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The Equal Pay Act - Where is it at?

03 March 2017 - By Maria Dew

Over the past three years, the Equal Pay Act 1972 (EPA) has gained unprecedented attention. In the 15 years prior to 2014, there were only a handful of unremarkable equal pay cases. None of which successfully progressed the concept or practical application of equal pay under the EPA, despite the initial progress achieved in the 1970s.

Unequal piles of coins

However, the last three years has seen a rebirth of the EPA. This began in August 2013, with Kristine Bartlett and the Service and Food Workers Union claim against the Terranova rest home company (Service and Food Workers Union Nga Ringa Tota Inc v Terranova Homes and Care Ltd [2013] NZEmpC 157) .

The following year, the case was taken on appeal by Terranova, leading to the Court of Appeal’s first consideration of the EPA (Terranova Homes and Care Ltd v Service and Food Workers Union Nga Ringa Tota Inc [2015] 2 NZLR 437 (CA)).

The Court of Appeal largely upheld the Employment Court decision on an important preliminary issue. The Court of Appeal confirmed that, where it is claimed equal pay rates do not operate in a female-dominated industry, claimants can seek to use appropriate external industry comparators to assess the claim for equal pay. It remains an on-going debate which comparators will be valid comparators for the purposes of assessing “equal” pay for rest home workers.

The Court of Appeal was careful to state that, as it had only been asked to determine preliminary questions about the operation of s3 of the EPA, it would not go further and attempt the practical task of identifying appropriate comparators to the rest home workers role, or to even give guidance on how the evidence of other comparator groups or systemic undervaluation should be adduced.

The Court of Appeal did, however, offer its view that “the best way forward would be for the Employment Court to be asked to state the principles under s9 before embarking on the hearing of Ms Bartlett’s substantive claim. … As mentioned the Court may for example in its statement of principles identify appropriate comparators and guide the parties on how to adduce evidence of other comparator groups or issues relating to systemic undervaluation.” ( CA at 239)

In December 2014, the Supreme Court announced that it would not grant Terranova leave to appeal the Court of Appeal decision, as the appeal is considered substantially an appeal on preliminary questions. The Court effectively endorsed the Court of Appeal’s view that the next logical step appeared to be that the Employment Court set the principles under s9 of the EPA.

Since December 2014, there has been no further progress in the Terranova litigation. However, it has emboldened parties in other female-dominated professions to issue equal pay proceedings. In 2015, the New Zealand Educational Institute (NZEI) issued proceedings on behalf of education support workers against the Ministry of Education in the Employment Relations Authority. In 2016, the New Zealand College of Midwives filed a claim in the High Court against the Ministry of Health for breach of the New Zealand Bill of Rights Act 1990, alleging gender discrimination in rates of pay for midwives.

The Joint Working Group – a reaction to the EPA litigation

In 2015, the Government established the Joint Working Group on Pay Equity Principles (the JWG). The group consisted of government, employer and union representatives and was tasked with recommending universally applicable equal pay principles for government consideration.

In May 2016, the JWG issued its recommendations, which included principles to guide employers and employees in identifying, assessing and resolving pay equity claims. The JWG also developed a process for employers and employees to follow to resolve pay equity issues, including a bargaining process based on the Employment Relations Act framework.

In November 2016, the JWG recommendations were all accepted by the Government. It is expected that, within the next few months, the Government will introduce a Bill to amend both the EPA and the Employment Relations Act, to recognise the now agreed process and principles for equal pay claims.

The JWG appears to have halted further litigation, while the Government and unions work through state sector equal pay claims. All parties to the JWG have been pleased that its recommendations have been so promptly adopted by the Government. It appears parties are hopeful that progress can now be made without recourse to further litigation.

What next for equal pay claims?

There is now an improved framework for equal pay claims in place as between the Government, employers and unions. The Terranova case, which potentially impacts over 30,000 female rest home workers, remains as yet unresolved but is expected to continue to be the subject of negotiation between the parties and the Government. As at the time of publishing, there is no word that the case is due to be back before the Employment Court. Whether this and other equal pay claims can now be resolved more swiftly will remain to be seen.

There are still some fundamental challenges for pay equity claims in female-dominated industries. The comparator industries and roles to be used to assess equal pay claims have not yet been publicly resolved and so will likely continue to be hotly debated. Some union representatives proposed the JWG compile a list of comparator roles, but this ultimately did not occur.

There are also challenges in accessing resources and information on pay, job evaluation methodologies and historical pay data. The JWG suggested that the Government will need to play a part in supporting the availability of pay equity information. The author notes that, in the UK, the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, comes into force next month and will require large employers to publish annual statistics concerning the pay gap between their male and female employees. Introducing a similar requirement in New Zealand could aid the resolution of pay equity claims.

What about equal pay claims in mixed industries?

The Terranova case has certainly focused attention on disparity claims for women impacted by systemic undervaluation in female dominated industries. However, it should not be overlooked that s3 of the EPA also applies to more straightforward equal pay claims, where comparator roles are not so open to debate. It is perhaps surprising that this type of claim has not been seen more frequently.

