Pay equity decision adds complexity, compliance, and costs

Pay equity decision adds greater complexity, compliance, and cost for SMEs.

26 JUNE 2017

The announcement that the female-dominated aged care workforce would have its pay equalised with similar male-dominated industries seemed like a huge cause for celebration.

First it was nurses, followed by mental health and support workers – now there are calls from the early childhood education (ECE) industry who are also seeking pay equity. Yet, at this stage, employees in nurses and mental health and support workers have been the only workers directly impacted by the decision however, with such significant change happening in only two months where will this end? Will small businesses in other sectors feel the change?

What is the Pay Equity and Equal Pay Bill (PEEP)?

It was announced that from 1 July 2017, workers in the impacted sectors will receive a pay rise of between 15 and 50% depending on their qualifications and experience. Over the next five years, some employees will see their wages increase anywhere between $19 and $27 per hour, with those on minimum wage ($15.75 per hour) seeing their wage increase to $19 per hour. This is a 21% increase for those on minimum wage and works out roughly $100 per week extra in take home pay.

What does this mean for SMEs?

The pay equity principles announced on 7 June 2017 are historic says Employsure’s General Manager Jen Tweed: “the decision is precedent setting - we may begin to see each industry classified by set pay rates and conditions” adding that New Zealand’s employment relations framework is “becoming far more complex than ever.”

In addition to complexity, the Pay Equity and Equal Pay Bill (PEEP) initiates greater compliance responsibility for employers. In essence, this means less bargaining powers of employers and employees and greater Government powers in setting out the conditions and terms of employment: “We may begin to see wage bargaining become more complicated. The requirement to bargain over job comparisons means more regulation and compliance for businesses” she said.

“It could mean the decision will have a knock-on effect to related sectors. The possibility of different expectations of employers by size or industry is left open for debate, and this is just the beginning.”

Of most concern to SMEs is the cost burden. Those privately-owned businesses in aged and disability residential care, and home and community support services, are now required to come up with the extra money per week per employee, “paid at the expense of their bottom line” Tweed adds.

Need help?

As New Zealand’s leading workplace specialists, Employsure encourage all employers to ensure that pay systems are equitable, and to demonstrate to employees that gender equity is a feature of wage setting in their business. This ingredient is crucial to ensuring that policies on equal pay and equal pay for work of equal value are delivered to your employees.

Jen Tweed is General Manager at Employsure, the largest provider of employment regulations and workplace health and safety advice for SMEs across New Zealand. She has extensive experience in all manner of employment relations issues and is known for her pragmatic and commercial approach in this area.

Prior to joining Employsure, she was the ANZ General Counsel and Company Secretary for Randstad. Prior to this she was APAC Head of Legal for an ASX listed staffing company, and responsible for legal and compliance for a national real estate network.

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