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FPAs – Why should you care?

Last December the Fair Pay Agreements Act come into force. This Act enables unions to negotiate the employment terms and conditions for whole industries or roles across multiple industries at once.

Many businesses across New Zealand don’t realise the wide reaching implications this will have for them. Businesses that have little or no union involvement, or consider they are paying their staff well above minimum rates often think an FPA will have little effect on them. This is unlikely to be true and if you are a business owner, manager, or HR professional, it’s probably time to reconsider and prepare.

Why should you care?

FPAs are not just about wage rates – they cover multiple aspects of pay. There are minimum conditions that are required to be discussed during bargaining and conditions that must be included in an agreement. Mandatory conditions are:

  • Date it comes into force
  • Coverage of work or type of work
  • Wages and when they apply, including:
    • Minimum base rate
    • Overtime rate
    • Penal rate
  • Training and development arrangements
  • Leave entitlements
  • Variation requirements
  • Expiry date

The only parties at the negotiating table will be the unions and any employer associations that seek to be part of the negotiations. No individual employers will have a seat at the table, but the outcome of the negotiations will become the minimum requirements that apply to every employer across New Zealand who has an employee covered.

Many employers will not even know if they have employees covered because the coverage clauses are likely to be broad and the system of notification is full of holes. Nevertheless, you will be in breach of legislation if you’re found not to be complying. There is a risk that Labour Inspectors will come knocking and once you’re found in breach, the backpay and fines will likely roll in.

The FPA process is likely to be difficult because it is essentially forcing competitors to work together. All employers that fall within the relevant industry or occupations will, as a minimum, have the same terms and conditions applied to them, regardless of size, location, and demographics.

Moreover, if you are not involved in any of the FPA process, you won’t have a say in what these rates are.

It’s time to be preparing. There are decisions to be made about the level of involvement you want in the process and how your interests will be best looked after as you don’t get a direct seat at the table. Without doing this, larger businesses or competitors could be effectively making decisions that you will have to live with.

Four applications have currently been made, covering industries such as hospitality, bus/coach transport, and supermarkets. These applications can cover many different roles. One of the difficulties with FPAs is the definition of what is included within a particular industry. For example, receptionists are part of the coverage claimed under the hospitality FPA application. The definition of receptionist broadly refers to someone who meets and greets guests. Do you have a receptionist? You may just be covered! Staying aware of what roles in your organisation may be covered is important so you can consider your next move.

How can we help?

We are across all the FPA details and are assisting our clients to understand the potential impacts for them, build strategies to best protect their interests in this process, and representing their views to an appropriate Employer Association. We have a team of highly experienced and skilled negotiators who regularly bargain and engage with unions.

If you would like to know more or seek advice on your particular situation, give us a call.


This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

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