There have only been a handful of such cases in the last 15 years, including:

Duvenhage v Prosthetic Processes (Auckland) Ltd NZERA Auckland AA 92/03, 7 April 2003: The claimant was a dental technician who claimed, in the Employment Relations Authority, that she was paid substantially less than the other (male) technician employed by Prosthetic Processes, in breach of the EPA. The claim was unsuccessful because the Authority held the reason for the male employee’s higher salary was not due to gender but because, unlike Ms Duvenhage, he had been headhunted from another position and was recruited to eventually take over a managerial role and run the practice.

Hitchiner v New Zealand Management Academies Ltd NZERA Auckland AA 16/06, 27 January 2006: Ms Hitchiner, another claimant in the ERA, alleged that, as a hospitality tutor, her salary was substantially lower than male hospitality tutors. The claim failed because the evidence showed Ms Hitchiner was, in fact, paid a similar salary to many other male and female hospitality tutors.

Talley’s Fisheries Ltd v Lewis (2007) 8 HRNZ 413, 4 NZELR 447 (HC), is a successful pay discrimination claim, brought under the Human Rights Act 1993. Ms Lewis successfully argued in the High Court that Talley’s Fisheries discriminated against her by giving her the role of fish trimmer, while her male partner, who had similar skills and experience, was given the higher-paying role of fish filleter. The High Court held that because Talley’s Fisheries almost invariably gave women the trimmer role and men of the same skills and experience the filleter role, Ms Lewis had been given less favourable terms of employment (lower paid work) on the basis of her gender, in breach of the Human Rights Act.

A case study: female employees in the retail sales industry – clear evidence of unequal pay?

The writer has, in recent years, been involved in an equal pay claim filed in the ERA on behalf of a female retail sales assistant in a clothing store. The company employed over a hundred part-time retail sales assistants, all female. All the sales assistants were paid the minimum wage, regardless of their skills and experience or years of service with the company.

The claimant had over 30 years’ retail experience when she began employment with the company as a part-time retail sales assistant. Throughout her five years with the firm, she was paid the minimum wage. This was despite her experience, long tenure with the company and strong performance. The claimant alleged that the company was in breach of the EPA by failing to meet the requirements of the EPA for her retail sales assistant role, as supported by evidence in the retail sales sector.

The company argued that there was no pay inequity as all of their retail sales assistants were paid the same. The company did not employ any males in the retail sales assistant role and so no in-house comparator roles were available. The claim therefore looked wider at the same role within the clothing industry for male comparators. The case provides an illustration of an equal pay claim that does not require any argument about the comparator group. The comparators are all available within the retail industry. The retail industry is not exclusively female, with males making up about 30% of all retail sales assistants, and 12% of retail sales assistants working specifically in retail clothing.

A remuneration consultant, Helene Higbee, provided expert remuneration evidence to support the claim. She determined that, for the purposes of the EPA claim, the most appropriate approach was to compare rates of pay for retail sales assistants within the claimant’s retail sector (ie: clothing retail) as well as with rates of pay for retail sales assistants in other retail sectors (ie: department stores, appliances, motor vehicle retail and supermarkets). Ms Higbee utilised Statistics New Zealand 2013 Census data for relevant wage and income information. This was argued to contain the most comprehensive set of data, based on established industry and occupational codes for valid benchmarking and detailed wage and gender information. Ms Higbee considered this data to be more detailed than any published remuneration survey by private organisations. It is also freely available.

Ms Higbee used the data to undertake a comparison of the median hourly rates of pay for retail sales assistants in all sectors of the retail industry. The results were startling. Each retail industry sector showed a clear disparity between male and female retail sales assistants. The greater the percentage of women in the sector the less the disparity. Conversely, the fewer females in the retail sector, the greater the disparity – in the same retail sales assistant role.

The pay range for men was between $13.75 and $21.15 per hour across the industry, while for women this was between $13.51 and $15.91 per hour.

The expert’s conclusion was that given that the sales assistant role across the retail industry requires the same or substantially similar skills, responsibilities, degrees of effort and working conditions, the only material difference was gender. The employee involved in this EPA claim was not represented by a union and her case was settled on an individual basis after the ERA hearing of this evidence.

However, it is hoped that this analysis of retail sales assistant roles can be adopted or adapted for analysis of other roles within the retail sector. Wage rates for female sales assistants has consistently lagged behind those for males. In fact, it appears that the gap is widening.

Much work still to be done

Recent litigation has brought the Equal Pay Act into new prominence. The current claims and government attention on female-dominated industries is encouraging, but still require much work to be done on the external comparators and evidence of systemic undervaluation to achieve final outcomes.

Meanwhile, there is also an opportunity to highlight the equal pay claim opportunities within mixed gender workforces such as the retail sales industry where comparators are easier to establish. There is still much work to be done to achieve equal pay for female retail sales assistants.

Acknowledgement

With special thanks to Anjori Mitra, Junior Barrister, Bankside Chambers and Helene Higbee, a specialist in the field of remuneration with over 25 years professional experience in New Zealand, Australia and the United States. In 1998, she founded Higbee Schaffler Ltd, a specialist remuneration consultancy to commercial and private sector businesses in New Zealand.

Maria Dew, is a barrister at Bankside Chambers, Auckland who specialises in employment law and professional misconduct. Since 2013 she has been Deputy Chair of the Health Practitioners Disciplinary Tribunal.

Last updated on the 8th March 2017