Fair Pay Agreements Bill

Members, the House is in committee on the Fair Pay Agreements Bill. We come first to Part 1. This is the debate on clauses 3 to 8, “Preliminary provisions”; and Schedule 1, “Traditional, savings, and related provisions”. The question is that Part 1 stand part.

I’m very pleased to be here for the committee stage of this important piece of legislation, the Fair Pay Agreements Bill. The House enjoyed a good, robust debate on the second reading of the bill earlier this week, which canvassed the general principles of the bill and enabled members of the House to put down in general terms their views about the bill and the reasons for it and against it, and I thought that was a good, robust debate. Obviously, the committee stage, which we’ll be making our way through over the next little while, focuses on the particular details of the bill on a part by part basis and especially those changes that are recommended by the select committee in its report back.

At the outset I do want to thank all members of the Education and Workforce Committee, who did consider the bill and did report back. It was a very considerable report back, and I encourage all members who are interested in this bill to fully acquaint themselves with the report back from the select committee and also with the full departmental report from officials on the bill. It’s a document of, gosh, about 250 pages or so, which provides a really detailed account of the submissions process, the arguments and issues that were put forward, and the responses from officials to those points.

It’s notable and worth the attention of the committee of the whole House that the report back from the select committee includes quite a number of changes to the bill, and that is consistent with the approach that I wished to see at the beginning of this process. The Government is extremely committed to this bill and the positive changes it will make to our employment relations system. But we always said that we wanted there to be a good, robust select committee process and that we expected there would be changes to improve the bill in response to submissions. And if one looks at the changes that are proposed by the select committee in the Supplementary Order Paper (SOP) 264 that I have tabled, I think the committee can see that the Government has followed through with that approach.

In respect of Part 1, this is a part which is narrowly focused on the preliminary provisions and includes key terms that are used throughout the rest of the bill. So it’s important but a fairly narrow part of the legislation. There were some changes that were recommended by the select committee and I think probably the most substantial in this was in response to a range of submissions actually from both sides of the debate, from employers and from unions, from those who felt strongly in favour and perhaps those who were not, who said that it was really important that there was real clarity around coverage of fair pay agreements (FPAs) so that workers and employers knew who was in and knew what the rules were for ensuring when a fair pay agreement will cover the work of an employee. And so changes have been made to make that as clear as possible.

There’s what one might term a 25 percent test which is now in the legislation. So in terms of the work being performed by a worker, 25 percent of that work has to be covered by an FPA for the FPA to set terms and conditions for that worker, and in the event that any individual worker does work covered by more than one FPA, it will simply be the FPA that covers the most work that is done by that worker. So there won’t be any confusing situations where a range of FPAs will apply to an individual.

I think that was a really useful clarification that the select committee has recommended and there were changes in response to those submissions. In the SOP I have tabled, there are a range of relatively technical wording changes which are around terms like “standard hours”, “overtime rates”, etc., to make sure that those terms are defined as consistently and as accurately in the bill as possible for the purposes of those issues being included in fair pay agreements. So that is what this part is about, and some of the key changes that are proposed for the consideration of the committee, and I’ll be very happy to answer any questions focused on Part 1 now.

Thank you, Mr Chair, for the opportunity to start what will no doubt be a lengthy debate on the committee stage of this bill, which is what we on this side of the House regard as the misnamed Fair Pay Agreements Bill, and I hope the Chair will indulge me a few opening remarks. When it comes to this legislation and what we’re dealing with here, our proposition is that we’re dealing with mandatory union deals passed by legislation. Once this legislation brings us back to sector-wide or occupation-wide agreements that cover the entire country—and we’re thinking in the context of shopworkers or supermarket workers, from the largest Pak ’N Save in central Auckland to the smallest corner superette in the Hokianga Harbour or Invercargill—it’s applying similar rules and requirements and details right across the board, and also very significantly lifting the role of unions in that.

So when we come to this, our fundamental proposition is that this legislation will make our workforces less flexible and less agile at a time when they need to be both those things to be competitive in a modern, competitive global workforce. It will certainly add costs to the fundamental structure of our workplace—that’s the purpose of it, of course; to have higher wages and higher costs—and our proposition is that that will certainly not be helpful to the fight against inflation, which the Government is losing at the moment, very much to the detriment of the many households up and down the country who are struggling to make ends meet in the face of higher costs.

When we come to this part—

CHAIRPERSON (Greg O’Connor): Yes. Now, you have been well indulged, Mr Goldsmith—

Yeah, thank you—thank you. Well, I think it’s only appropriate—

CHAIRPERSON (Greg O’Connor): —so you now may—I’ll just indicate to other speakers that that indulgement won’t be forthcoming. We now will be required to speak to the parts of the Act that we are discussing.

💬 Chris Penk: The bill, rather than the Act.

CHAIRPERSON (Greg O’Connor): The bill—I’m sorry. Thank you for that correction.

Thank you, Mr Chair. So one of the most interesting things that we find when we come to Part 1 of the Fair Pay Agreements Bill—misnamed—is that right at the start, the Minister has changed the purpose of the bill, which is quite interesting. You would think that when you introduced legislation into the House, you’d be reasonably clear on the purpose of it and that you wouldn’t sort of change your mind after you had introduced it and change the purpose of the bill. But, indeed, they have, and so I suppose my first question to the Minister is: why didn’t he and his Government have a clear view of what the purpose of the legislation was when they introduced it?

They started off with a purpose clause which said that “The purpose of this Act is to provide a framework for collective bargaining for fair pay agreements that specify industry-wide or occupation-wide minimum employment terms.” This, it appears, proved inadequate, and I think this has something to do with the fact that the Minister came to this House with a large piece of legislation, and then, on the very same day that he introduced the legislation, he introduced a very significant amendment to the legislation, fundamentally changing—

💬 Hon Michael Wood: A parliamentary paper.

