A matter of equity

12 May, 2016
Ian McPherson is a director of Smartsims International Ltd. This article was inspired by his LLB(Hons) dissertation completed at the AUT Law School.

This opinion piece was first published in Employment Today (May 2016).

New Zealand’s landmark pay equity case is now before a government-initiated Joint Working Group. AUT law honours student Ian McPherson summarises the situation so far and discusses the only legitimate source from which pay equity principles can be derived.

The latest development in Kristine Bartlett’s fight for an equitable wage has seen a government-initiated Joint Working Group established to develop pay equity principles. These principles will provide practical guidance to employers and employees in implementing pay equity mechanisms. The result will have wide-ranging implications, not only for the aged-care sector, but all female-dominated industries.

Current application of New Zealand’s equal pay legislation has failed to identify or eradicate systemic discrimination, particularly evident in female-dominated occupations. As a result, a significant gender pay gap continues to be a feature of the labour market.

In late 2014, the Court of Appeal decision in Terranova Homes & Care Ltd v Service and Food Workers Union Nga Ringa Tota Inc changed the employment law landscape by adopting the widely recognised right to pay equity into domestic law.

There are an estimated 33,000 workers employed in the residential aged-care sector in New Zealand, with 92 percent of these being women. Caregivers earn on average $15.31 an hour. Kristine Bartlett has 20 years’ experience as a caregiver, but was only paid $14.46 per hour, a mere 71 cents above the minimum wage at the time.

Human Rights Commission Finding
An inquiry by the Human Rights Commission found low pay rates in the care industry were caused by historic undervaluation of roles which are traditionally considered ‘women’s work’. So this was not a claim of direct discrimination. Rather, the claim was that both male and female caregivers receive a low rate of pay because caregiving as a profession is predominantly performed by women.

The Equal Pay Act states that the court may consider the pay rate of a male comparator in assessing whether pay discrimination exists in a female-dominated workplace. The question before the Employment Court, and subsequently the Court of Appeal, was who is this male comparator?

Did Parliament intend this investigation to be limited to a comparison with a male from within the same workplace performing an identical role, or does the Act allow the court to consider what is paid to a male from outside the industry who performs work requiring the same or substantially similar skills, responsibility and effort.

In effect, is the Equal Pay Act limited to enforcing pay equality (equal pay for equal work) or does it create a right to pay equity (equal pay for work of equal value).

The Employment Court considered the wording of the Equal Pay Act in light of its purpose; being to remove and prevent the effects of gender discrimination on female pay rates. The Court struggled to see how this purpose could be achieved if only pay rates for males within the same workplace could be admitted as evidence of gender discrimination.

To select a male performing the same role from within the same workplace simply perpetuates systemic discrimination, as both men and women in female-dominated occupations receive an artificially depressed rate. Only a broad approach allowing a complainant to have their pay rate compared to a notional male performing a role equivalent in value would achieve the Act’s purpose.

In adopting this approach, the Employment Court affirmed the existence of the right to pay equity in New Zealand domestic law.

The decision was subsequently upheld by the Court of Appeal who sent the case back to the Employment Court to establish guidelines for the implementation of equal pay. However, in October 2015 the State Services Commission announced the Government’s preferred approach was to allow a Joint Working Group to develop pay equity principles instead of the Employment Court. This process is ongoing, but if the Government accepts the group’s recommendations these principles will be given legislative force.

Unique Quandary
In identifying pay equity principles, New Zealand is in a unique quandary. Where other countries have developed principles of pay equity over time, recognition of this right in New Zealand has been retrospectively thrust into domestic law through a modern interpretation of the Equal Pay Act.

In addition, New Zealand has no domestic legal source from which pay equity principles can be derived. While other jurisdictions may draw upon existing principles from their constitution to aid legislators and the courts, New Zealand is one of just three major democracies with no written constitution.

So from what legal source can the Joint Working Group identify pay equity principles to guide the law and provide practical guidance? The only legitimate source for pay equity principles are the international legal instruments of the United Nations which New Zealand has ratified.

Those directly relevant to identifying pay equity principles are the ILO Convention Concerning Equal Remuneration for Men and Women Workers for Work of Equal Value 1951 (Convention 100), the United Nations Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) and the Beijing Declaration and Platform for Action.

All were ratified on the basis that the New Zealand Government adopt these labour rights and associated principles into domestic law. As such, the adoption of pay equity principles must comply with these international legal instruments. The silver lining of New Zealand’s delayed compliance with its international human rights commitments is there is now over 60 years of research and expertise to draw upon. The principles embodied in these instruments provide a framework in which the implementation of pay equity can be delivered effectively and efficiently.

Ian McPherson is a director of Smartsims International Ltd. This article was inspired by his LLB(Hons) dissertation completed at the AUT Law School.

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