Views on Employment Relations Law Reform Bill February 2004

From Coalition for Equal Value Equal Pay (CEVEP) — views on Employment Relations Law Reform Bill which will form the basis of our submission (concentrating mainly on provisions in Part Two — on equal pay): to be posted on website and circulated to assist others with submissions on the Bill: these are due at the Transport and Industrial Relations Committee (25 copies) by Friday, 27 February 2004. If you wish to appear before the committee, state this clearly with your submission, providing a contact name and daytime phone number. Submissions to select committees generally become public. If you want any assistance from CEVEP, contact Prue.Hyman@vuw.ac.nz.

Note that this is 21 pages and complex: the summary on the first two pages may be adequate for many groups — while section 4 towards the end deals with issues other than equal pay / equal pay for work of equal value. Section 2 is background and section 3 has the detail on equal pay.

info@cevep.org.nz

19 February 2004

Summary of Major Points

Focussing on Part Two, Equal Pay for Identical / Substantially Similar Work and Equal Pay for Work of Equal Value

This submission also covers in less detail some other sections of the Bill, welcoming its emphasis on more effective promotion of collective bargaining and settlement, and its proposals to improve the protection of vulnerable employees in restructuring situations. However, CEVEP opposes clause 110 D and its proposed new powers, which appear unfairly to reduce the rights of health sector workers taking industrial action.

In detail, with respect to equal pay for work of equal value, CEVEP argues that:

The 1972 Equal Pay Act, introduced by a National government and supported by the Labour Opposition, was explicitly intended to cover equal pay for work of equal value and did so
Subsequent Labour governments have accepted this
It is highly likely that the equal value provisions of the 1972 Act are still able to be used for claims
For New Zealand to have no legislative provisions for equal pay for work of equal value would be a major backwards step, putting this country in breach of CEDAW and ILO 100, leading to justified complaints to those bodies, and in breach of the New Zealand Bill of Rights Act
For a government committed to equal pay for work of equal value in policy terms to introduce legislation that does not support it would send contradictory messages and alienate many women's organisations.
The timing for submissions is unfortunate with the Taskforce on Pay and Employment Equity in the Public Service and Public Health and Education Sectors due to report on 1 March. It would be better to withdraw Part Two and leave legislative change in this area until its report can be considered — or, if there is time within the framework of the ERLRB, to substantially amend Part Two to include equal pay for work of equal value.

With respect to equal pay for identical / substantially similar work, CEVEP argues that the provisions of Part Two are inadequate and suggests some improved principles and changes.

1. CEVEP

The Coalition for Equal Value Equal Pay (CEVEP) was established in 1986 to work to secure equal pay for work of equal value in New Zealand. It is a coalition of major women's organisations together with unions with a high proportion of women members.

CEVEP is funded by donations from approximately 300 individuals, organisations and unions on its mailing list.

Since 1986 CEVEP has been active in lobbying for legislation to address the pay gap and in other matters that impact on or arise from the unequal earnings of women in the labour market. CEVEP has a website at www.CEVEP.org.nz which is accessed regularly by a wide range of users.

2. Background to CEVEP's Concerns

on Part Two of the Employment Relations Law Reform Bill (Equal Pay for Identical / Substantially Similar Work and Equal Pay for Work of Equal Value

CEVEP recognises that historically the terms and conditions of paid employment have been designed in a way that does not adequately recognise the experience and qualifications women bring to paid employment. Legislation for equal pay in the New Zealand public sector was enacted in 1960 and covering the whole economy in 1972. These are Acts which the bill under consideration seeks to repeal without adequate replacement. Pay equity is yet to be achieved and the labour market is not gender neutral. It results in unequal pay and unequal opportunities for women workers.

Women's work and skills have traditionally been undervalued in the paid workforce, a situation which equal pay for work of equal value implementation would help to address. In the June 2003 quarter the average hourly earnings of $16.57 for women was 87% per cent of males' average hourly earnings of $19.02. Weekly earnings show a wider gap and Maori and Pacific women lag further behind. This relativity has improved only very slowly since the final step in the implementation of equal pay for identical / substantially similar work under the Equal Pay Act in 1977. Women are concentrated in industries where the gender earnings gap is predicted to increase, typically service industries such as hospitality, retail trade and banking.

Even equal pay for identical / substantially similar work is probably not totally adhered to in the current New Zealand labour market. The changes in the industrial relations / wage settlement processes since 1987 have made it harder for women to know if they are receiving equal pay, for trade unions to assist women, and for outside agencies, including the Labour Inspectorate, to enforce it. The trend away from centralised bargaining and national awards towards enterprise and individual bargaining yields an environment less able to ensure that the law is being upheld. Further, these trends have been accompanied by a greater concern for privacy and less public knowledge of the pay rates of individuals, so that many women are unable to compare their pay to those of men working alongside them. In this situation it is important that any changes to the legislation improve enforcement of equal pay for identical / substantially similar work. It will be argued below that Part Two does not achieve this.

