Hot on the heels of the government’s first tranche of employment law changes was its plan to reconvene the Joint Working Group on Pay Equity Principles (“JWG”). The JWG has now reported back to ministers. They have made recommendations they say will clarify and simplify the process for initiating a pay equity claim. They have also recommended making no changes to the principles on determining how to “compare” individuals for the purpose of a claim, and suggesting amendments to the law to implement the principles.
The background to the JWG derives from a key 2014 case in which the Court of Appeal and prior to this the Employment Court interpreted how the Equal Pay Act 1972 (“the Act”) should be applied. In that case a group of predominantly female care workers brought equal pay claims against their employer under the Act. They essentially alleged that they were being paid less on account of performing work that was systematically undervalued as a result of being historically performed by women.
An “equal pay claim” is essentially a claim for equal pay for work of equal value, and to rectify the undervaluation. The Court of Appeal said that it was not a complete defence that the employer in this particular case paid its four male caregivers the same rate as its 106 female caregivers, but did not give guidance on how to compare the work or how the undervaluation should be addressed.
In response, the previous government established the JWG to develop and recommend pay equity principles for workforces dominated by women, where the work may have been systematically undervalued. Since that time, the particular claim by care workers was settled, but law changes around equal pay have proved a hot potato.
In May 2016, the JWG made a number of recommendations to the Government, including the way in which equal pay claims could be brought, how the merit of such claims would be assessed (involving a consideration of whether the work was predominantly performed by women and whether it may have been historically undervalued) and how such claims could be resolved. The JWG did not however resolve the extent to which the pay equity principles provided guidance on identifying comparators.
The JWG has now reported back on:
- How to determine the merit of a claim as a pay equity claim – basically by saying that to start a claim the work must predominately be performed by women; and that it must be “arguable” that the work has been undervalued historically. These would seem to be relatively low and easy bars to cross to get a claim off the ground; and
- How to deal with the claim – basically by requiring the parties to bargain about the resolution of the claim before they progress the claim through the processes of the Employment Relations Authority, including mediation and facilitation.
We understand that once the government considers the report it will introduce new pay equity legislation in the middle of this year. It remains to be seen how wide the net can be cast in relation to identifying appropriate male comparators required for pay equity claims, so watch this space.
In the meantime, the Act continues to apply as it is, and we understand a very large number of cases are stalled in the Employment Relations Authority and are unlikely to be pursued until the legal position on pay equity is clarified.