Fair Pay agreements Act becomes legislation on 1 dec 2022

by | Nov 16, 2022 | News & Events

The Fair Pay Agreements Act is the single biggest legislation change since the early 1990’s and, as an employer, you need to be prepared as you have legal obligations in respect of the provision of information, access to staff etc.

I will be running an Open Forum Q&A session with Max Whitehead on Friday 9th December at 10am.  Click here to register.  The goal of this session is a practical “what do I need to do” to a) prepare and b) respond if/when I get approached about an FPA.

What are Fair Pay Agreements?
In brief summary, the Fair Pay Agreement Act means that industry-wide or occupation-wide terms of agreement can be negotiated and agreed between Unions and an Employer negotiating body. This will generate a 3 to 5 year agreement that is legally binding on all employers and employees who are within the defined coverage of the agreement.  For example, the coverage may be for “cleaners”.  If you employ a “cleaner” even part-time, that cleaner would fall within the coverage of that FPA.  There is no ability to opt-out from any party (employer or employee), and there are fines of up to $40K for businesses that fail to comply.

A union can make a submission for a fair pay agreement if:

  1. 1,000 employees under the defined coverage vote in favour of initiating a FPA claim.  I.e. within the construction sector 1,000 employee represents only 0.5% of all the employees so that 0.5% need to vote in favour, and the claim will be valid,


  1. The union can initiate bargaining without any employee support for groups that the union claims are low paid and have little bargaining power (Clause 29)

NB employees do not need to be members of the union, they do not even need to want the fair pay agreement, but if one exists covering their work, then they are covered, and as an employer, you need to comply.

You can see more details of the submissions that I made on this legislation in April 2022.  Though there were some minor changes made to the final Act, they are minimal, and in essence those submissions will give you a reasonable overview of what the Act is about.

What is the process?
By very brief bullet point, the key dates etc that you as an employer need to comply with are:

  1. Union applies to MIBE to initiate bargaining
  2. MIBE approves the application within 30 days
  3. Union to notify that bargaining has been initiated along with approved statement
  4. Within 30 days Employer must pass on approved statement to all employees that bargaining has been initiated, this must be done individually, not by publication on a staff intranet
  5. Within 20 days employer must provide to union with contact details of all covered staff, or statement from staff who have specifically stated that they do not wish their details to be provided
  6. Employer negotiating body must be formed and approved by MIBE within 3 months
  7. Unions have to give 14 days notice of FPA meetings.
  8. FPA meetings can be up to 2 hours in length and there can be up to 2 meetings in respect of a proposed FPA and 1 meeting in respect of a variation.  This time is paid by the employer
  9. Unions can enter the workplace without employer consent to discuss FPA, this cannot be “unreasonable duration” and the employer must not deduct for this time
  10. Employer must use best endeavours to provide covered employees with regular updates and provide opportunities to give feedback 
  11. Not later than 30 days after employing someone new starts who is covered by the FPA you must also provide their information or declaration that they don’t want to provide information
  12. Once FPA is ratified employer must abide by the terms of the FPA

If at least 25% of the work an employee performs is covered by a FPA then they are covered by the FPA.  For example, if someone does 30% cleaning, and 70% reception work, and a FPA is ratified for cleaners, then they are covered by the cleaner FPA

The agreements must cover:

  1. Standard hours of work
  2. Minimum base rate (and starting out rates and training rates if applicable)
  3. Overtime rates (with maximum daily or weekly hours)
  4. Penal rates
  5. Arrangements for training and development
  6. Leave entitlements
  7. Duration of FPA no less than 3 years and no more than 5 years

Parties must also discuss

  1. Health and safety arrangements
  2. Flexible working arrangements
  3. Redundancy arrangements

And if an employer “intentionally or fecklessly” fails to comply they can be subject to penalties up to $40K.

Are you scared yet?
I know I normally try to say that HR isn’t scary, but I have to say, the implications of this Act are scary.  But we are here to help, and hopefully can get you through navigating this new minefield without too many sleepless nights.

Contact Us

957 Paihia Road, Opua
Northland, 0282

0800 HRtoolkit