Equal pay for work of equal value is a key policy which, if carried through, would help to narrow the gender earnings gap further. It is also vital for both equity reasons and for better use of female human capital. It has been a plank of Labour Party policy for many years and at times has been supported by National Party. It is argued below that the Equal Pay Act 1972 did, indeed, cover equal pay for work of equal value as well as equal pay for identical / highly similar work, although the former was never adequately implemented. The short lived 1990 Employment Equity Act, part of which was intended more clearly to cover and implement equal pay for work of equal value, was enacted by a Labour government and repealed by the incoming National government later the same year. While this repeal reduced the legislative force behind equal pay for work of equal value, some collective bargaining and judicial decisions using equal value arguments led to real progress in the 1990s. Examples include the parity gained by primary teaching, a heavily female occupation, with secondary teaching where qualifications were equivalent and the equalisation of rates of pay for midwives with general practitioners with respect to normal birth.

The current Government established a Taskforce on Pay and Employment Equity in the Public Service and Public Health and Education Sectors in May 2003. It was charged with advising Government on how the factors that contribute to the gender pay gap apply in particular parts of the public service and public health and education sectors, and on a five year plan of action to address pay and employment equity with reference to those factors. Equal pay for work of equal value is one of the key areas of its work: for example the project work it established included a project entitled: "Research on initiatives intended to achieve equal pay for work of equal value with particular reference to the Health sector'. The aim of this project was stated as to put together a systematic programme for assessing the extent to which mainly-women occupations are under-valued. It was to undertake research on health system-wide equal pay for work of equal value exercises, including the recently completed Agenda for Change in the UK.

The unequal position of women in society and the need to eliminate discrimination has been recognised by Governments in New Zealand in legislation and with the establishment of organisations such as the Ministry of Women's Affairs, the Human Rights Commission, the Equal Employment Opportunities Trust, and the current Taskforce. New Zealand is a signatory to the Convention on the Elimination of Discrimination against Women and presents periodic reports to its Monitoring Committee. It has also ratified ILO 100 on equal pay for work of equal value and reports biannually on this, coming under criticism from the ILO in the 1990s for lack of progress. Both CEDAW and ILO Convention 100 require signatory countries to implement policies on equal pay for work of equal value. CEVEP argues below that it is essential that any changes to pay equity / equal pay legislation strengthen, rather than weaken the situation with respect to equal pay for work of equal value.

3. CEVEP's Comments on the Proposed Legislation — Part Two

— Elimination of Provisions for Equal Pay for Work of Equal Value and Inadequate Provisions for Equal Pay for Identical / Substantially Similar Work

CEVEP is mainly concentrating its detailed comments on the ERLRB to Part Two of the Bill which covers the equal pay area, the topic of greatest interest and expertise of our organisation and on the contents of which we have major reservations. However, there are other aspects of the Bill which CEVEP welcomes, and these are mentioned briefly at the end of this submission together with one other area where we oppose a provision.

This section of our submission deals firstly with the absence of provisions for equal pay for work of equal value and then with the inadequacy of the provisions on equal pay for identical / substantially similar work. Part Two repeals the 1960 and 1972 Acts and the explanatory note to the Bill explicitly states that "the new Equal Pay Act will not, however, deal with equal pay for work of equal value.' We understand that Ministers and the Department of Labour argue that the 1972 Act cannot now and possibly never could have been used for claims for equal pay for work of equal value, and that therefore nothing is being lost by making this explicit. Indeed the Cabinet paper where the principles underlying the Bill were laid out portrayed Part Two as simply a technical amendment. CEVEP strongly disputes all these assertions. We argue that:

The 1972 Equal Pay Act, introduced by a National government and supported by the Labour Opposition, was explicitly intended to cover equal pay for work of equal value and did so
Subsequent Labour governments have accepted this
It is highly likely that the equal value provisions of the 1972 Act are still able to be used for claims
For New Zealand to have no legislative provisions for equal pay for work of equal value would be a major backwards step, putting this country in breach of CEDAW and ILO 100, leading to justified complaints to those bodies, and in breach of the New Zealand Bill of Rights Act
For a government committed to equal pay for work of equal value in policy terms to introduce legislation that does not support it would send contradictory messages and alienate many women's organisations.
The timing for submissions is unfortunate with the Taskforce on Pay and Employment Equity in the Public Service and Public Health and Education Sectors due to report on 1 March. It would be better to withdraw Part Two and leave legislative change in this area until its report can be considered — or, if there is time within the framework of the ERLRB, to substantially amend Part Two to include equal pay for work of equal value.

