NZ Equal Pay Amendment

Overview and Background

The Equal Pay Amendment Act 2020 (the Act) was unanimously passed by the New Zealand Parliament in July 2020 and came into force in November 2020. Its primary purpose was to strengthen and clarify the existing Equal Pay Act 1972 by introducing a practical and accessible process for raising and resolving pay equity claims. The legislation sought to address long-standing issues of systemic sex-based pay undervaluation in occupations predominantly performed by women, where wages had historically been lower than those in male-dominated occupations for work of comparable value.

Prior to this amendment, while the Equal Pay Act 1972 prohibited discrimination on the basis of sex for the same or substantially similar work, the 2020 Act broadened this to explicitly include 'pay equity'. Pay equity is defined as men and women receiving the same pay for doing jobs that are different but of equal value, meaning they require similar degrees of skill, responsibility, and effort. The Act was developed based on recommendations from a Joint Working Group on Pay Equity Principles, involving business, union, and government representatives, aiming for a collaborative, evidence-based approach to dispute resolution outside the courts.

Key Provisions and Requirements

• Differentiation Prohibition: The Act reinforced that an employer must ensure there is no differentiation based on sex in remuneration for employees performing the same or substantially similar work, nor for work exclusively or predominantly performed by female employees compared to male employees with similar skills, responsibility, experience, conditions, and effort.
• Pay Equity Claims Process: It introduced a new, non-judicial process for employees or unions to raise pay equity claims, aligning with the bargaining framework of the Employment Relations Act 2000. This process prioritised negotiation and collaboration, with court action intended as a last resort.
• 'Arguable' Claim Threshold: The Act established a low threshold for a claim to be considered 'arguable', meaning the employer had to take a light-touch approach when deciding if a claim related to female-dominated work that was, or had been, undervalued.
• Good Faith Bargaining: Parties were required to engage in good faith throughout the pay equity claim process.
• Act Binds the Crown: The Equal Pay Amendment Act 2020 explicitly stated that it binds the Crown, meaning public sector employers were also subject to its provisions.

Scope (Who Must Comply, Thresholds)

The Act applied to all employers across New Zealand, both in the private and public sectors. A key aspect of its scope related to claims for "female-dominated work," which was defined under the 2020 Act as work performed by a workforce that was approximately 60 percent or more female.

Employer Obligations

Under the Equal Pay Amendment Act 2020, employers had several obligations:

• No Sex-Based Differentiation: To ensure that remuneration rates did not differentiate on the basis of sex for similar work or for work of equal value in female-dominated occupations.
• Acknowledge and Respond to Claims: Upon receiving a pay equity claim, an employer was required to acknowledge its receipt and decide within 45 working days whether they considered the claim to be 'arguable'.
• Good Faith Negotiation: To engage in good faith negotiation with employees or unions on arguable pay equity claims, aiming for a settlement that rectified any identified undervaluation.
• Notify Other Employees: Employers had to notify all other employees performing the same or substantially similar work as the claimant within 20 working days of a pay equity claim submission.
• Information Sharing: Provide supporting information if they deemed a claim inarguable.
• Deliver Settlement Copy: For union-raised claims involving multiple employers, each employer party to a settlement had to ensure a copy was delivered to the chief executive of the department responsible for administering the Act.

Employee Rights

Employees gained enhanced rights through the Act to pursue pay equity:

• Raise Pay Equity Claims: Individual employees or unions could submit written pay equity claims to their employer if they believed their work was female-dominated and undervalued due to sex.
• Union Representation: Unions were explicitly entitled to raise claims on behalf of their members and represent them throughout the process.
• Dispute Resolution: If parties could not agree, employees had the right to refer the claim to mediation, facilitation, or, as a last resort, determination by the Employment Relations Authority.
• Right to Information: Employees could request further information regarding an employer's decision on the arguability of a claim.
• Protection from Detriment: The Act ensured that employees would not have their terms and conditions of employment reduced for the purpose of settling a pay equity claim.

Penalties for Non-Compliance

The Equal Pay Amendment Act 2020 amended section 18 of the principal Act, outlining penalties for non-compliance with certain provisions. A person who failed to comply with listed provisions, and any person involved in the failure, was liable for a penalty. Actions to recover penalties could be brought by a Labour Inspector or the affected employee in the Employment Relations Authority. The Authority would consider prior non-compliance with improvement notices when determining penalties. Such actions had to be commenced within 12 months after the cause of action became known or should reasonably have become known.

Implementation Timeline

The Equal Pay Amendment Act 2020 received Royal Assent on 6 August 2020 and came into force three months later, in November 2020.

Compliance Recommendations

For employers, compliance with the 2020 Act centred on proactive engagement and good faith. Key recommendations included:

• Understanding Pay Equity: Grasping the distinction between equal pay (same work) and pay equity (different work of equal value).
• Internal Review: Conducting internal assessments to identify potential sex-based pay undervaluation in female-dominated roles.
• Good Faith Bargaining: Committing to a collaborative and evidence-based approach when claims are raised.
• Documentation: Maintaining thorough records related to remuneration practices and pay equity claims.
• Seek Advice: Obtaining legal or expert advice when navigating complex claims.

Note on Subsequent Amendments: It is crucial to be aware that the framework established by the Equal Pay Amendment Act 2020 has been significantly altered by subsequent legislation, specifically the Equal Pay Amendment Act 2025. This later Act changed several key aspects, including increasing the threshold for what qualifies as "female-dominated work," discontinuing existing pay equity claims, and making review clauses in existing settlements unenforceable.