay Agreement. Once finalised, the Agreement will be binding on all employees, regardless of whether they participated in the bargaining process or not.

As mentioned above, the Bill has just passed its first reading. This means that the Bill is not yet law. The Bill must still undergo two further readings in Parliament, and is presently open for public submissions.

Please feel free to call us on 03 211 0080 if you have any questions about the proposed Fair Pay Agreements Bill.