(i) The 1972 Equal Pay Act, introduced by a National government and supported by the Labour Opposition, was explicitly intended to cover equal pay for work of equal value and did so

There is ample evidence of this. The wording of sections of the Act, particularly with respect to female dominated work, strongly indicate this. They use the language of equal value, in terms of comparing skills, effort, responsibility and working conditions — and, with respect to female dominated work, assessing what males with similar attributes would be paid.

Equal Pay Act 1972:

3. Criteria to be applied for determining whether there is an element of differentiation between male employees and female employees based on the sex of the employee:

(a) For work which is not exclusively or predominantly performed by female employees—

The extent to which the work or class of work calls for the same, or substantially similar, degrees of skill, effort, and responsibility; and
The extent to which the conditions under which the work is to be performed are the same or substantially similar:

(b) For work which is exclusively or predominantly performed by female employees, the rate of remuneration that would be paid to male employees with the same, or substantially similar, skills, responsibility, and service performing the work under the same, or substantially similar, conditions and with the same, or substantially similar, degrees of effort.

Examination of the Parliamentary Debates at the time, official reports, testimony of those involved at the time, and academic reviews confirm this interpretation. Among relevant material are articles by Elizabeth Orr, Prue Hyman and others, discussing this in detail

(Orr, E. (1986a) 'The Arbitration Court's Role in Supervising the Equal Pay Act 1972' in Proceedings of Seminar on Equal Pay Wellington: Centre for Continuing Education, Victoria University (1986b)

The Equal Pay Scene Revisited, unpublished paper (1988)

Hyman, P. 'Perspectives on Equal Pay for Work of Equal Value' in Equal Pay for Work of Equal Value, Seminar Papers, Centre for Continuing Education, Victoria University of Wellington, April 1986, pp. 1-19.

Equal Pay Study - Phase One Report (with A. Clark and Urban Research Associates), New Zealand Department of Labour, July 1987 pp. 51 plus appendices,

'Equal Pay for Work of Equal Value', Women's Studies Conference Papers '86. Women's Studies Association NZ (Inc), July l987, pp. 210-220.

'Equal pay for Work of Equal Value - Job Evaluation Issues' in New Zealand Journal of Industrial Relations, Vol 13 / 3, December 1988, pp. 237-255,

'Equal Pay for Women after the Employment Contracts Act: Legislation and Practice - the Emperor with No Clothes?' in New Zealand Journal of Industrial Relations, Vol 18 / 1, May 1993, pp. 44-57)

Elizabeth Orr's most recent (2004) article Equal Pay for Work of Equal Value, which reaffirms the interpretations above, is attached to this submission as Appendix One

(ii) Subsequent Labour governments have accepted this

The gender earnings gap was narrowed during the implementation period of the 1972 Act with separate rates for men and women in awards, in particular, disappearing. It took a number of years for dissatisfaction with the implementation of the Act to become strong, as it was realised that equal pay for work of equal value had not been fully implemented. Orr's article explains some of the reasons for this.

The 1984 Labour Government, which set up Women's Forums and established the Ministry of Women's Affairs, was committed to equal pay for work of equal value, although concerned about possible implications. With the failure of the Clerical Workers Union case in 1986, taken under the 1972 Act, that government instigated an Equal Pay Study, followed by a Working Group on Equal Employment Opportunities and Equal Pay (chaired by the current Minister of Labour). In 1990 they introduced the Employment Equity Act, enacted but repealed the same year by the incoming National government.

In commissioning the 1987 Equal Pay Study (report referenced above), it was clear that the intention was to identify barriers to the implementation of equal pay for work of equal value, which was considered to be theoretically in place but not well implemented. The preamble to the Terms of Reference include: "The 1972 Act required the parties (unions, employers and workers) to undertake a work classification exercise and determine the rates of remuneration that represent equal pay in accordance with defined criteria. This was aimed at ensuring that equal pay was implemented on the basis of equal pay for work of equal value." It also required the study to identify "Any other related issue which adversely affect the implementation of equal pay for work of equal value", together with "possible courses of action to remedy any problems or defects which prevent the proper implementation of equal pay for work of equal value". Any current belief that the Act was not intended to cover equal value or did not do so is a reconstruction of history.