—significant parts of it—a parliamentary paper. So having spent a number of years preparing the legislation, he found himself in the position of introducing legislation that clearly wasn’t going to work and he had to introduce another big chunk of a parliamentary paper to bring it back into shape.

So I presume that the change of the purpose is to accommodate that, because the new purpose says that “The purpose of the Act is to enable employment terms to be improved for all employees by providing—(a) a framework for bargaining for fair pay agreements that specify industry or occupation-wide minimum employment terms; or (b) in certain circumstances, for the Authority to determine those minimum employment terms.” That seems to me to be a rather fundamental shift.

Originally, the purpose of the bill was just to introduce collective, occupation-wide minimum employment terms and fair pay agreements. Now, the purpose is twofold: it’s to do that, and also to provide for the Employment Relations Authority to determine such things and minimum terms. So I suppose the first question is why did the Minister not have his thinking straight when he first introduced the bill, and he is now changing the purpose; and, second, what gives the Minister such confidence that the Employment Relations Authority, which, of course, amongst the employment organisations and businesses around the country, including Auckland, is a byword for very slow determinations and the very slow, grinding wheels of justice in that part of the area, where it takes months or sometimes years to hear anything back from the Employment Relations Authority—what gives him great confidence that this institution has the expertise and the administrative ability to take on this very substantial, totally new task and to find the wisdom within itself to figure out what best suits the needs of businesses large and small, up and down the country, in terms of their arrangements, so much so that they are better than the thousands of individual businesses and employees having conversations between themselves and figuring out for themselves what works best when it comes to hours of work, when they’re going to have breaks, when they’re going to have holidays, and whether or not the pay and conditions are appropriate for them and their businesses?

These are the sorts of issues that will be dealt with by this bill. So the fundamental question is: where does this confidence lie and come from for the Minister to put such a heavy burden on the Employment Relations Authority?

If we sit back and think about the consequences of all this, what the Minister is saying, fundamentally, is that he doesn’t have confidence in the ability of the tens of thousands of small businesses, and large—but, particularly, small businesses—across the country. If we take, for example, the checkout operating area such as in small little superettes up and down the country in places like Hokianga and places like Eketāhuna, and things like that, where you’ve got a little business. They know their community, they might have a relatively small turnover, they might only have one or maybe two staff working at any given time, and they know what they can pay—and, of course, we’re all living in a country where there is a minimum wage and there are certain minimum entitlements in terms of sick leave, and the Government has been very active in increasing all of those things.

So they’ve got this floor there already, but they’re working out what else they can do in relation to what their business can afford, and, if they’ve only got one or two employees, what they can manage in terms of rules around breaks and rules around holidays and all those sorts of things. The Minister is, fundamentally, saying that he doesn’t trust them to make those decisions. What he would prefer and what this Government would prefer is that the industry—which, let’s be honest, will be guided and driven by the big players—will meet and decide collectively with the unions what the rules should be, and they will apply regardless, and if they can’t make an agreement, fundamentally, it will be the Employment Relations Authority that decides.

So there will be a few people, probably in Auckland, sitting around a desk who possibly have never run a business in their lives and who are making a decision about these realities on the ground. Where does he get the confidence?

In amongst all of that there are a couple of particular questions about the purpose statement in Part 1 which I am happy to address. The member accurately points to the fact that there are changes before the Education and Workforce Committee in the purpose statement. It’s important to note that those are changes which have been recommended by the select committee, who have examined the legislation and the parliamentary paper and heard submissions from those people who have spoken with the select committee. The main change there, as the member does accurately point out, is that the purpose statement now does explicitly refer to the fact that fair pay agreements might set those sector-wide terms and conditions, either through bargaining or through a determination process which the Employment Relations Authority (ERA) will undertake. It is worth noting, of course, that in the initial version of the bill the ERA did actually have a determination process in the event that bargaining broke down, so that in itself wasn’t a new addition to the bill.

The additional pathway which is described through the parliamentary paper—now incorporated into the bill that is before the committee—effectively ensures that if one of the bargaining sides is not able to bargain or not willing to bargain, and if a default bargaining party is not able or not willing to bargain, then the Employment Relations Authority will then have a role. Ultimately, that is important. The purpose of the bill, clearly, is to establish fair pay agreements in certain sectors, and there can’t be a situation where one or the other side, for whatever reason, just says, “Well, we’re not going to engage and therefore you can’t have them”. That is why the role of the Employment Relations Authority in issuing determinations in the event that occurs is important. I think what the select committee was getting at is that it is simply accurate and appropriate for that to be reflected in the purpose statement given that that will happen some of the time. My expectation is that it will be a minority of occasions, because I think parties will by and large want to work through that bargaining process for themselves.

The second part of the member’s question goes to operational stuff a little bit outside of this bill and this part, but it’s effectively about the capacity of the ERA to undertake that function. It’s worth noting, of course, that the ERA—I’m sure the member’s aware of this—under the existing Employment Relations Act does already have a determination function for the settling of collective agreements, where necessary. And in respect of their capacity and resourcing, the Government has through Budgets 2020 and 2021 provided specific resourcing to the ERA to be able to fulfil these functions in an efficient way.

Thank you very much, Mr Chair. It’s a great pleasure to be joining the debate within this committee on the Fair Pay Agreements Bill—so-called. Like my colleague Paul Goldsmith, and, indeed, the Minister, I will be focusing on Part 1. In particular, I wanted to have some advice and guidance from the Minister in relation to various definitions within that.

