Pay Equity definitions and process
Our equal pay laws say that women and men should be paid the same for jobs of equal value, even if they are different. This is called pay equity.
The pay equity framework gives us a process for addressing systemic gender based pay discrimination in female dominated roles. Historically, women were generally paid less than men.
In certain occupations, the workforce has been dominated by women and, as a result of these historic pay imbalances, wages have been undervalued and employing people in these industries is not a fair or equal rate.
Pay equity is about getting the same pay for different work of equal value. Equal pay-related terms 'equal pay' and the 'gender pay gap' are often used interchangeably causing confusion and misinterpretation as they have different meanings. Read more about the different terms below.
Definition of 'pay equity'
Men and women paid the same for doing work of equal value.
Terranova v Service and Food Workers Union and Bartlett
In 2015, the Court of Appeal made a decision in Terranova v Service and Food Workers Union and Bartlett that held that the Equal Pay Act 1972 required equal pay for work of equal value (pay equity), not simply the same pay for the same work.
Following this, the Government established the Joint Working Group on Pay Equity Principles (JWG) which was made up of Government, employers and Unions, and tasked the JWG with recommending universally applicable pay equity principles.
There was consensus that it was not appropriate for the Courts to determine pay rates. As a result, the JWG recommended that pay equity claims be negotiated within the New Zealand employment relations framework.
In November 2016, the Government accepted the recommendations of the JWG.
The State Services Commission, Council of Trade Unions and a Terms of Reference
Unions in the public service had already raised pay equity claims, and the Government agreed that the pay equity principles (Principles) would be applied to current claims in the State sector in advance of any new legislation being enacted.
In early 2017, the State Services Commission (SSC) and the New Zealand Council of Trade Unions (CTU) started discussions on how best to apply the Principles to identified pay equity claims in the State sector.
The SSC and the CTU agreed to jointly overview current and any new pay equity claims in the State sector, and established a Terms of Reference to guide agencies and unions to progress identified pay equity claims.
The DHBs are working within that framework and have authorised us to represent DHBs in engaging in the pay equity claims processes with health sector unions.
Definition of 'equal pay'
Men and women paid the same amount for doing the same work.
Since 1972, this has been a legal requirement in New Zealand to pay the same to men and women doing the same work. This was required by the Equal Pay Act 1972.
Definition of 'gender pay gap'
The difference in the median hourly earnings of men and women across all roles.
A pay equity claim is limited to matters of pay equity - (equal pay for work of equal value). Wider issues contributing to any gender pay gap include career progression, access to training opportunities, and lack of flexible working arrangements.
Did you know that:
- in terms of median hourly earnings, the gender pay gap was 16.3% in 1998 and has trended downward to 9.2% in 2018
- that in New Zealand the gender pay gap has reduced since 1998 (16.3 percent), but has stalled in the last decade
- a number of factors contribute to the gender pay gap, from overt bias and discrimination through to unconscious bias that impact on women’s opportunities and recognition in the workplace.
In recognition of the ongoing gender pay gap the government convened the Gender Pay Principles Joint Working Group (JWG), which started meeting in 2017. Its purpose was to establish a set of principles to be used by State Sector agencies to end workplace inequalities and address issues that contribute to gender pay gaps in the State Sector. The JWG comprised government, employer and union representatives.
In the longer term, addressing the sources of inequality is important for ensuring that achievements in pay equity are sustainable and are not eroded over time by the same dynamics in the workplace and in society that created the conditions for gender-based discrimination in pay.
After receiving a claim (usually from a Union on behalf of its members), we assess it against The Pay Equity Principles that were agreed by the Pay Equity Joint Working Group. These principles are the foundation for the process of pay equity bargaining.
A principles process diagram has been developed to provide a guide to the parties involved in pay equity claims. It shows the steps involved in pay equity bargaining and the principles that are at play when working through the process. It outlines the process starting with raising a claim, assessing the claim through to pay equity negotiations and settlement. It is also possible for the parties to be flexible and carry out steps in parallel or in a different order.