(iii)It is highly likely that the equal value provisions of the 1972 Act are still able to be used for claims

There has been considerable debate about the status of the Equal Pay Act with respect to equal value claims over time. The outcome of the Clerical Workers case in 1986, the passage of the Employment Contracts Act, 1991 and of the Employment Relations Act, 2000, all affected the situation and attracted academic debate (one article by Hyman in 1993 on this was mentioned above, while Martha Coleman's LLB thesis, 'The Equal Pay Act 1972: Back to the Future?' discussed the situation at that date.)

CEVEP is convinced that the Equal Pay Act 1972 is still operative for both identical work and equal value. The definition of equal pay in section 2 states that it is a rate in which there is no element of differentiation between men and women based on the sex of the employees. Since discrimination includes both direct discrimination and indirect discrimination, this means that where the differentiation arises because of the under-valuation of work predominantly performed by women, the differentiation is based on the sex of the employees. Section 3 of the Act, mentioned above, sets out criteria to be applied in determining whether there exists an element of differentiation. In this section there are different criteria for work which is exclusively or predominantly performed by female employees to work which is not. This shows that the Act was meant to cover equal value situations. If the Act was intended to cover "like work" only, there would be no need for different criteria. Significantly, these separate criteria have been omitted from the Employment Relations Law Reform Bill. In other words, to limit the Bill to "like work" only, it was necessary to take out the separate criteria applying to work predominantly or exclusively performed by women.

Even if the Equal Pay Act was judged ambiguous in this respect, there are several principles of legal interpretation that mean that a court should interpret it as providing for equal value. These include the fact argued earlier that it was intended to provide for equal value. It is also clear from subsequent events. New Zealand ratified ILO Convention 100 in 1984 in the belief that the Act complied with the convention. (NZ does not ratify international conventions until domestic legislation complies.) Further, it placed no restriction on the equal value provisions in the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) when it ratified that convention. Where it is possible to interpret legislation consistently with our international obligations, courts must adopt that interpretation. It does not strain the language of the Equal Pay Act to do so. Legislation must also be interpreted, if possible, consistently with the New Zealand Bill of Rights Act 1990 (NZBORA), which covers indirect discrimination. This means that the Act must be given an equal value interpretation if this is possible, which is the case.

Hence, despite the 1986 Clerical Workers case, the Act is still alive for equal value claims, as argued in more detail in a paper "Can the Equal Pay Act 1972 be used for Equal Value Claims?" on which this section was based. The paper is attached as Appendix Two. It has also long been the view of the Ministry of Women's Affairs, expressed in a number of papers, that the Equal Pay Act was intended as equal value legislation and that it is still "live".

(iv) For New Zealand to have no legislative provisions for equal pay for work of equal value would be a major backwards step, putting this country in breach of CEDAW and ILO 100, leading to justified complaints to those bodies, and in breach of the New Zealand Bill of Rights Act

Mention was made earlier of the fact that Equal Pay Act was never properly implemented for equal pay for work of equal value. This is a reason to improve, rather than withdraw the provisions. CEVEP has heard that it is being argued that as the Act has not been tested with a case in recent years, nothing would be lost by repeal. However, the lack of cases, in CEVEP's view, is largely because of expense and the uncertainties over the legislation outlined. Nevertheless, further testing of the Act may occur this year, under the threat of repeal. It would still be a major backwards step, sending all the wrong messages locally and internationally, to remove equal value from all legislation explicitly.

As mentioned earlier, New Zealand has ratified both the two principal international treaties which expressly make provision for equal pay for work of equal value, ILO Convention 100 and the Convention on the Elimination of All Forms of Discrimination Against Women ("CEDAW"). The repeal of the Equal Pay Act 1972 ("EPA") guarantees that New Zealand is in breach of those international obligations.

CEDAW is of particular importance given that New Zealand is also a signatory to the Optional Protocol under that Convention which enables complaints to be made to the United Nations about New Zealand's failure to comply. It is clear from article 1 that discrimination includes both direct and indirect discrimination, which means that it covers the situation where women are paid less because they work in female dominated occupations. Under article 2, New Zealand has agreed to adopt legislation prohibiting all discrimination against women, an obligation clearly not met if New Zealand repeals the Equal Pay Act. Furthermore, under article 11, New Zealand has committed itself to "take all appropriate measures" to secure the right for women to equal pay for work of equal value. Repealing legislation that at worse "might" and at best "does" provide for that right is hardly an appropriate measure.

Similar comments can be made in terms of the International Covenant on Civil and Political Rights ("ICCPR"). It too contains an Optional Protocol process by which complaints can be made to the UN. Under articles 2 and 26 of the ICCPR, New Zealand is under a positive obligation to pass laws which prohibit all discrimination against women. Again this refers to both direct and indirect discrimination. The scope of the obligation is wide enough to encompass employment discrimination by private actors, not just the state (see Nowak CCPR Commentary 1993 at pp 475-479).