The first is the phrase “bargaining side”, which is defined within Part 1 to mean an employee bargaining side or an employer bargaining side, and I just wonder if the Minister can speak a bit about the language chosen there—if there is a particular reason that the word “side” was used. I know oftentimes it has an adversarial tone: one might be on different sides of an argument, different sides of a battle, and so forth. I would love to suggest to the Minister some appropriate synonyms that could, perhaps, be used in its place, but following the passage of the Plain Language Bill last night, I would be in danger of being convicted under that, so I don’t dare get out the thesaurus to suggest any alternative language. So I wonder if the Minister can speak about the choice of language there: “bargaining side”, as opposed to some other way of denoting that there might be different perspectives. If the spirit of the legislation is to ensure that there is a discussion reaching a mutually agreeable outcome, either the parties themselves doing so or, failing that, by heading off to the authority, then I wonder if he might contemplate different language to be used in relation to that meaning of what is now “bargaining side”.

I’ve got a couple of other questions, still, within this section, so unless the Minister’s indicating that he wants to leap to his feet immediately and put me right on that, I’ll continue. One is a slightly more substantive point, which goes to the definition—and indeed, the role—of eligible employer associations. The significance of that type of entity is that these are representative bodies that can speak for one side or the other, and there are various criteria set out in Part 1 to say what an eligible employer association is. Of course, there are types of employers that are not generally covered by a business association, and I note that that’s the starting point of the legislation—actually, I think, the finishing point, too, in terms of groups that can be representative bodies representing the interests of employers.

I note that charities and NGOs would often not already be members of a business association in a chamber of commerce kind of way, and yet they are no less affected by employment law and labour relations, and oftentimes they’re operating in a very constrained economic set of circumstances. Indeed, they’ve made a choice, in becoming a charity—almost invariably; I don’t want to open another can of worms in terms of charities law and the anomalies within that. But, roughly speaking, we’re talking about enterprises that are not-for-profit, so I wonder if it’s reasonable to expect the employment interests of those kinds of groups to be represented by a definition that contemplates—indeed, requires—that business associations are to be the representatives for such employers.

One can think, too, of sole traders who might employ, from time to time—I know that might sound like a contradiction in terms, that a sole trader might be joined by others who are doing the work, and they’re not necessarily a pure sole trader in that sense. But in terms of the type of legal entity, someone who is in private practice—for example, a lawyer—might not be represented by an employer association; they might be part of a bar association or some other professional group. So I wonder if the Minister can speak a little bit about types of employment situations that aren’t covered by the standard conception of an employer who is a person or a group making widgets, who goes along to their chamber of commerce and says, “I want you to go in to bat for me, to play for my side of the argument, my team”—indeed.

I have a couple more points that I’ll leave for now, but I look forward to the opportunity to cover, if I may. But, for now, I’ll put those two different points in front of the Minister and look forward to any response he can give us.

Thank you, Mr Chair. I’m interested to hear from the Minister. Part 1 includes a very long list of interpretation words in terms of what means what. A lot of these details flow through to later parts of the legislation, but a very important definition relates to a “covered employee” and how that’s defined. In the process of the select committee, the select committee majority—which, you know, fundamentally we did not support—changed that definition from “A covered employee means an employee who is within the coverage of a proposed FPA, a proposed variation, a proposed renewal, or a proposed replacement … of a fair pay agreement”,—which is a pretty short definition meaning an employee who is within the coverage, to now the proposal being in three parts: “(a) in relation to the proposed agreement, performs work that is within the coverage of the proposed agreement; or (b) in relation to a proposed variation, … [a person who is covered who is] in relation to the fair pay agreement that is proposed…; or (c) in relation to a fair pay agreement, meets the threshold”. And that points to another change, which is how to deal with people who may be covered by multiple fair pay agreements.

I just thought: if we were to take the example of a salesperson, how would that work if we had the definition that “covered employee” is somebody who performs work that is within the coverage of the proposed agreement? You know, I think to myself, “Just about every person engaged in just about any business enterprise has an element of salesmanship in their work.” Well, not just about everybody; I suppose a lot who don’t. But a lot do.

I think even of what I used to do before Parliament, which was, you know, writing books. There was a period every now and again where I had to persuade somebody that it was a good idea to write a book about them, which was, effectively, salesmanship. So would I be included in this? You can think of it from whatever—just about every enterprise there is involves an element of sale.

So if the definition is “in relation to a proposed agreement”—say that agreement is salespeople—“performs work that is within the coverage of the proposed agreement”, that’s a very broad definition. It says “or”, so further on there are thresholds specified where you have to be spending a percentage of your time in that particular work, which makes a certain sense. But under this definition in paragraph (a), you don’t have to go down that threshold route; you can be included if you perform work that is within the coverage of the proposed agreement.

So is he confident that a large number of people wouldn’t wake up one day, surprised to find that they are part of a fair pay agreement because they do some work that is within the coverage of the proposed agreement? I’d be interested in getting some clarity from him around that.

Thank you, Mr Chair. I just rise to ask a few questions of the Minister in the chair, Michael Wood, while we’re in the committee stage of Part 1. I just would like to note that the part we’re looking at, at the moment, is the purpose clause and that I have a question around the purpose clause, which is, notably, that, as has already been traversed in the committee, the Education and Workforce Committee has changed the definition of purpose to look at the benefits provided by the Fair Pay Agreements Bill. So I wondered if the Minister could elaborate on the benefit of that. I note it’s improving the terms of employees by providing a framework for industry- or occupation-wide minimum employment terms, so I wondered if the Minister could expand on that. Obviously, Part 1 is quite limited to the purpose and the definitional clauses, and the main definitional clauses that I noted that were of immense importance, I think, and significance in terms of this bill were the duty of good faith and the principles of freedom of association.

