Pay Equity Claim – What is it?

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Friday 12 October 2018

Pay Equity Claim – what is it?

A pay equity claim is a claim that an employee, in a predominantly female role, considers it arguable that their pay has been historically or currently undervalued.   This is terminology which has been adopted from the Employment Court judgment in the case of Bartlett v Terranova, where the union claimed, and the Court agreed, that caregivers employed in the aged care sector were underpaid compared to a hypothetical male comparator employee.   The Amendment Bill before Parliament will now extend and modernise the Equal Pay Act to put in place mechanisms to allow groups of employees to bring claims as pay equity claims – which means essentially that their work is of the same value as that of a hypothetical or actual male employee doing the same or different work.

What will the process for claims be?

On receiving a claim, the employer will need to notify all other employees that do the same or substantially similar work of the claim (within 20 days of receiving a claim), and others can come forward to have their pay considered as part of the bargaining process.

When an employer receives a pay equity claim, the employer will be able to respond and state their view as to whether it is arguable or not.  If the employer forms the view it is not arguable, the employee will have rights to challenge that decision in the Employment Relations Authority.   If the employer considers it is arguable, then the parties will go to “pay equity bargaining” to work out a settlement.  This process will involve an assessment of the nature and remuneration of the work and comparable work.

Employees will be able to ask for information from an employer to support their claim.  The employer will be entitled to give the information to an “independent reviewer” rather than directly to the employees.  This will assist to preserve confidentiality or sensitivity around the information.


The Bill would appear to create a new mechanism for collective pay negotiations for female employees, whether they are unionised or not, and where they are engaged in female dominated industries.  We see there being some practical difficulties with the Bill in its present form.

The Bill does not expressly deal with the sort of information the parties in the private sector might need to access to be able to make a meaningful comparison across roles outside of their workplace.    It is not clear how an employer will be able to justify their position, if for example a teacher is claiming their work is comparable to that of a construction worker.  How does the employer access information about the pay of the construction worker?

This Bill may also present the opportunity for disgruntled employees who are paid less for other reasons (such as performance), to use this mechanism to bring their pay up to others in the workplace, or to seek out information from the employer about the pay of others.  It will give them a platform for bargaining that would not otherwise exist.

If you are a private employer in a predominantly female workforce, market forces may no longer be the sole determinant of your pay rates and scales and you may be expected to look at external relativities in pay rates.

If you are interested in reading the Bill click here 

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