CEVEP's Principles for Pay Equity

In November 2015 the government established a Joint Working Group on Pay Equity Principles, to develop recommendations that, if accepted by government, might require amendment to the Equal Pay Act. This is an alternative to the Employment Court issuing General Principles for Implementing Pay Equity under s.9 of the Act, as part of the Bartlett vs Terranova case. This Working Group comprises four officials, six unionists and four employer representatives - and no representatives from women's organisations.

Running in parallel a second government-led working group is exploring possible settlement of the Bartlett pay equity claim, which is still in the courts. It has been agreed that any settlement would be extended to publicly-funded mental health and disability carers in residential homes and in the community.

General Principles for Pay Equity will apply to the caregivers' pay equity claim, but should also apply more widely. Already two further pay equity claims have been lodged with the Employment Court: for special education support workers and for social workers. And midwives have applied for a judicial review of their government-set rates on gender equity grounds.

CEVEP, as an invited intervening party in the 2013 Employment Court hearing on legal issues, wrote to the Minister of State Services requesting inclusion on the Principles working group, as did the Auckland Pay Equity Coalition. Crown facilitator Dame Patsy Reddy replied, inviting us to make written submission.

In our submission CEVEP proposed the following:

General Principles for Implementing Pay Equity

Purpose

Equal Pay is defined in the Equal Pay Act 1972 as a rate of remuneration in which there is no element of differentiation based on the sex of the employee. (1) New Zealand has ratified UN Conventions 100 and CEDAW which require equal pay for women and men for work of equal value based on objective appraisal of the value of their jobs. Recent Court judgments confirm that the Equal Pay Act covers both equal pay for women and men in the same job, and equal pay for work of equal value in different typically male and female jobs.

Under New Zealand's employment and human rights laws, employers must ensure their pay rates and other conditions of employment are free from all forms of discrimination. Employers cannot 'contract out' of requirements for equality and human rights. Nor does the Act permit 'market forces' or 'ability to pay' to be used as a reason for paying women less than men. (2)

We have drawn on the requirements of the Equal Pay Act, as well as those of the Employment Court and Court of Appeal judgments in developing the set of General Principles below. To the extent that any aspect of these may be seen as 'restating the Act', we believe that General Principles should be a stand-alone document for best use by employers, employees and unions.

General Principles

  1. As the Equal Pay Act applies to all employment instruments (3), the General Principles for Implementing Pay Equity must also apply to all employers, public or private. Further principles may apply to a particular sector or kind of work. Parties to a claim may continue to apply for further guidance from the Employment Court under s 9 of the Act if needed.
  2. Every woman has the right to equal remuneration without discrimination on grounds of sex, under New Zealand laws and international conventions. Under our equal pay, employment and human rights laws, she has the right to raise matters of discrimination or illegal underpayment and arrears at any time, individually or as a group or raised by her union.
  3. Pay transparency is fundamental to ensuring both equal pay and equal pay for work of equal value for women. Remuneration includes all forms of wages or salary, as well as any other benefits or rewards, that are payable directly or indirectly, whether in cash or in kind. (4) No employer may discriminate by reason of sex in terms of employment, conditions of work, fringe benefits, and opportunities for training, promotion and transfer. (5) The Act requires employers to provide any employee on an individual contract with all information relevant to equal pay on request. (6) This right should be extended to all employees and to their union. If a pay system is not transparent, the employer must prove its gender neutrality and justify the rates paid.
  4. Evidence of current, historical or structural gender discrimination demonstrates the systemic undervaluation of work done predominantly or exclusively by women. To arrive at an 'equal pay rate' requires comparative investigation of the skills, responsibilities, service, conditions and effort in specific jobs as required by the Act.
  5. The 'equal pay rate' is determined based on the skills, responsibility, service, conditions and degrees of effort in work performed by women compared to work performed by men. (7) The Act distinguishes between work done by both women and men and work performed predominantly or exclusively by women, who must be paid at the same rates as men whose work is of equal value based on these criteria. Conditions means conditions of employment as well as physical working conditions.
  6. Comparative assessment of predominantly or exclusively female jobs requires the identification of appropriate male comparators. A male employee doing the same work whose pay rate is also distorted by systemic undervaluation cannot be an appropriate comparator. It is necessary to look more broadly, to jobs to which a similar value can be attributed using gender neutral criteria. Males whose pay is most clearly unaffected by structural or other discrimination against women are those in jobs, sectors or industries that employ predominantly or exclusively men. The equal pay comparison should therefore be between the female job or job class and two or more named comparators in different male jobs in two or more different male dominated sectors or industries.
  7. Assessment of the statutory factors must give full recognition to the importance of the kinds of skills, responsibilities, service, effort and conditions of work that are commonly overlooked or undervalued in female dominated jobs, such as those related to human interactions. Examples include but are not limited to social and communications skills, responsibility for the well-being of people, emotional effort, cultural knowledge and sensitivity, responsibility for safety.
  8. Any job comparison system used for determining an equal pay rate must be able to capture and assess the content requirements of the female and male jobs being compared and establish a process to assess their relative value. For the system to be gender neutral, it must be able to analyse and rectify systemic patterns of wage discrimination. If an existing job evaluation system is used, it must be shown to be gender neutral. Assessments of work value reached under existing systems cannot be assumed to be free of assumptions based on gender, despite the claims of the firms involved. (8)
  9. The equal pay rate should be set to the same rate as the comparators' pay if the assessment shows the jobs to be of equal value. Where the work value assessment rates the woman's job more highly (or less highly) than that undertaken by her male comparator or comparators, a proportional calculation will be needed to derive an equal pay rate. No employer may reduce men's pay or other conditions of employment in order to achieve gender equality in pay.
  10. The purpose of the Equal Pay Act is the removal and prevention of discrimination based on the sex of employees. (9) As the Employment Court stated, this purpose is ongoing - 'legislation always speaks'. In an unequal and gendered labour market, equal pay rates fairly arrived at may nevertheless need to be revisited in later years, with the possibility of differentiation on the basis of sex re-occurring as pay rates change.
  11. In pay negotiations, settlement by the parties is an option at any stage, but the outcome will not constitute an 'equal pay settlement' unless this has been demonstrated on the basis of the Principles above.
  1. Section 2. 
  2. The only defence is that provided in s 2(2), which is limited to the experience, qualifications or other special qualities of an individual male employee.
  3. Section 2.
  4. Section 2.
  5. Section 2A(1). 
  6. Section 4(2A).
  7. Section 3(1)(b).
  8. See for example Ontario Nurses' Association v Regional Municipality of Haldimand-Norfolk, Respondent (1991), 2 P.E.R. 105.  The Mercer system held not to be gender neutral in this case is very similar to the Hay system. See also Ontario Nurses' Assn (ONA) v Women's College Hospital [1992] O.P.E.D. No. 20.
  9. Section 1.
  10. Section 1.[2013] NZEmpC 157 at [46].