So I just wondered, on this quite short part of the Fair Pay Agreements Bill, which is quite extensive, if the Minister had any thoughts on, really, the purpose in terms of the changes that it is noted the select committee did make by majority, and also those two notable parts in clause 4(3), which notes the duty of good faith, which was inserted by the select committee, and also the existing note on the principles of freedom of association.

Thank you, Mr Chair. And I do thank and acknowledge the members for their questions that relate to Part 1. If I can address them in order, starting with Mr Penk’s questions around bargaining sides and the definition and language that is used here.

So, for the benefit of the committee, there are effectively two bargaining sides who will be involved in the negotiation of a fair pay agreement (FPA): one representing employers and one representing employees. Each bargaining side will be made up of bargain parties. On the employee’s side, bargaining parties will be eligible unions; on the employer’s side, bargaining parties will be eligible employer associations. The requirements to be eligible are set up relatively clearly in the in the Employment Relations Act (ERA)—those organisations must represent the interests of those parties. They must have, within their constitutions, a purpose that relates to the bargaining or fair pay agreements as well.

On each of those sides, those bargaining sides will have a good-faith obligation that goes back to everyone that they represent for the purposes of that bargaining. Mr Penk raises the question around the language of “bargaining side”. It simply reflects the relatively well-known and used language that would be used in collective bargaining generally at the moment, that there will one side representing employees and one side representing employers. From my point of view, it’s reasonably clear language and I don’t think it particularly denotes anything especially conflictual. If the member’s got particular suggestions there, I’m open to hearing them.

In respect to his question about different kinds of organisations—for example, charities and NGOs—the member was right in his comments, of course, that very often these organisations by definition do need to engage in the employment system and, in fact, many of them already do engage in collective bargaining processes, so they’re relatively familiar. Much of the funded sector, for example, is covered by collective bargaining arrangements. It would be a much higher proportion, for example, than other parts of the private sector.

So I don’t think there will necessarily be a great lack of familiarity with collective bargaining processes there. Those organisations often do have organisations that currently represent their collective interests, that they draw advice and support from around employment relations matters, and they will be free to continue to be represented by those organisations through the FPA process or to be represented by other associations who partake in that process. It will be up to those individual employers which organisation they choose to be associated with. But a really, really important point here is that whoever is the organisation at the table, whoever is the bargaining party on a bargaining side, that bargaining side has a fundamental duty of good faith back to all of the organisations, be it the businesses or the employees that they represent. So whoever is at the table has to act in the good-faith interests of whoever they’re representing—be it a private business, be it a Government agency, be it an NGO.

That links into a couple of the questions from Camilla Belich, who I know worked very hard on this in the Education and Workforce Committee. It is really important to note that quite a few of the key concepts, which are reflected here in the definitions in the bill, are concepts which come directly over from our broader employment relations system framework in the Employment Relations Act itself. So really important to note—because, frankly, there has been disinformation about this in the public arena at times—that the core provisions around freedom of association that are inherent in an Employment Relations Act and the rest of our system just copy over to the fair pay agreements legislation, and that is reflected in plain black-and-white wording in Part 1.

It’s the same around good faith, and, in fact, there’ve been some minor changes made here to ensure, effectively, that the way in which a “duty of good faith” is described is basically consistent with the way that it is described in the Employment Relations Act. So all of those duties of good faith between parties and from parties to those that they represent will apply in a broadly consistent way to what everyone is familiar with now in the existing Employment Relations Act and its regime, which has been in place now for 21 years—so quite well-understood concepts will come over and continue to play out there.

Camilla Belich also asked another question around the purpose statement. I do think that the recommendations from the select committee are helpful there, both in respect of the clarification around the ERA playing a role, sometimes, in determining FPAs—that just reflects the reality. So it’s important that the purpose statement does do that. And, secondly, that there is clarification here that the purpose of fair pay agreements is to improve conditions. Look, that is the Government’s policy objective here; it is not a policy-neutral piece of legislation—the intention of the legislation right throughout. I think this will be reflected in every statement that I and other representatives of the Government have made: the purpose of fair pay agreements is to improve conditions for workers where we think that should happen. So I think it is appropriate, and just, frankly, transparent for that to be reflected in the purpose statement.

Mr Goldsmith had a number of questions around interpretation as well, primarily focusing around the definitions of “covered employee”. Again, here, I think the changes that have been made are just quite helpful, just in terms of clarity. These are changes that have come through from the select committee in response to, as I say, submissions actually from all sides of the debate. And I do acknowledge submitters, even those who didn’t agree with the bill, quite often provided helpful submissions around how the bill can be as workable and practical as possible. And I think this is one of those areas. So the definitions of “covered employee” make it really clear that it is about the work that is done.

And we then do have the real clarity around the 25 percent test, and that’s about avoiding, for example, an absurdity where, let’s say, you know, I once worked in Hugh Wright’s men’s clothing stores—great job in the early part of my working life—and we’d spend 10 minutes in the morning sweeping or vacuuming the floors. Now, it would be an absurdity if a person in that situation ended up being covered by an FPA that was for cleaners. And so the 25 percent test is about having a rational threshold that focuses on what is really the focus of people’s work. And again, where there were multiple FPAs, it will be the FPA that covers the most work that that person does. So it’s really about clarity in this area. In respect to Mr Goldsmith’s particular example, I imagine that as a writer he wasn’t—well, I don’t know, but I’m not sure if he was an employee of anyone, so I wouldn’t necessarily relate to that example that he gave.

