At a glance
- The Equal Pay Amendment Act 2025 (Amendment Act) was enacted on 6 May 2025, to address concerns that the original Act was not effectively identifying or resolving genuine pay equity issues.
- Claimants must now show a workforce is at least 70% female for ten consecutive years, up from the previous 60% at any time.
- A strict hierarchy of comparators has been introduced, prioritising those from the same employer; claims cannot proceed without a suitable comparator.
- Employers now have broader grounds to discontinue claims, including if the comparator work is not substantially similar.
- All 33 existing claims were discontinued under the new law, raising concerns due to its retrospective application and urgent enactment.
The New Zealand government has recently passed significant amendments to the Equal Pay Act 1972 (Act) to develop the pay equity process. The Amendment Act was enacted into legislation under urgency on 6 May 2025.
Why change the law?
The purpose of the Act is to address systemic undervaluation of jobs predominantly held by women by establishing a process for resolving pay equity claims. One of the debates has been around the use of comparator roles to re-evaluate roles.
At the heart of the Amendment Act was a concern by government that the Act was not operating as intended. The Minister for Workplace Relations and Safety indicated that the Act did not give confidence that genuine pay equity issues were being correctly identified and addressed. Highlighting this concern, the Minister noted:
"It is clear the current Act is not working as intended… Claims have been able to progress without strong evidence of undervaluation and there have been very broad claims where it is difficult to tell whether differences in pay are due to sex-based discrimination or other factors".
What has changed?
Prospective claimants must now show that the workforce has 70% or more female members and has done so for ten consecutive years. Previously, prospective claimants needed to show that 60% or more members of the workforce having ever been female.
Further, the Act has introduced a hierarchy of comparators. The purpose of this change is to ensure that the comparators selected are closely related to the employer. The Minister noted in the third reading of the Bill that comparators have been used in the past despite "a number of differences with the work of claimants and respective skills."
Priority is given to comparators from the same employer. If none are suitable, comparators from similar employers, then within the same industry or sector, can be used. If no appropriate comparator is found, the pay equity claim cannot proceed.
Comparators from different industries or sectors are excluded due to difficulties in determining if pay differences are sex-based or due to other factors. Workforce size can also exclude a comparator if it is too small to allow a meaningful comparison. Without a suitable comparator, the claim cannot move forward.
The scope for employers discontinuing a claim has also widened. Employers can now give notice discontinuing a claim if they consider that the work is not the same or substantially similar to the claimant's comparator workforce. Previously, employers could only discontinue a claim by giving notice if there was not an arguable case that the claim related to female-dominated work that was or had been historically undervalued.
Other amendments have been added such as allowing parties to agree that increases in remuneration from pay equity bargaining can be phased in, and that review clauses in settled claims are no longer enforceable.
Impacts?
Controversially, all existing pay equity claims (totalling 33 at the introduction of the Amendment Act), have been discontinued by the introduction of the Amendment Act, and can only proceed if they meet its new requirements. Some commentators have noted concerns around the retrospective nature of this decision, coupled with the fact the Amendment Act was enacted under urgency.
While the Amendment Act appears to be directed toward the public sector, it does not exclude the private sector. Depending on the nature and scope of employment in the private sector, these changes would also reduce costs for employers by narrowing the scope of claims.
More to explore