If there was any doubt on this point from the text of the Covenant, the case of Nahlik v Austria (608 / 95) puts the issue beyond doubt. The author in this case complained that a provision in a collective agreement was discriminatory. Austria argued the complaint was inadmissible because "collective agreements are contracts based on private law and exclusively within the discretion of the contracting parties" (at para 4). This argument was not accepted by the UN Human Rights Committee. It said that "under articles 2 and 26 of the Covenant the State party is under an obligation to ensure that all individuals within its territory and subject to its jurisdiction are free from discrimination, and consequently the courts of States parties are under an obligation to protect individuals against discrimination, whether this occurs within the public sphere or among private parties in the quasi-public sector of, for example, employment" (at para 8.2).

CEVEP notes that the Minister of Foreign Affairs has announced that New Zealand is seeking election to the UN Commission on Human Rights in 2009. It will hardly help that cause to have numerous complaints to both the United Nations' CEDAW and Human Rights Committees about the lack of legislative gurarantee for equal pay for work of equal value.

The repeal of the EPA also breaches the International Covenant on Civil and Political Rights ("ICESCR"). While the non-discrimination provisions under this Covenant may not give rise to the same positive obligation that arises under the ICCPR and CEDAW, nonetheless the ICESCR does prohibit retrogressive steps by State parties in respect of their obligations under the Covenant (Committee on Economic, Social and Cultural Rights General Comment 3, paragraph 9), one of which is to ensure equal pay for work of equal value (article 7).

Notwithstanding the fact that the Bill was not the subject of a section 7 report to Parliament, CEVEP believes that the Bill is also in breach of section 19 of the New Zealand Bill of Rights Act 1990 ("NZBORA") for reasons that were not considered by the Ministry of Justice when it vetted the Bill (see MOJ website, 19 December 2003). In Canada anti-discrimination legislation that is underinclusive breaches the right to freedom from discrimination under section 15 of the Canadian Charter, the equivalent to section 19 of NZBORA (see Vriend v Alberta [1998] 1 SCR 493). The legislation in New Zealand is under-inclusive because it provides a right to equal pay for some women but not to others. This is so even though the purpose of the legislation states that its purpose is to address gender-based discrimination in pay. However, because it provides no (real) rights or remedies to those women who work exclusively or predominantly alongside other women it meets this purpose only in part. In other words, even by its own admission it is under-inclusive.

CEVEP does not rely entirely on Vriend for its view that the Bill is discriminatory. Under-inclusivity in pay equity legislation has been the subject of another case (SEIU Local 204 v Ontario (A-G) 5 September 1997 Ontario Court of Justice (General Division)). This case concerned a partial repeal of the Ontario pay equity legislation and it was held to be discriminatory because it provided a pay equity remedy for some women but not for others. In so finding Justice O'Leary said: "It is a matter of choice for government as to whether or not it legislates to remove inequity. When, however, government decides to legislate and identifies the disadvantaged group the legislation is intended to benefit, then it must, subject to section 1 of the Charter, make the legislation apply fairly and equally to all within the group or government itself is guilty of discriminating" (at para 107). The Ontario Government did not appeal this decision even though its effect was to cost the Government $380 million in pay equity adjustments.

The Human Rights Act 1993 now provides a complaints mechanism by which discriminatory legislation can be challenged. Not only would the outcome of this Bill be discriminatory but the Human Rights Act itself would also be in breach of s 19 NZBORA. This is because it too fails to provide for a comprehensive prohibition against indirect discrimination against women, if the cause of that discrimination arises as a result of the undervaluation of women's work.

(v) For a government committed to equal pay for work of equal value in policy terms to introduce legislation that does not support it would send contradictory messages and alienate many women's organisations.

CEVEP is pleased that the Labour led government is committed to equal pay for work of equal value in principle, although we understand that it is not convinced that this should be accomplished through legislation. On that, CEVEP totally disagrees. Without legislation, it is unlikely that employers will comply. Two recent UK reports, including one by their Equal Opportunities Commission, agree with this.

CEVEP does not oppose public sector leadership in implementing equal pay for work of equal value as a policy choice, provided the private sector is required to follow suit soon after. CEVEP hopes that the Taskforce Report will lead to strong recommendations on equal value. In the Public Service, Health and Education sectors, it may be possible to use policy decisions rather than legislation. However, this would have to apply to all employers in the broad public sector, health and education sectors. It would also be highly desirable for such policy to include contract compliance whereby government departments, Area Health Boards and education sector employers, among others, would have particularly obligations. These would include a requirement in contracts for services that all employment in the completion of contracts funded from the public purse would be at rates of pay that reflected equal pay in the same job and equal pay for work of equal value between women and men.

