The law provides a framework for collective bargaining for fair pay agreements across entire industries or occupations rather than just between unions and particular employers.

In New Zealand, until now, collective bargaining has been carried out on an enterprise basis . Only if the employer and unions cannot agree (and these are exceptionally rare cases) can the NZ Employment Relations Authority fix the terms and conditions.

Under the new law, if the employer and union bargaining sides cannot reach an agreement after two votes, the Employment Relations Authority is empowered to fix the terms of a fair pay agreement, including the remuneration that must be paid to employees.  

Moreover, those terms are valid for all employees who perform the work covered by the fair pay agreement, regardless of who the employees’ employer is or whether the employees are members of a union.

As we previously reported, this topic has been widely debated and strongly opposed by employers organisations that consider these agreements not in compliance with international labour standards. Moreover, according to Business NZ, they remove the flexibility and autonomy of modern workplaces and do not improve employees’ pay and conditions. 

After the Parliament decision, BusinessNZ said it would help its members negotiate Fair Pay Agreements, even though it rejected the government’s proposal for it to be employers’ default representative of last resort. Also, Employers’ and Manufacturers’ Association ( EMA)’s Chief Executive, Brett O’Riley, commented: “The BusinessNZ Network’s members employ 65-70 per cent of the country’s workforce, so we feel we must add our significant resources to help employers who will be affected by this legislation. We have experienced legal and consulting teams who will provide their considerable expertise in centralised bargaining to our members in dealing with FPAs”. “We have also been told the International Labour Organisation (ILO) Committee of Experts on the Application of Conventions and Recommendations will revisit this legislation at its next meeting in December 2022, now that it has been enacted and is coming into law on December 1", he added. 

This new legislation is very controversial, and the opposition has committed to repealing the law should it be elected next year.