Posted on: May 10, 2017

On 18 April 2017 the Government reached a settlement with the unions in the long running caregiver pay equity case. This settlement impacts on 55,000 workers in the Aged Care Sector, who from 1 July 2017 will receive a pay increase of between 15 and 50 per cent, depending on their qualifications and/or service. This settlement will apply to all pay equity claims made prior to 1 July 2017 that fall within the settlement scope.

The settlement is the result of the long running pay equity dispute between Kristine Bartlett and the Service and Food Workers Union (now E Tu) and TerraNova Homes & Care Ltd.  The case had been heard through the Court system and reached the Court of Appeal, which found that the Equal Pay Act 1972 went beyond requiring equal pay for men and women doing the same work, and required men and women to be paid equally for doing different work deemed to be of equal value. The matter was then referred back to the Employment Court for general principles to be observed in implementing equal pay. However, given the significant ramifications of this case, the Government made the decision to take the case out of the courts in 2015 and work to negotiate a settlement.

The settlement that has been reached means that all employees within the aged and disability residential care, and home and support workers will receive the newly negotiated wage rates regardless of whether they are members of a union. The new wage structure (which still needs to be ratified by unions members) range from $19 to $27 per hour, and will be implemented over a five-year period.

The settlements direct wage increases will be fully funded by increases to Vote Health and ACC, however, there may be an increase in costs for people in aged care facilities, whose assets keep them above the subsidy threshold.

New wage structure

The Ministry of Health is planning on the implementation of the new wage structure from 1 July 2017, when employees will be paid a minimum of $19 per hour. This is a significant increase of 21 percent for an industry which has predominately paid the minimum hourly wage of $15.75.  The new wage structure will formally be announced once it has been ratified by union members.

What does this mean for other sectors?

Pay equity issues are not limited to the aged care sector and this settlement is significant for all sectors which are, or have been, traditionally female dominated. We understand that there are currently pending cases from midwives and social workers, however, the parties to the settlement have agreed as a term of settlement that this case will not be used as a precedent for other occupational groups.

Employment (Pay Equity and Equal Pay) Bill

The Government has announced pay equity principles and the Employment (Pay Equity and Equal Pay) Bill will be progressed this year to establish a process for raising and resolving pay equity claims. The intent is that pay equity claims will be settled through bargaining, rather than through the courts.

A draft Bill was announced on Friday 28 April 2017, and is now open for submissions. Broadly the Bill allows:

  • Any employee may raise a pay equity claim with their employer.
  • Upon receiving a claim, the employer must assess and determine the merit of the claim based on factors set out in the Bill. The employer’s decision to refuse a claim can be challenged.
  • If the employer accepts that the claim has merit as a pay equity claim, the parties must enter into pay equity bargaining:
    • Bargaining is guided by principles on how the work is assessed in pay equity bargaining. This involves an assessment of the work and the work of suitable comparator occupations.
    • The parties may agree to a bargained outcome at any point.
    • Where bargaining reaches an impasse, the parties may access mediation or facilitation or determination by the Employment Relations Authority.

The Bill will amend the Employment Relations Act 2000, and will repeal and replace the Equal Pay Act 1972 and the Government Service Equal Pay Act 1960.

For more information on this bill or making a submission see MBIE website or click here.

Source: Draft Employment (Pay Equity and Equal Pay) Bill












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