The other key bit of specification that the select committee has brought in here, which, again, is really helpful, is around how coverage will be defined as crisply as possible. And that recommendation is to make use of the Australian and New Zealand Standard Classification of Occupations (ANZSCO) and the Australian and New Zealand Standard Industrial Classification (ANZSIC) codes which are well known by employers, which are effectively the standard way in which different types of employment are defined. And so, in the coverage that a union puts forward when a fair pay agreement is initiated, coverage will need to be described using ANZSCO or ANZSIC codes unless there is a really good reason not to—perhaps there is a very peculiar type of occupation that doesn’t quite fit into those. But the starting point will be using ANZSCO and ANZSIC codes, which I think will provide significant clarity. So I hope that’s helpful in answering the questions of members.

Thank you, Mr Chair, and thank you very much, Minister Wood, for that detailed explanation then. I had a couple of questions as well around the bargaining side, and you did outline that just then to some degree, so thank you for that. But it does look like it is quite simplistic in the sense that it’s the employee and the employer, and, obviously, there are definitions that extend from that. But I look at the example of if, you know, you’ve got a small business, say a cafe; you’ve got one in Westport where wages and cost of living are going to be considerably less than what they may be if you’re a cafe in Remuera, for instance. I think binding everyone to that one piece is going to be somewhat problematic for the counterparts in the smaller regional sections of society, and I was curious as to how much thought or consideration had been given to that.

Also, when you’ve got businesses—I mean, people don’t always just pay a salary; there are other factors as well, over and above the minimum conditions that someone would give. You know, people don’t always go into a workplace because of the salary. There may be other things—a friendly environment, close to home, or perhaps they are looked after by their employer in other ways. This will be the case for a lot of small businesses as well. They probably have very close relationships with their employees. I own and direct a small business myself, and we have a couple of employees, but we are very close with them. So what I’m trying to get at here is that they may give them payment not through the traditional means of big employer paying worker X amount of dollars, but it may be they look after their kids or they help pick them up or drop them off, or perhaps there’s some exchange otherwise that would happen. I fear that with the bargaining side defined as it is here, there may be an ability for that to be potentially overlooked.

I also look at the covered employee piece, and where it’s got one covered employee. Does this account for when you’ve got your mum and dad takeaway place somewhere, and they’ve got a son or they’ve got a young neighbour who comes along and helps all the time, for instance, a child. So often you will see it; you go into a fish and chip store or you go into a local takeaway or you go into a dairy and quite often they will have a family member in there working. Now, obviously, they’re giving that family member a lot of support in a number of other ways. Are they then captured by some blanket, wide agreement that that is imposed on them, which is negotiated industry- or sector-wide?

You also did talk about the good faith, and, you know, obviously, that’s a fundamental underpinning of all employment relations. So looking to extend that—I commend you on wanting to extend that. But you did mention in there that they would have to go back to all parties and make sure that they are negotiating in good faith with all of them. But when you’ve got some significantly big sectors in there, I’m curious as to how practical it is for them to go back and work with them on it or even have an understanding of what a small mum and dad business may want or need. I can see this being somewhat overtaken by the much larger players in society, and I’m sure you’ll recognise that. They’ll have a lot more clout at the table, and I would imagine that their voices will probably drown out the voices of the numerous, numerous small players throughout the country. Are we then going to end up in a situation where the big players have got significantly more ability to do stuff, as in to pay wages and meet conditions, as opposed to some of those smaller businesses that I’ve already outlined? So those are the questions that I would put forward to you, Minister. Thank you, Mr Chair.

Thank you, Mr Chair. I want to take the Minister in the chair to Part 1, clause 5: the interpretation subclause (3), where the Education and Workforce Committee in its wisdom recommended changes in relation to “Before recommending regulations that specify the employee default bargaining party, or [the] employer default bargaining party, the Minister must be satisfied that—(a) in the case of the employee … that [it] is the most representative organisation of unions”, and similarly, “in the case of the employer default bargaining party … [that it] is the most representative organisation of employers in New Zealand.”

Some people would read that and conclude that, pretty much in all cases, the most representative organisation of unions in New Zealand will be the New Zealand Council of Trade Unions (CTU), which is the biggest union and covers that phrase “most representative”, which is a phrase picked up from the International Labour Organization to determine who can represent constituencies. And similarly the most representative organisation of employers would always be Business New Zealand—and I can’t think of too many other circumstances, and maybe I’m misunderstanding that. And if that was the case, if the Minister had to be satisfied that on the employee side it was the most representative organisation of unions in New Zealand, which I’d have thought would always be the CTU, which is the biggest union, the most representative, and in the case of employers it would always be Business New Zealand, which is the biggest and most representative organisation of employees—then that would sort of appear to lock both of those in. And of course elsewhere in the bill, it specifies that the role is voluntary, so they don’t have to do it. So then you’d be sort of left in the situation that in every case, if Business New Zealand for example decided not to engage, then automatically the whole thing would go to the Employment Relations Authority for determination without bargaining.

I’m sure that’s not the purpose or intention of the Minister or the way that it’s being defined; but I’d like to hear from the Minister as to how he can assure us that that wouldn’t be the logical flow when reading those words—because the words say that the Minister must be satisfied in the case of the employer default bargaining party that it is the most representative organisation of employers in New Zealand. So how does that work?

Thank you very much, Mr Chair, and thanks to the Minister for engaging with my previous questions. I have a couple more questions, obviously also in Part 1 and also still within the definition or interpretation section.