Without this, the unsatisfactory situation can arise, as it does at present in other respects, where much of the lower paid and female dominated work in the broad public sector, such as homecare, cleaning, and catering, is contracted out to enterprises which are not covered by public sector requirements. With government directly or indirectly (for example by funding to Area Health Boards) setting the contract prices or funding constraints in which such contracts operate, this can mean a squeeze on wages of those employed in this work. Some of the project reports to the Taskforce cover this issue and the lack of gender pay equity and low pay for women which results. Government has a substantial responsibility in this area.

CEVEP very much hopes, therefore, that the Government will take strong equal value actions as a result of the Taskforce report, and that it will subsequently lead to action in the private sector. However, Part Two of the current Bill is totally negative in this respect. For a government committed to equal pay for work of equal value in policy terms to enact legislation that does not support this direction would send contradictory messages and alienate many women's organisations.

CEVEP is not in a position to suggest draft legislation in the time available, nor is it appropriate for it to do so in full detail and before the Taskforce reports. This submission is already a long one. However, it has earlier suggested the use of pay audits for all employers and attaches a submission covering this and other points made to the Ministry of Women's Affairs in its last set of consultations on this issue as Appendix Three to give the Committee an indication of what could be done.

Further, CEVEP suggests that the Employment Relations Law Reform Bill and any subsequent proposals should be assessed against the extent to which they:

clearly cover both equal pay and equal pay for work of equal value
provide for both individual and collective claims
involve union representation and unionled claims
promote the role of unions in addressing equal pay and pay equity
allow access to pay information by individuals and unions so that claims can be developed and pursued
create a transparent process
can be easily enforced as a right through current institutions, that is the Employment Relations Authority
include access to expert advice and support through an independent agency

And in addition to everything else in this submission, CEVEP considers that the ERA should include a general requirement for employers to ensure that their pay systems are equitable.

(vi) The timing for submissions is unfortunate with the Taskforce on Pay and Employment Equity in the Public Service and Public Health and Education Sectors due to report on 1 March. It would be better to withdraw Part Two and leave legislative change in this area until its report can be considered — or, if there is time within the framework of the ERLRB, to substantially amend Part Two to include equal pay for work of equal value.

Our conclusion, given the balance of the arguments made above, is that total withdrawal of Part Two with a view to substantive progress on equal pay for identical / substantially similar work and equal pay for work of equal value as soon as possible is the best course. However a satisfactory alternative would be substantial amendments to cover both areas.

Equal Pay for Identical / Substantially Similar Work

We now turn to equal pay for identical / substantially similar work. The provisions have a number of good features, in CEVEP's view. They clearly provide a duty for employers to provide equal pay, to include arrears where necessary, with a wide definition of remuneration. The Bill appropriately requires equal pay across multi-employer collective agreements.

However, CEVEP argues that overall, the provisions of Part Two are inadequate. We make some suggestions concerning important principles and changes that could be made to the provisions, if this Part of the Bill is not dropped. Many of the principles listed in the previous section apply here, covering both equal value and identical / substantially similar work. They are not all met by this legislation which is therefore deficient.

We note that while addressing equal pay, there is no specific mention of women. Instead the language is gender neutral, with either a man or a woman able to make an enquiry. This may be appropriate, but of course the major concern is about equal pay for women.

There are some additional problems with the provisions. The first relates to the choice of comparator being entirely with the employer when an enquiry / complaint is made. Hence there is no guarantee of equal pay with all relevant men. The provisions appear to be satisfied by comparison with one man even though the complainant may not be being paid equally with others. Such a situation does not represent equal pay. As Lord Keith said when considering a similar (but not identical) situation under the UK legislation, employing a token man on the same pay as one or more women would leave a large gap in the equal pay provision if this allowed an employer to evade its obligations. The House of Lords held it should not (see Pickstone and Ors v Freemans plc [1988] 2 ALL ER 803 at p 806-807 for Lord Keith's comments).

Further, CEVEP notes that Labour Inspectors are required to comply with the principles of natural justice (s 92). This is also an obligation under section 27(1) NZBORA. This obligation must include at the very least an opportunity for the enquirer / complainant to be heard in relation to their complaint, including the critical question of who is the appropriate comparator. Once the comparator has been chosen, the employee must be told who it is, so s / he has an opportunity to be heard in relation to that individual. Given that the Labour Inspector's decision will be reviewable (cf s 27(2) NZBORA) in any subsequent action for review, this information must be made available. Hence it is better to provide for a more transparent process straight up.

