Woodhouse MichaelEMPLOYMENT (PAY EQUITY AND EQUAL PAY) BILLFirst ReadingHon MICHAEL WOODHOUSE (Minister for Workplace Relations and Safety): I move That the Employment (Pay Equity and Equal Pay) Bill be now read a first time. I nominate the Transport and Industrial Relations Committee to consider the bill. This is a historic bill. When passed it will ensure that female-dominated occupations that have historically been subjected to gender pay discrimination are in future paid fairly. It will make a vital contribution to closing the gender pay gap. I raise a point of order Mr Speaker. This is an important debate and I would appreciate the opportunity to explain the bill and its intent without the barrage that started from the moment I stood up.Mr DEPUTY SPEAKER: I hear the member and I take his comments. I do not yet think it has yet registered as a barrage but I am prepared to monitor it closely.Hon MICHAEL WOODHOUSE: Moreover it will have a substantial impact—[Interruption]Mr DEPUTY SPEAKER: Don't push it! Order! [Interruption] Order! Just have a bit of a listen to the speech. Treat it with the respect that it should be.Hon MICHAEL WOODHOUSE: —for women in the labour market. Addressing and correcting the pay imbalance created by systemic undervaluation will benefit individual women their families and future generations in New Zealand. This bill had its genesis in the commencement of proceedings in the Employment Court in 2012 by the Service and Food Workers Union now E tū on behalf of Kristine Bartlett in proceedings now known as the TerraNova case. In 2014 the Court of Appeal upheld the Employment Court's decision that the Equal Pay Act 1972 applied not only to cases of equal pay—the same pay for the same work—but also of pay equity: the same pay for work of equal value.In the wake of that decision the Government took two important steps. Firstly it entered into negotiations with the union and Ms Bartlett which culminated in a more than $2 billion settlement—55000 care and support workers received pay increases of up to 71 percent over 5 years following the passage of the Care and Support Workers (Pay Equity) Settlement Bill. Secondly the Government established the Joint Working Group on Pay Equity Principles. That group led by Dame Patsy Reddy made recommendations on a set of principles to guide pay equity claims a process by which the claims were considered and a dispute resolution process to help parties to keep moving forward in the claims process without having to rely on the courts in the first instance as they would have under the Equal Pay Act which can be expensive and prohibitive.The working group was groundbreaking in its process and involved hard-working commitment from all parties and I am grateful for their dedication. In November 2016 the Government accepted all of their recommendations and this bill gives effect to them. The bill replaces a grievance-centred process of the present legislation with one more aligned with the bargaining-based approach of the Employment Relations Act. The working group made considerable progress in taking the ideas of pay equity forward. However in order to maintain consensus it was necessary that the recommendations were focused on high-level principles. In developing this legislation we have had to drill into a further level of detail while retaining consistency with the principles of the working group.There was one area where the joint working group was unable to reach a consensus. Again we have made decisions here to support the workability of the pay equity principles. The result is a well-grounded bill that will allow parties to effectively work together to address systemic gender-based undervaluation of work performed by women. The bill provides employees with a right to make a pay equity claim directly to employers. From there employees and employers must work together to determine whether the claim has merit meaning that the work is predominantly performed by women and that there is a reasonable cause that the work could be subject to both historic and current undervaluation.In assessing whether the jobs are subject to ongoing undervaluation parties will look at the market features for that job to understand why wages may remain depressed. The bill sets out factors that could result in this sort of undervaluation which include circumstances where an occupation may lack competition have a dominant source of funding and/or lack effective bargaining. This process is entirely consistent with the joint working group's recommendations.I would also point out to those who say the merit-establishment process is too onerous or that establishment of merit should not preclude bargaining and look to the TerraNova case to support that view that the Employment Court did not even get to the point of establishing merit. That step was still to be taken when the Crown stepped in and in all likelihood would involve similar questions to those set out in this bill. If the parties agree that a claim has merit they move into pay equity bargaining where the work is assessed against appropriate comparators to reach a settlement to address the pay equity in that role. At each stage of the process the parties will be able to access facilitation mediation and Employment Court determinations as necessary.In determining which comparator is the most appropriate for a certain claim the bill establishes a hierarchy of comparators to support the appropriate selection. This starts with comparators within the employer's business moving to similar businesses then the same industry or sector and finally comparators outside the industry or sector. This hierarchy of comparators was the point upon which the joint working group could not agree. The Government believes it is a necessary component of efficiently reaching an appropriate comparator and consistent with the Employment Court's expectations. I refer members to the following comments of the Employment Court judgment: is the Authority or Court entitled to have regard to what is paid to males in other industries?". It answered thus: "They may be if those inquiries of other employees of the same employer or of other employers in the same or similar enterprise or industry or sector would be an appropriate comparator group." My interpretation of that statement is that regard to what is paid to males in other industries should be made only after inquiry of the same or similar industries does not identify a valid comparison.The Court of Appeal found that the Employment Court's answer to that question was not wrong in law. However I should stress that the parties are not bound under this bill to that methodology. If they can agree an alternative method for determining the equity gap then they are free to do so. There are other approaches for carrying out this assessment and parties by agreement are free to draw on the approach that is most appropriate to their particular claim. I can also advise the House that as far as I can establish the ability to use a comparator after checking within an organisation or industry is more progressive than any other country with whom we compare. The European Union the United Kingdom California Australia and most provinces of Canada restrict comparisons to within a workplace or industry. New Zealand will be far more enabling in this regard.Another area of contention is that of back-pay. Back-pay for up to 6 years remains payable under the equal pay provisions of the bill. For equity claims the commencement of back-pay is the date a valid claim is made. The reason for no further arrears prior to that point is that unlike equal pay underpayment where the employer has consciously paid a woman less than a man doing the same role that condition does not exist in a pay equity claim. An employer and employee have—Jan Logie: They have a legal requirement to do it now. You've let them away with it for 40 years.Hon MICHAEL WOODHOUSE: Pipe down Jan. You will blow something. An employer and employee have previously bargained an appropriate rate often with the support of the union and the employer has kept faith with that agreement. The rate is paid to both men and women performing that role notwithstanding that it is female dominated. Under these conditions and especially given that funding may have been provided by a dominant funder or purchaser on the basis of an agreed rate of pay the Government does not consider further back-pay appropriate.I would note that notwithstanding the strident criticisms already levelled at the Government which no doubt are about to come my way during the first reading of this bill the TerraNova settlement which put $2 billion into the pockets of 55000 care and support workers was I understand achieved by reference to comparisons within that industry and without the payment of back-pay. It was a forward-looking settlement and this bill is also forward-looking. Statements by unions and others that the TerraNova settlement could not have been achieved had this bill been in law just do not bear up to any scrutiny of the facts.Another comment we are bound to hear tonight is that the Government in the face of the Court of Appeal decision was forced against its will to settle the TerraNova case out of court. This is patent nonsense. In the first place the Government was not even a party to those proceedings. It made interventions but it was not party. Second the Court of Appeal simply ruled that the Equal Pay Act provided equal pay should be paid for work that had equal value. That was the start line. It took 3½ years just to establish whether or not section 9 of the Equal Pay Act prevailed. The point is had the parties been left to their own devices they would have been locked in court for years and years. The Government chose to intervene because it accepted that this hard-working group of mostly female employees deserved better. It acted decisively and the notion that further claims would be better dealt with under the Equal Pay Act than this bill is just ludicrous. Nevertheless I have no doubt that we will continue that conversation with the unions business and other interested parties as we have over the last couple of years. I commend the bill and I look forward to that conversation."