CTU president Richard Wagstaff said the agreement was successfully negotiated by representatives of working people, business and the Government following the historic victory of aged-care worker Kristine Bartlett v Terranova in the Supreme Court.
The Kristine Bartlett equal-pay case was a landmark case. Ms Bartlett had worked as a caregiver in the aged-care sector for 20 years and received close to the minimum wage. Her argument, essentially, was workers in the rest-home industry were underpaid because they were mostly women. If the rest-home workers were predominantly men, they would be paid more.
"I am pleased the Government is committed to being on the right side of history in making real progress to paying working women what they are worth," Mr Wagstaff said.
State Services Minister Paula Bennett said the Government would update the Equal Pay Act and amend the Employment Relations Act to implement recommendations of the Joint Working Group on Pay Equity.
That would make it easier for women to file pay equity claims with their employers, rather than having to go through the courts. It would also assist employers in addressing those claims, she said.
Workplace Relations and Safety Minister Michael Woodhouse said the Government also decided to clarify how to choose an appropriate job for comparison when making a pay equity claim. That was an area the joint working group was not able to agree on. However, the Government believed it needed to be addressed to ensure the process was clear and effectively addressed pay equity claims for all parties.
Otago-Southland Employers Association chief executive Virginia Nicholls said regulation would ensure the effects of the Terranova decision would, at some point, be felt by other sectors in which a female-heavy workforce predominated.
Those included nursing-care providers, social service organisations, preschools and primary schools, cleaning companies, grocery chains and industries with administrative, events and promotions roles, which tended to be dominated by women.
Employers should note the recommended guidelines suggested any employee or group of employees could make a claim. However, there were thresholds the work must meet for it to qualify for a pay equity claim.
Those included that the work must predominantly be performed by women and might have been historically undervalued because it was seen as "women’s work", she said.
The work might also have been subjected to continued undervaluation.
"The recommended threshold test is broad, making many employee roles potentially subject to a claim."
In parts of the lower South Island, where retail and service worker wages might already be lower than those for comparable roles in Auckland, the potential was for a double whammy, Mrs Nicholls said.
Those organisations relying on the fact they paid at "market rates" might find such rates had been systemically undervalued.
Few would argue the ethics of addressing pay equity, but the challenge for many employers, particularly small and medium-sized enterprises (SMEs), would be affordability.
The simple business equation around increased operating costs had not been rewritten, she said.
"As we have seen with the impacts of public holiday legislation, increased wage costs cannot be readily absorbed by business. They typically impact either on the price of goods or services and/or business profitability."
Some organisations were looking for improvements in productivity to offset wage increases but employers needed to look at their workforce roles and inform themselves about the likely criteria for pay equity claims, Mrs Nicholls said.
An informed employer was a better prepared employer.
The domino effect across the wage levels and sectors would ensure the court’s decision affected not just those industries employing care workers, she said.
At a glance
• Principles to provide guidance to employers and employees in identifying, assessing and resolving pay equity claims
• A process for employers and employees to follow to address pay equity, including a bargaining process based on the Employment Relations Act framework
