Submissions on the Fair Pay Agreements Bill

Last month, we sent out a newsletter on the Fair Pay Agreements Bill. 
 
We noted the Bill had passed its first reading on 5 April 2022 and that submissions to the Select Committee were being accepted for consideration, with a final due date of 19 May 2022.
 
We have received instructions to assist clients with making their submissions on the draft Bill since and have identified concerns that all employers should be aware of, as they are likely to be impacted if the Bill proceeds in its current form. 
 
First, although the aim of the Bill is to address occupations that have been historically disadvantaged, such as cleaners and bus drivers, it is highly likely that entire industries and occupational categories will be drawn into the fair pay bargaining process. 
 
The test for initiation of a bargaining process is extremely broad.  A union must only satisfy the test that either 10 percent or 1,000 of the employees within the proposed industry or occupation supports the initiation or, even more broadly, that it is within the public interest to commence a bargaining process. 
 
Once these tests have been met, all employers of the occupation/s that have been approved or all employers who operate within the industry that has been approved must participate in the bargaining process.  This means, for example, that all organisations who employ retail assistants in the clothing industry or all organisations who employ salespeople in the electronic industry would be required to participate.
 
These tests are problematic because they will apply to a vast range of employees and employers. Once they have been met, however, employers will be required not only to participate in the bargaining process but also to balance their competing interests.  As the Bill is currently drafted, employer bargaining parties will be required to endeavour to represent the collective interests of all covered employers.  The draft provisions in the Bill on how this may be achieved are vague but without a sound framework, it is likely that employers will face a significant amount of time and cost to meet their legal obligations.  If they do not they will face possible penalties of up to $20,000 for an individual and up to $40,000 for any other person (including, companies, charitable trusts, and incorporated societies etc).  
 
There is a high possibility that employer bargaining parties will not be able to represent the collective interests of covered employers, despite using their best endeavours. For example, if employee bargaining sides negotiate higher base wages for certain occupations, it may no longer be viable for employers to pay their top performing workers more than their worst performing workers.  This will discourage employers who use incentive-based remuneration structures from agreeing to higher base wage terms. If they cannot agree with the employers who don’t use such structures, what will happen then?
 
We are encouraging all employers to make submissions on how the draft Bill would impact their business and their employees. If you would like our assistance in doing so, please feel free to contact us on 0800 339 002.  We will be able to assist in making your submissions up to and including 19 May 2022 when they are due.