In addition, another better approach would be to allow the enquirer / complainant to choose their own comparator if they wish. This seems entirely reasonable when it may be that concern about a particular suspected relativity is at the heart of the matter and would help resolve the problems raised in the previous paragraphs. However it should be only an option, as in other cases, it may be a general suspicion rather than a specific case involved. This also raises the issue of group claims, which should be provided for. It is often a whole category of (female) employees who suspect and / or are being discriminated against. It is far more efficient and less intimidating for those involved if they can take a group claim.

Also relevant to this is the total lack of reference to union involvement in the whole process, even with respect to multi-employer pay rates. It is essential for unions to be allowed and encouraged to participate in the process and for the right to this to be included in the legislation. Where an enquirer / complainant wishes to have help from their union, they should be able to do so. This can again assist with an intimidating situation and draw on experience and knowledge beyond that of the individual. There should be a simple procedure where the woman's union can be asked "to check the books" and take up any problem discretely, as under the Equal Pay Act 1972.

CEVEP's next, related, set of concerns relate to a lack of transparency and of information. The legislation specifies that the employer must not disclose the identity of the comparable employee (clause 78). If the Labour Inspector is involved in the process, they are also required to not disclose the identity of the comparable employee (clause 83 (5)). In addition, there are no provisions which enable the worker or union to obtain relevant information required to compile and pursue an equal pay claim. All this puts the enquirer / complainant at a considerable disadvantage. With the employer required to keep information on the comparator confidential as far as possible, the enquirer / complainant will simply receive an assurance that s / he is paid properly, or receive a pay rise. S / he will never learn who was the comparator or their pay level. If the complaint is rejected, s / he will receive an assurance from the person s / he thought did not value her equally that there is no discrimination — hardly a transparent result.

Concerns over confidentiality, however understandable, are exactly what makes it easy to discriminate. It would be better to provide that a union or an individual worker could request specific information to be provided in relation to other workers employed by the employer (or other employers in the MECA), for the purposes of ascertaining whether they are being provided with equal pay. The process would be similar to section 34 of the Bill, with the union or worker specifying in writing the information sought. If the information is considered confidential by the employer, there could be provision for an independent review.

Under the Bill, if the enquirer / complainant is not satisfied with the report from the employer, a Labour Inspector is the person to whom she can appeal, the only person who may take 'enforcement action' (s.87). This is an extension of Labour Inspectors' role and there is no evidence that they will be trained to have the necessary level of expertise. If a woman is unhappy with the Labour Inspector's decision, there is no right to appeal or pursue a claim in the Employment Authority.

What constitutes equal pay is also an issue. There are slightly altered criteria for a claim compared with the 1972 Act. In determining whether workers carry out the same or substantially similar work, regard must be had to, among other things, the extent to which the work requires the same, or substantially similar, degree of skill, knowledge, effort and responsibility (clause 76 (3) (a)). Both the phrase "among other things" and the word "knowledge" are additions to the 1972 Equal Pay Act. The impact of these changes in any particular case is unclear. Further, there is allowance for 'special rate' exceptions for the comparator. These clauses and other terminology could easily provide loopholes. In addition, it is important that where the employer is required to justify denial of a claim, that the onus of proof shifts to the employer to justify a differentiation in pay. The employer should have to satisfy the requirement to show that the reasons for the differentiation are not, in whole or part, by reason of the sex of the worker.

The next problem is that the process outlined in the Bill is significantly different from other provisions that can be utilised to take an equal pay claim, namely personal grievance process under the Employment Relations Act and discrimination cases taken under the Human Rights Act. It is not clear whether the employee can bypass the provisions in Part Two and go straight to one of these two processes — which are probably on balance superior to these proposals. If an employee must first use Part Two provisions, the process simply becomes more onerous. If they are alternatives, Part Two seems pointless — while the other two alternatives are not perfect for equal pay for identical / substantially similar work (and also do not cover equal value) they are free of some of the problems above and probably therefore preferable to Part Two.

To summarise, few equal pay complaints are currently made. One key reason is the lack of pay transparency, the prevalence of individual contracts and confidentiality. Together they mean that most women do not know what male colleagues are paid. This issue was raised in many submissions on the Ministry of Women's Affairs consultations on their 2003 Discussion Document, Next Steps on Pay Equity. Further, it is very hard for individual women to face up to their employer on this issue. In small workplaces where women are over-represented and where they work in close relations with their employer, this may be particularly difficult. Despite the application of good faith principles to this area in the proposed legislation, the problems raised above suggest that the situation would be likely to worsen, rather than improve, under the proposed legislation.