The meaning of “court” is defined to be the Employment Court, and, in a separate but related point to that made by my colleague and friend the Hon Paul Goldsmith in terms of the difficulty of accessing justice—my point’s a slightly different one. I wonder if the definition is intended to include by implication, if not explicitly, that other courts that are hearing the same matters are, effectively, included in the way that the “court” is able to operate—so if there are appeal courts that are able to hear matters on appeal from the Employment Relations Authority or the Employment Court and if decisions made under this regime would be subject to judicial review by the High Court.

The Minister may or may not know the answer, but if he does, then I think it would be helpful just for the sake of clarity. I’m not going to suggest that the legislation be amended explicitly in that way at this stage of the game, but nevertheless an important function, of course, of the committee of the whole House stage is to ensure that for those charged with administering the legislation—either they’re sort of actively involved or, of course, those adjudicating in some way or other its actions flowing from it—that can be helpful.

I will just go back briefly, if I may, to a point that the Minister made in response to the question I have made about employers or those affected by employment arrangements who aren’t necessarily businesses in that typical sense. I think, with respect, the Minister may have missed my point when he’s pointed out that a lot of these NGOs are already bound by collective agreements or arrangements. Well, that may be so, of course, but it’s not all of them and, of course, that’s part of the issue at play substantively between the different philosophies that underpin parties’ approach to the bill. The fact that there may be a large proportion of the charitable sector that’s engaged in collective arrangements implies all the more strongly that those who’ve chosen not to have made a conscious choice not to. And to remove that choice from them seems to me a strange thing and the pointing out by the Minister that there’s a degree of familiarity of NGOs with this kind of arrangement or approach isn’t really the point. It’s not about familiarity so much as voluntary participation that’s at issue in a philosophical or policy kind of way.

Other questions that I had go again to the idea of these associations or representative bodies, and we’ve got a definition of an eligible employer association. It talks about a constitution enabling the association to reflect the collective interests of its covered members. And I wonder if the Minister contemplates that the constitution would have to explicitly enable such representation for the purposes of bargaining and so forth or if it would be enough that that would be implicit in an existing constitution. The significance, of course, is that for incorporated societies that don’t currently have a constitution that says that its members agree to be bound by its actions for the purpose of the Fair Pay Agreements Act 2022—and of course they don’t yet, because such a thing does not exist. I wonder if the Minister’s considered the implication that there’s going to be a lot of constitutions and rules that are going to need to be changed internally by special general meeting, and uploaded to the incorporated society’s register and so on. And if that’s the case, if that’s merely the price of doing this business, in the Minister’s mind, then fair enough as far as it goes, but I think it would be good for everyone who’s sitting around one of those tables to know exactly what is involved. And if the Minister happens to know, for a bonus point, how many such associations there are in New Zealand, just sort of to get a scale of the amount of additional administration that’s going to be required in that regard, that would be good, but I don’t expect that.

Then my final point, which I’ll make within this five-minute call—and again it’s a question and an invitation to the Minister to explain anything he can in this space—is that the contact details, again as defined within Part 1 in relation to an employee, means certain things about them and the way they can be contacted. I wonder if the Minister has considered how this interacts with the Privacy Act and the information privacy principles within that. Is it possible, for example, for an employee to opt out of having some of those contact details—for example, their phone number—not used for this purpose? I think that would be a reasonable expectation, albeit that the legislation does make clear that the regime as a whole cannot be contracted out of.

So the Minister’s thoughts on those points would be much appreciated.

Thank you to members for particular questions that they have asked, I’m happy to now respond to those. In respect of Mr Uffindell’s questions about employers in different regions, I think there are two important points to make here. The first is that it’s generally accepted by all but the most extreme voices that it is appropriate to have minimum terms and conditions that cover everyone—a minimum wage, our minimum sick leave, our minimum annual leave. And you might have legitimate political debate about where those levels should be set. The general acceptance is that you should have a floor that applies to everyone regardless of where they work or what part of the country they’re in. Then, of course, individual employers and employees and unions, depending on particular circumstances, can negotiate above that to suit the particular conditions that they face in their particular aspirations.

The principle is, effectively, no different with fair pay agreements (FPAs). Fair pay agreements are about establishing a minimum set of terms and conditions across an industry or an occupation, as Parliament and the Government will set minimum terms and conditions through statute, and then different employers, unions, and employees can bargain different conditions, over and above that, if they wish.

It’s also important to note that, later on in the legislation, there is a specific capacity for regional variations to be agreed within fair pay agreements, and that might go to some of the examples that the member identified there.

When it comes to family members working in businesses, I think the most important point to make here is that just because you employ someone in your family, it doesn’t mean you can contract out of employment law, in respect of the rights of that person. That’s not just a point about fair pay agreements as proposed to the committee; that’s a point about any employment law that is the law of the land. And, actually, it’s a very, very important and fundamental protection that we have in place there.

In respect of good faith being extended, as I say, it’s a fundamental tenet of our employment law. The obligations around good faith have pretty established jurisprudence and understandings built up around them. I don’t foresee that those things will be particularly difficult for parties to comply with. They rest around honesty, transparency, good communication, listening to what the other side or what your own constituents have to say to you, and taking that into account.

Mr Goldsmith asked some questions around “the most representative body”. As he rightly pointed out, this is a well understood term in terms of our relationship with the International Labour Organization, but also the engagement that Governments historically have with peak bodies. In terms of our relationship with the International Labour Organization, the member is correct that the peak bodies are understood to be the New Zealand Council of Trade Unions, as the most representative body of workers—they’re not a union themselves, but they are the most representative body—and Business New Zealand, as the most representative body of businesses. I will have to, under the regulations, determine that that is appropriate for the purposes of fair pay agreements, but there is no particular reason to think that they will be any different for the purposes of this legislation.

