Fair Pay Agreements FPAs
FAIR PAY AGREEMENTS –
The Fair Pay Agreements (FPA) system in New Zealand brings together unions and employer associations within a sector to bargain for minimum employment terms for all covered employees – either in an industry, or an occupation. Since 1 December 2022, eligible Unions have been able to apply to initiate bargaining for a Fair Pay Agreement.
E’tu applied to MBIE for a Fair Pay Agreement for the commercial cleaning industry on 12th of April 2023 and this application was approved by MBIE on the 20th of June 2023.
What are FPAs?
The Fair Pay Agreements (FPA) Act was passed into law on 26 October and the Fair Pay Agreement system came into effect as of 1 December 2022. FPA’s are legally-binding agreements that set out minimum pay and conditions between employers and employees across an entire sector. Mandatory inclusions in an FPA, include:
- Effective date
- Standard hours of work
- Minimum base wage rates
- Overtime and penal rates
- Wage adjustment mechanism(s)
- Training & Development arrangements
- Leave entitlements
- Governance arrangements
FPAs may include (but must discuss)
- Objectives of the FPA
- Health and Safety
- Flexible working arrangements
How does Fair Pay bargaining get initiated?
If 1,000 workers in an industry or an occupation, or 10% of their workforce (whichever is smaller) demand a Fair Payment Agreement, then an eligible Union can apply to MBIE to initiate bargaining for a proposed Fair Pay Agreement. All Unions that applied for an FPA have used the 1,000 workers as their eligibility criteria.
At the stage of an application being made:
- The application is reviewed and assessed against the legal requirements by MBIE. They will also go through a verification process to check that the threshold used to initiate the application (either 1,000 workers, or 10% of the workforce) has been met.
- If approved, MBIE will publicly notify that it has approved the application and will publish details. negotiations begin between employers / employer representatives and unions.
- Once a union has been given approval to start bargaining, within 15 working days of receiving the approval, the initiating union must use its best efforts to identify and notify in writing:
- all unions that have members that it considers are likely to be covered employees and
- all employers that it considers are likely to have covered employees in the occupation or industry that the proposed Fair Pay Agreement relates to (and provide an email address to which they must send their covered employees contact details). For our industry FPA this was the 10th of July 2023.
The FPA bargaining process
Fair Pay Agreement bargaining is made up of employee and employer representatives.
- The employee bargaining side is made up of one or more eligible unions who are approved to be an employee bargaining party.
- The employer bargaining side is made up of one or more eligible employer associations, like the Restaurant Association, that are approved to be an employer bargaining party.
Please note, both the employer and employee bargaining sides must bargain for both employees and employers that are, and are not, members of their organisations.
BSCNZ has applied to become the employer bargaining side, and this was approved on the 28th August 2023
Action required now by employers of commercial cleaners –
There are some important responsibilities as a commercial cleaning business owner/operator with regards to FPA legislation. We have outlined these actions for you below. The deadline to complete these tasks is by the 20th September 2023.
Employees are covered by an FPA if at least 25% of their type of work is within coverage stipulated within the FPA
- Distribute Union Information to your employees Please note: This applies to Union and non-union employees.
- Share FPA information sheet and contact details document to your employees: [Fair Pay Agreements and Employee Contact Details Document].
- If employees do not want their details shared with the Union, they must opt-out by completing a portion of the form and returning it to you. This will not exclude them from the FPA. Any employees who do not opt-out should have their details sent to the Union. The ‘opt out’ responses by employees must be captured and details kept on file. Opt out form
- Send employee details to the Union: All employees who haven’t opted out should have their details sent to the Union using this excel spreadsheet. You must send this by the 20th September, 2023 as required by the Act.
Please note: Employees entitled to two paid 2-hour meetings for FPA purposes (additional to those in the ER Act), plus one additional meeting after a failed ratification vote. Further entitlements to paid meetings relating to a proposed variation, renewal or replacement of an FPA may follow.
Unions can access workplaces with covered employees – no permission required; however, Health and Safety rules must be observed.
No strike action is permitted during bargaining for an FPA, except for Health and Safety reasons.
You can view current FPA applications and their stage of progress here. https://www.mbie.govt.nz/business-and-employment/employment-and-skills/fair-pay-agreements/fpa-dashboard/
ABOVE: Infographic of the Fair Pay Agreement system [sourced from MBIE]
Through the bargaining process, unions and employers attempt to reach an agreement on the minimum terms and conditions to be included in an FPA. That will then go to a vote – and needs more than half of workers and more than half of employers’ votes to be in favour. If bargaining reaches an impasse, or a deal is twice rejected by either workers or employers, then the Employment Relations Authority will step in and set the minimum terms and conditions itself.
MBIE will still need to approve each agreement and bring it into force through regulations.
The First Set of Regulations have been passed and a second set of regulations will be passed in 2023.
- Details for the public interest test criteria
- Evidence required by MBIE to satisfy the representation test
- Requirement for how parties need to define coverage
- Who the voluntary default bargaining parties are under the FPA system
Once a Fair Pay Agreement is in place
Once a Fair Pay Agreement is passed into law, the employment terms of the Fair Pay Agreement apply to any employee where 25% or more of their work is covered by the agreement. In addition, if an employee is covered by more than one Fair Pay Agreement, the agreement that covers the greater percentage of their work applies. This is so that only one Fair Pay Agreement will apply to a particular employee.
Fair Pay Agreements set minimum employment terms for covered employees. If an employment term in an Individual Employment Agreement or Collective Employment Agreement is better than the term in a Fair Pay Agreement, then that term will apply. If the Fair Pay Agreement term is better, the Fair Pay Agreement term will apply.
BSCNZ’s position on FPA’s
We have never supported the Fair Pay Agreement legislation. BSCNZ has the longest standing multiple employer collective agreement in New Zealand (MECA). Being a member of the BSCNZ stipulates you must adhere to the terms and conditions set in our MECA.
Our MECA is evidence that the Association supports fair working conditions and as the representing body of commercial cleaning operators in New Zealand we provide support for our members in achieving this.
We have always supported fair pay and appropriate working conditions and long done so without the compulsive force of the law.
Part 6A of the Employment Relations Act works as an effective implemented means of covering our industry employees with the provisions of our industry employment agreements when transferring between employers through customer contract changes. This combination of widespread industry collective bargaining and the continuation of terms and conditions through employer change in instances of contract churn already provides broad employee protections.
We currently operate in an environment with extremely robust minimum standards in place, that provides wide-ranging protection for employees. Low unemployment and minimum wage levels that are already one of the highest in the OECD provide incentive for employers to put their best foot forward with regards to pay and conditions.
Having said that, the Association aims to ensure that we will be at the bargaining table of any negotiations around Fair Pay Agreements for commercial cleaning and will be providing input from consultation with member.
How can you have your say on Fair Pay Agreements?
The BSCNZ is committed to representing commercial cleaning employer’s voices in the bargaining process. Here are some of the ways you can ensure you have your say:
- ·Sign up to receive updates by contacting us on 0800 253 264, or email firstname.lastname@example.org