Finally, in this area, it is not clear in the Bill as drafted whether there will be a new Equal Pay Act, although we have received some assurance that such an Act will be separated off. However, with the current wordings, it seems possible that if enacted, Part 2 would remain buried in the Employment Relations Law Reform Act, while other sections of the Employment Relations Law Reform Bill would be incorporated into a revised version of the Employment Relations Act. This would be totally unsatisfactory. Equal Pay / Pay Equity legislation needs to be either in a separate Act (as at present) or included in the main Employment Relations Act. It may be better to amend the 1972 Equal Pay Act rather than to start again with a new Act.

4. CEVEP's Comments on the Proposed Legislation — Other Clauses

CEVEP warmly welcomes some parts of the Bill, particularly its acknowledgement of the inherent inequality of power in employment relationships, its emphasis on more effective promotion of collective bargaining and settlement, and its proposals to improve the protection of vulnerable employees in restructuring situations. This is an area in which women and Maori / Pacific employees are heavily over-represented. Ensuring greater content in the requirements for good faith bargaining is also to be welcomed, although unions and others with more expertise in this area are better placed to assess if the proposed provisions are adequate.

On the transfer of undertakings provisions (clause 30, Continuity of Employment if Employer's Business Restructured, creating a new Part 6A in the Employment Relations Act), it is particularly important that those employees designated as "vulnerable" cover some of the lowest paid groups - cleaning services, food services, laundry services and orderly services for the age-related residential care sector, laundry services for the education and health sectors, orderly services for the health sector, and caretaking for the education sector.

In most of these occupations, especially cleaning and food, women are over-represented, with cleaning the most common occupation for Pacific women and the second most common occupation for Maori women. While orderlies and caretakers are predominantly male, they are again low earnings occupations with Maori and Pacific men overrepresented. The other criteria for vulnerability (where the employees concerned are employed in a sector in which the restructuring of an employer's business occurs frequently and has tended to undermine employee's terms and conditions of employment, with the employees being in a labour intensive sector in low paid work and with little bargaining power) are also important and likely to apply disproportionately to low paid women. There could be a case for broadening the groups covered by these clauses and the strength of the protection, but the unions involved are in a better position to argue the details.

Also to be particularly welcomed is the provision whereby the Employment Relations Authority can fix the provisions of collective agreements where there has been a serious and sustained breach of good faith in collective bargaining (Clause 15 of the Bill setting out a new section 50J in the Act). With access to collective bargaining an important factor in addressing pay and employment equity for women, the provision could be of importance, for example when unions are trying to bargain for a collective agreement for a group not previously so covered.

However, there is one area outside Part Two on which CEVEP wishes to express concern. Part 8A, clause 110 D requires the Minister of Health to gazette a code of employment practice in the health sector covering the health and safety of patients, employees, and the public during any strikes or lockout in that sector. This appears to be a somewhat threatening provision sending a warning to employees in the sector concerning industrial action. Nurses, a heavily female dominated occupation, are among the groups which CEVEP consider to be underpaid due to the undervaluation of skills in such female skilled caring work. Nurses, ably led by the NZNO, are currently conducting a well justified campaign to obtain pay equity. While they are always reluctant to take industrial action, they need to be able to do so in extreme situations. There are already restrictions on industrial action in the sector, including the requirement for 14 days notice, mediation and restrictions on industrial action in the early stages of bargaining. Further, the nurses union (NZNO) has always provided cover to preserve life in any industrial action. The proposed new powers appear to be unnecessary for patient safety and unfairly reduce the rights of health sector workers.

5. Conclusion

Equal pay / pay equity legislation in New Zealand in 2004 needs to cover both equal pay for identical / substantially similar work and equal pay for work of equal value. The Taskforce on Pay and Employment Equity in the Public Service and Public Health and Education Sectors is due to report on 1 March. It would be better to withdraw Part Two and leave legislative change in this area until its report can be considered. An alternative would be to amend substantially Part Two to include equal pay for work of equal value and improve considerably the provisions on equal pay for identical / substantially similar work, possibly by amending rather than repealing the 1972 Equal Pay Act. This submission also covers in less detail some other sections of the Bill, welcoming its emphasis on more effective promotion of collective bargaining and settlement, and its proposals to improve the protection of vulnerable employees in restructuring situations. However, CEVEP opposes clause 110 D and its proposed new powers, which appear unfairly to reduce the rights of health sector workers taking industrial action.

Representatives of CEVEP wish to speak to this submission.

Rachel Brown

Coalition for Equal Value Equal Pay

Email CEVEP at info@cevep.org.nz
This webpage: http://www.cevep.org.nz/history/index.html
Last reviewed February 2004. This website created by First Bite of the Apple.