The member’s also right that in respect of the backstop role, the default bargaining party role—it is a voluntary role, and that is specifically in response to the views of Business New Zealand as we have developed this legislation. They identified that they did not want that to be a required role; we respected that. But they identified that they were willing for that to be a voluntary role that they stepped into, so that is what is reflected in the legislation that we have here. And the member is then also right that if you go through those two stages—that if employers for whom an FPA is initiated are unwilling or unable to form a bargaining party, and then the default bargaining party, being the most representative body, is unwilling or unable to take on that role, then it does go to through to the Employment Relations Authority for determination.

Fundamentally, it would be absurd to set up a regime like fair pay agreements and then just say, “Well, if one party just chooses not to participate, that won’t happen.” So you have to have a pathway to make sure that they do happen. And, again, I’ll just repeat that I actually think, in good faith, you’ll generally have two parties who will want to come to the table to put their views and have a decent negotiation to try and settle fair terms and conditions.

And Mr Penk appropriately asked a number of questions around the courts, and he is correct that, you know, the court that is referred to in the legislation here is the Employment Court. Judicial review, where it occurs, will be heard in the Employment Court in the first instance, and parties will then be able to access the higher courts in terms of appeal, right through, of course, to the Supreme Court.

In terms of the charitable sector, I mean, again, the member is right. As is the case with other sectors, you will have some employers who are currently familiar with collective bargaining regimes and some who are not so familiar. My point was that I think that degree of familiarity will be higher in the NGO and charitable sector. And, in fact, some of the most supportive conversations I have with employers come from that NGO and charitable sector. They’re often part of what we call the funded sector, where funding flows down to the Government—you can think about a lot of the care work that happens in our communities. And they’re a classic example of the race to the bottom that we’re trying to fix here. Often, those sectors have very low pay and poor conditions. They compete for contracts, effectively, to keep on going, and that has often ended up with some of the people doing incredibly important work in our society with pretty poor pay and conditions. And that’s what fair pay agreements are about. The whole point is that, by establishing a minimum floor, you stop that race to the bottom and you stop competition for contracts and business based on the lowest wages. So it is inherent here—that’s what we’re trying to fix. And I think—and, again, many employers in the sector reflect this back to me—that will actually be a helpful addition to the landscape for many NGOs and charities. Ultimately, the funders—sometimes local government and sometimes central government—will need to participate in that to make sure that appropriate funding is there to meet those objectives.

In terms of contact details as defined in the legislation—yes, there’s been substantial work that has been done with the Privacy Commissioner as the legislation has been developed here. These are very clear and we’ll get to this later on, and I can’t quite remember which part it’s in, but there are very clear procedures for employees to be able to opt out of providing their details if they do not wish their details to be passed on.

I move, That the question be now put.

Thank you, Mr Chair. Look, I just wanted to pick up on a couple of the points that the Minister was making there, and I think, in particular, his comment that having the floor will stop any race to the bottom—well, actually, I totally disagree with that, fundamentally, because you set something like that and that then becomes the target—right?—the accepted standard or the level. So rather than allowing free-market decisions to decide on that, basically it’s saying, well, this is the standard and therefore you must comply with that. So I just wanted to touch on that.

What I’ve been picking up on through this debate so far is that it just reflects a lack of practical understanding and the ability to allow for people to just get on and make things happen. In most instances—and in any sector, there will be some challenges—people are prepared to negotiate in good faith and come up with situations that work for them as an employer and for them as an employee, depending on which side of the table they sit on. What we’re seeing here is that it lacks practical flexibility.

The Minister spoke earlier about the intent being to improve conditions—the policy intent, he said, was to improve conditions. You can’t contract out of this. Actually, the ability to improve conditions comes back to, I think, as well, that fundamental tenet of acting in good faith, where both parties genuinely want to make a situation work, they want a best outcome for everyone in that situation, and on that basis are prepared to come up with agreements that work for them. Now, having something like this takes away the ability to have nuanced differences based on particular situations. Mr Uffindell referred to some of that in his contribution, as well, where, actually, across the breadth of New Zealand, we have so many amazing businesses and all sorts of different industries with all sorts of different situations, and this just lacks the practical flexibility to allow for those people to determine what is best for them to improve conditions, which, as the Minister has stated, is the policy intent.

So taking away that ability, and forcing them to come around the table in this really clunky and adversarial-type approach can actually impact on that goodwill and the good faith that is typically present in some of those areas. I’m referring to mainly the smaller industries—not necessarily the big ones, of course, that the Minister might be thinking of more broadly, but, actually the little ones that underpin the economic productivity of the New Zealand business sector. Those ones that are, typically, small businesses owned by individual Kiwis with maybe a few employees and some of the situations that now will not be able to be worked through there where they have to have these “bargaining parties”, as he’s defined.

I’d be interested, actually, in whether the Minister can share his views on any instances or any industries where he’s not aware of employer associations being in place to represent the employer bargaining party and, therefore, having to fall back on the most appropriate. If he could give us an example of that—I’d be interested in whether he can actually do that.

Also, I’m interested in this comment that he just made around the allowance for regional variations—and this was his justification that there was flexibility within it because you could have some regional variation. But, again, that’s a relatively clunky aspect—because how do you then define the “regions” in that instance? You can look at the Auckland example, do it by the territorial authority, the council boundary, but then you end up with situations where hundreds or thousands, tens of thousands, of commuters every day travel into Auckland for their role but they live outside of Auckland—Tuakau, Pōkeno, Te Kauwhata, North Waikato areas—and so, on that basis, are they in or out of those regional variations that he has previously commented on?

