Employers should embrace this pay-equity deal for women

By Phil O'Reilly, January 2017

The concept of pay equity - equal pay for work of equal value between men and women - is a controversial one. Some say many roles traditionally undertaken by women are (and historically have been) under-paid compared to similar occupations undertaken by men.

Others say properly functioning labour markets should be left to resolve these issues and argue that there are already many women employed in the highest paid sectors.

The reality in modern, relatively flexible places like New Zealand probably lies somewhere in the middle. However, if we accept both of the above then the really difficult public policy question becomes, what should we do about it?

Interestingly, some of the countries to whom we usually look for solutions have tried to resolve this and have, arguably, made a bit of a mess of it. In the UK, Europe and Canada some pay equity claims have been the subject of massive back pay claims, crippling legislation, regulation and court action.

In New Zealand too, the courts have recently taken action. They decided that our equal pay legislation, first passed 44 years ago, could be re-interpreted to also include pay equity.

This came as a surprise to many as the Equal Pay Act of 1972 actually bears little relation to today's labour relations framework - it was enacted at a time when New Zealand had national awards which covered most of the work force with highly regulated and inflexible terms and conditions.

Court-ordered pay equity outcomes, based upon an act that was completely out of date, would, therefore, leave the system wide open to a series of litigious, negative and counterproductive court battles.

It was both logical and timely that the Government last year set up a tripartite working group comprising employers, unions and the Government, charged with finding a modern day solution.

Over several months the working party worked co-operatively and constructively to ensure that pay equity issues could be made workable for New Zealand.

Consensus recommendations were agreed by the working party and these were accepted by the Government. However, we still have a long way to go before legislation is introduced and we still need to iron out some of the details the working party could not cover.

But, with continued good will and constructive engagement these are sure to be resolved over the next few months.

This gives employers time to consider embracing the idea of pay equity. And why? Because amongst the many reasons for accepting pay equity legislation is the fact that "it is the right thing to do".

Quite simply, we should not have a situation whereby some occupations undertaken by women are paid less than very similar occupations undertaken by men.

There are also sound socio-economic reasons for resolving this issue. Many of the affected occupations are the very ones that lead individuals to circle around the bottom of the labour market, often under employed, under qualified and not able to get ahead. If we fix this, we also help create cohesiveness within our society.

Add to this the fact that the working party's recommendations should make it much easier for employers and their staff to resolve pay equity issues while retaining a productive and competitive workplace.

This is because under the principles adopted future pay equity matters will be dealt with through workplace negotiation - exactly as pay and other labour matters are dealt with.

This means individuals or groups of workers can make pay equity claims at the enterprise level, with a view to them being resolved directly with their employer through good faith bargaining.

It also means employers will be able to engage in working out, for example, the time period over which pay equity settlements might come into effect. This gives employers the opportunity to make changes within their organisation so they don't find themselves in a similar situation later.

What's more, the principles do not include any consideration of back pay. The working party's recommendations favour resolution over penalties.

Once a pay equity claim has been settled to the satisfaction of the affected parties, it will be extremely difficult for a court or any other party to reopen that claim in the near future. This is important, since employers will be able to settle matters and move on without the worry that they will be the subject of continuous litigation or dispute.

This new system will not be without difficulties, and employers will encounter challenges. But nothing on the scale of the alternative - court action, disputation, the potential of massive arrears of wages claims and other really destructive experiences.

However, that the courts have decided that New Zealand needs pay equity legislation and that the Government has (wisely) left much of the detail of the new process up to workplace specialists should be seen as hugely encouraging.

So too should the fact that the working party recommendations were made collaboratively, constructively and with regard for both employers and workers.

If employers, unions and Government all embrace and support the changes and continue to work closely together, pay equity resolution in New Zealand will without doubt be the better for it.