Pay equity definitions and process
Pay equity claims are raised to ensure that people are paid equally for doing work of equal value.
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This information supports you to understand the pay equity claim process.
- About pay equity
- Is pay equity different to employment equity?
- What is pay parity?
- What is gender pay gap?
- What is a claimant?
- What is a union?
- The pay equity claim process
- Pay equity principles
Pay equity can be a challenging concept because achieving pay equity means we have to compare the way that we value and pay for work that we perceive to be very different.
Pay equity recognises that while on the surface two jobs may look very different to each other, they actually require the same or similar skills, responsibilities, experience and effort of employees, working in the same or similar conditions.
It also recognises that in some instances, wages for workers in female dominated occupations have suffered from gender-based discrimination because of perceptions and prejudices about the value of “women’s work”, and a tendency to minimise the skills, responsibilities, conditions and effort required by this work.
By comparing the work and pay of female-dominated occupations with male-dominated occupations, pay equity ensures that workers in female-dominated occupations receive pay that properly recognises the value of the work that they do.
Employment equity is about fairness at work. It means people have the same opportunities to participate fully in employment regardless of their gender.
Pay parity means the same pay for the same job, regardless of who your employer is or what sector you work in.
The gender pay gap is a high-level indicator of the difference between women and men’s earnings. It compares the median hourly earnings of women and men in full and part-time work.
Further information about the gender pay gap:
A claimant is the person (or group of people) making a claim. They can do this on their own, or the claim can be raised on their behalf by a union.
Unions are membership-based organisations within workplaces that are democratically run by their members. They exist for workers to support each other so that they don’t have to face a problem, or negotiate improvements to their working conditions, on their own.
Union members elect union representatives from workplaces, and make decisions on things like how the union is run, and what to focus on when negotiating with the employer.
Unions use a variety of means to achieve their aims including:
- industrial action (particularly collective bargaining), recruitment of new members, development of members
- formal and informal engagement in the workplace between members (often with support from an organiser) and managers at all levels of the workplace
- campaigning, participation in public submission processes, building alliances with other community and international organisations
Further information about unions:
- NZEI Te Riu Roa(external link)
- Post Primary Teachers Association (PPTA)(external link)
- New Zealand Council of Trade Unions(external link)
The pay equity process was created to show the steps involved in a claim.
The stages are:
- Raising a claim
- Assessing a claim
- Settling a claim.
The process in more detail
Once an employer has accepted that a pay equity claim is arguable, it is recommended that the parties develop and sign their own Terms of Reference at the start of the pay equity bargaining process.
This should include:
- the scope of the work done by the claimants
- how they will assess their work
- how much claimants and comparators are paid
- how the everyone will work together to engage, solve problems and share information
What is a comparator?
When talking about a pay equity claim, a comparator is a person who is doing work of a similar value, but in a role that is mostly performed by the opposite gender.
The groups should then move through the Principles process to carry out a gender-neutral assessment that includes:
- the claimants’ work
- identification and agreement of appropriate comparators
- assessment of the comparators’ work
- comparison of the work and remuneration of both claimants and comparators
The main purpose for the assessment is to find out whether the claimant is being paid less than the comparator because of their gender.
If the assessment process confirms this, then the parties move into negotiating a settlement that establishes equivalent rates of pay for the claimant.
Any agreement should be recorded in writing, and may need to be ratified (agreed to) by union members if the claim has been raised by a union.
Due to the number of claims increasing, the State Services Commission (SSC) and the New Zealand Council for Trade Unions (NZCTU) agreed to jointly oversee State sector pay equity claims. In early 2017, they agreed Terms of Reference to help agencies and unions to work through pay equity claims in the State sector.
A Joint Working Group was set up to create a set of pay equity principles to guide the raising and resolving of pay equity claims. These principles are based on good faith, in line with New Zealand’s employment relations framework.
More information about the work that the State Service Commission is doing around eliminating the gender pay gap in the Public Service can be found on the State Services Commission website(external link).
The pay equity principles are listed below:
Raising a claim
Any employee or group of employees can make a claim.
The process to raise a claim as a pay equity claim should be simple and accessible to all parties.
To determine whether to proceed with the claim as a pay equity claim the work must be predominantly performed by women.
In addition it should be arguable that:
The work is currently or has been historically undervalued due to, for example:
- Any relevant origins and history of the work and the wage setting for it
- Any social, cultural or historical factors which may have led to undervaluing or devaluing of the work and the remuneration paid for it
- There is or has been some characterisation of the work as “women’s work”
- Any social, cultural or historical phenomena whereby women are considered to have “natural” or “inherent” qualities not required to be accounted for in wages paid.
Consideration may also be given to whether gender-based systemic undervaluation has affected the remuneration for the work due to:
- Features of the market, industry or sector or occupation which may have resulted in continued undervaluation of the work, including but not limited to: a dominant source of funding across the market, industry or sector the lack of effective bargaining
- The failure by the parties to properly assess or consider the remuneration that should be paid to properly account for the nature of the work, the levels or responsibility associated with the work, the conditions under which the work is performed, and the degree of effort required to perform the work
- Areas where remuneration for this work may have been affected by any occupational segregation and/or any occupational segmentation
- Any other relevant features
Agreeing to proceed with a pay equity claim does not in and of itself predetermine a pay equity outcome.
Assessing the claim
A thorough assessment of the skills, responsibilities, conditions of work and degrees of effort of the work done by the women must be undertaken.
The assessment must be objective and free of assumptions based on gender.
Current views, conclusions or assessments are not to be assumed to be free of assumptions based on gender.
Any assessment must fully recognise the importance of skills, responsibilities, effort and conditions that are commonly overlooked or undervalued in female dominated work such as social and communication skills, responsibility for the wellbeing of others, emotional effort, cultural knowledge and sensitivity.
To establish equal pay, there should be an examination of:
- the work being performed and the remuneration paid to those performing the work, and
- the work performed by, and remuneration paid to, appropriate comparators
An examination of the work being performed and that of appropriate comparators requires the identification and examination of:
- The skills required
- The responsibilities imposed by the work
- The conditions of work
- The degree of effort in performing the work
- The experience of employees
- Any other relevant work features
An examination of the work and remuneration of appropriate comparators may include:
- male comparators performing work which is the same as or similar to the work at issue in circumstances in which the male comparators’ work is not predominantly performed by females; and/or
- male comparators who perform different work all of which, or aspects of which, involve skills and/or responsibilities and/or conditions and/or degrees of effort which are the same or substantially similar to the work being examined; and
- any other useful and relevant comparators
The work may have been historically undervalued because of:
- any relevant origins and history of the work and the wage setting for it
- any social, cultural or historical factors which may have led to undervaluing or devaluing of the work and the remuneration paid for it
- there is or has been some characterisation or labelling of the work as “women’s work”
- any social, cultural or historical phenomena whereby women are considered to have “natural” or “inherent” qualities not required to be accounted for in wages paid
A male whose remuneration is itself distorted by systemic undervaluation of “women’s work” is not an appropriate comparator.
Settling the claim
Equal pay is remuneration (including but not limited to time wages, overtime payments and allowances) which has no element of gender-based differentiation.
Equal pay must be free from any systemic undervaluation, that is, undervaluation derived from the effects of current, historical or structural gender-based differentiation.
In establishing equal pay, other conditions of employment cannot be reduced.
The process of establishing equal pay should be orderly, efficient, kept within reasonable bounds and not needlessly prolonged.
Any equal pay established must be reviewed and kept current.
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