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A "WORLD-LEADING FRAMEWORK" FOR PAY EQUITY IN THE PIPELINE
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The Government is in the process of fashioning “a world-leading framework for the consideration of pay equity”, to be announced “in the not too distant future” according to Michael Woodhouse, Minister for Workplace Relations and Safety. (Questions in the House 25 August 2016.)

While the focus of developments in pay equity law has recently been on the caring sector, the proposed framework is likely to have implications for all employers who employ people in female-dominated occupations, and for employees in those occupations. Some of the affected workforces are likely to be in the health sector, education, and in secretarial and hospitality services.
 
Pay equity is the principle that employers must pay men and women “equal pay for work of equal value”. This means not just that an employer must pay a man and a woman the same amount to do the same job, but also that jobs which are different, but have “equal value” must be remunerated equally, unless any differences in remuneration can be explained by factors that are not influenced by gender. A pay equity law therefore has the potential to require employers to increase remuneration for affected employees where pay gaps exist. 
 
The Government’s framework will be a response to recommendations made by a Joint Working Group on Pay Equity, comprising representatives of government, unions and employers (available here). The Joint Working Group proposed:

  • An employee will be able to make a pay equity claim to their employer at any time. The employer must immediately notify other affected employees. If a claim is accepted to be a genuine pay equity claim (as opposed to simply a general complaint about pay), the parties will initially attempt to resolve the claim through bargaining. If bargaining is unsuccessful, a claim may be made to the Employment Relations Authority, and will be resolved with the assistance of the normal dispute resolution institutions.
  • Determination of a pay equity claim, either through bargaining or other processes, is to be guided by, among other things:
    • Assessing the skills, responsibilities, conditions and degrees of effort required for the job in question, ensuring that factors that are commonly overlooked or undervalued in female-dominated work are considered; and
    • Comparing the remuneration for the job in question with comparable jobs where the remuneration is not affected by any potentially discriminatory undervaluing.

Pay equity legislation is well established in comparable jurisdictions such as Canada, the UK and Australia, but the Joint Working Group’s proposals appear to go further than the legislation in any of those countries. In particular, the scope of comparison is not limited to employees of a single employer or establishment. This is consistent with the Court of Appeal’s decision in the Terranova case in 2014, in which the Court rejected the European position that “there must be a single body both responsible for and capable of remedying the pay inequality.” It remains to be seen whether the Government will agree.
 
The Joint Working Group’s recommendations also provide little assistance for dealing with arguably the greatest challenges in pay equity claims: determining how to compare the ‘value’ of different jobs, and, if two jobs are equivalent, working out how much of any difference in remuneration can be attributed to legitimate considerations, like recruitment and retention issues, rather than discrimination. Presently, the recommendations do not even suggest the threshold at which an occupation is to be considered “female dominated”.
 
If the Government decides to pursue the proposal for new legislation, there will be an opportunity for submissions once the bill has been referred to select committee. If you are interested in submitting and would like legal assistance, please get in touch. We are also able to help both employers and employees to consider their positions ahead of the new legislation. Pay setting practices and records will have increasing importance once the new pay equity obligations come into play. 

This article was written by Catherine Fleming, a Senior Associate in our public law team.

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