So those are a couple of the aspects that, I think, just demonstrate there really isn’t a flexibility and we just don’t need this sort of thing, because it totally takes away and undermines that base premise of good faith that people enter into on their own account. So if I could get some insight, particularly around the regional variations and whether he can demonstrate an example of his understanding of where those bargaining parties might not be there on the employers’ side. Thank you.

The member’s comments were, for the very most part, highly general rather than about the part. But I’ll just make this point: the argument that a floor becomes a target is demonstrably untrue in the labour market. We have a minimum wage; that is the floor. That member is paid four times the minimum wage and most people in New Zealand are paid significantly above the minimum wage.

In terms of regional variation, I would encourage members involved in the debate to become familiar with the legislation. The legislation is very clear that regional variations will be determined along the lines of territorial local authorities.

In terms of employer associations, there will be sectors where there are existing obvious associations, and there will be some where there are not. Ultimately it is up to businesses and sectors to organise themselves as they best see appropriate, for the purposes of fair pay agreements or any other form of industry organisation.

Thank you, Madam Chair. I just do want to take issue with the response from the Minister in the chair, Michael Wood, to my previous question where I was asking about clause 5(3) in relation to the Minister being satisfied before recommending regulations that specify that the employee default bargaining party and the employer default bargaining party—he has to be sure that they are both the “most representative organisation”. He confirmed that, yes, they do need to be, and he confirmed that, yes, under the understanding of the International Labour Organization the most representative union organisation is the Council of Trade Unions (CTU) and the most representative employers’ organisation is Business New Zealand, and he confirmed that if they voluntarily don’t take up that role, then it automatically goes to the Employment Relations Authority (ERA) for a determination rather than bargaining.

So I’m left puzzled. Is he saying that for every fair pay agreement that comes up, that is proposed—and later on we’ll get to the point that you only need, you know, a handful of employees across a large occupation to initiate this procedure. Is he saying that whenever it comes up, if either the CTU as the most representative employee representative or Business New Zealand as the most representative organisation of employers do not voluntarily decide to be the bargaining party, then in each case it’ll go off to the ERA, in which case much of this bill is redundant, unless in every instance Business New Zealand picks up the cudgel? I didn’t think that that was what it was supposed to be. I would’ve thought that in other circumstances, other business associations might decide to be the bargaining party. So I’d like him to just clarify that. Just what does that mean in practice, and is it the case—and I hope I’ve got this wrong, but is it the case, if Business New Zealand doesn’t decide to be the bargaining party in every case, that the whole process will be shuffled straight off to the ERA using the backstop process that he introduced in the House at the same time in this legislation?

I have addressed this matter in previous comments, and I note that, effectively, the provisions that relate to the formation of bargaining sides, which is what this goes to, are dealt with under Part 3.

Thank you, Madam Chair. I just want to bring up a few things that have come to my notice recently from Hospitality New Zealand. They have some quite major concerns that they felt have not been addressed in the bill, and I wonder if the Minister can give us some answers on this to try to appease the concerns they have got. They believe that for their sector particularly this is a very complex, expensive, and unaffordable system for New Zealanders and for their businesses in the hospitality sector. They talk about the inability to stack roles and how workers in small businesses often do need to be able to have multiple roles, particularly these small hospitality businesses in smaller centres.

I’m thinking particularly of Fiordland and Te Ānau businesses at the moment. They are hospitality and tourism businesses that are really struggling, and so they are using people across a number of roles. On that notion of stackable roles, they think that this will prevent that and that it will be a very unwieldy system for those smaller hospitality businesses which, essentially, have to do everything they can to maintain their ability to keep trading at this time and to keep people employed. They felt that the Government has really not entertained any degree of compromise around this bill.

So can the Minister perhaps please explain and allay some of these concerns about how the bill will enable that level of flexibility for those very much smaller businesses in the smaller centres, particularly those that are worried about this lack of flexibility and this lack of ability to stack roles.

In terms of the member’s contribution to Part 1, nothing here prevents employers from organising work in a way that is appropriate in their workplaces, including stacking roles, which is where a worker takes on a number of different functions.

In this debate, I have already, on a number of occasions, addressed extensively the way in which the coverage of fair pay agreements (FPAs) applies to the type of work that is done and the 25 percent test that the select committee has inserted and the fact that only one FPA will apply per employee based on, if there are multiple FPAs, the majority of work that that employee does.

I move, That the question be now put.

Before I take that closure motion, can I just check with Chris Baillie that he knows his Supplementary Order Paper (SOP) 266 is actually for this part, and once I take that closure motion he won’t be able to talk to his SOP.

Thank you, Madam Chair. My Supplementary Order Paper (SOP) 266 refers to the vulnerable, low-paid part of this of this bill. The Minister often refers to the bill being for the lower paid, and I can quote: “People like our cleaners, our supermarket workers have got us through COVID. It’s about them.” The SOP just wants to ensure that it is those workers that the Minister is trying to help, and makes it clear that there must be a public interest test in each consideration. A lot of people think they are lower paid—and in this environment I don’t blame them; teachers, nurses, police—but a lot of other New Zealanders would think that they are not low paid. So the SOP refers to the public interest test being part of every agreement. Thank you.

Madam Chair, I think I feel that the Supplementary Order Paper is a little misplaced. The main provisions around the public interest test are in Part 3 of the bill, and I would note that one of the changes already proposed by the Education and Workforce Committee is to ensure that low pay is one of the factors that is a bar for the public interest test being met.

The question is that the Hon Michael Wood’s amendments to Part 1 set out on Supplementary Order Paper 264 be agreed to.

The question is that Chris Baillie’s amendment to Part 1 set out on Supplementary Order Paper 266 be agreed to.