Key Pay Equity Caselaw
With a good head of steam built up, I dived into the main caselaw: Terranova Homes & Care Ltd V Service And Food Workers Union Nga Ringa Tota Inc Ca631/2013 [2014] NZCA 516 [28 October 2014] (Bartlett Case), fully expecting to find another ugly piece of activist legal interpretation.
What I found was something completely different.
To the Courts credit, it had actually tried to make a decision which was honest to the interpretation of the legislation, in this instance, the Equal Pay Act 1972 (the Act). It was the Act itself that was a nasty piece of really bad legislation, and the Court canvassed the reasons why.
The Court struggled to interpret the Act in the context of the policy at the time, to understand what was the legislative purpose Parliament had been trying to achieve.
The problems the Act sought to address from the 1970’s award system, no longer existed in 2014. The Bolger government, who removed the award system, ought to also have repealed the Equal Pay Act, but hadn’t.
And for the next THIRTY YEARS, politicians through either laziness, or an unwillingness to “kick a hornets nest” left this ugly Act alone.
And in 2014, the unions quite rightly seized on this legislation, a relic of a bygone labour market, and milked it for all it was worth. The Courts did their best to give the Act its Parliamentary intention (as they should), but the Act sort to fix a “problem” that no longer existed.
And then the “Pay Equity” Gravy Train really kicked off.
New Zealand Pay Equity History
Its worth reading the Court of Appeal judgement from O’Regan P, Stevens and French JJ. The following is substantially (ie – word for word) ripped-off from the text of the Justices’.
New Zealand in the 1970’s: A Socialistic Labour Market Ripe with Gender Inequality
The Equal Pay Act 1972 came from a 1971 Commission report that sought to address gender issues of the time that related to the 1970’s labour relations system.
Back in the 1970’s, wage fixing in the private sector was primarily regulated by the Industrial Conciliation and Arbitration Act 1954 which was highly centralised. Wage bargaining system was through compulsory conciliated bargaining for blanket-coverage awards that set minimum terms and conditions of employment across industries.
Some awards were limited to local industry labour markets but many of them were regional or national in scope. The awards were negotiated by unions and employer representatives and then submitted for approval to the Court of Arbitration.
If the parties could not reach agreement the dispute would be resolved by state-sponsored arbitration.
Prior to 1972, awards often expressly provided separate rates for female employees. The female rates were invariably lower than the male rates.
In some awards, gender bias took the form of different job titles being allocated to men and women undertaking substantially the same work. Again, the men received higher rates of pay.
The “New Zealand (except Canterbury) Rest Homes Employees Award” was typical of the times. The Award covered workers in all rest homes throughout the country, except those in the Canterbury region. The names of the rest homes were listed.
Under the heading “Industry To Which Agreement Applies”, it stated that “this agreement shall apply to all workers employed in old people’s Homes” and that it was not lawful for either employer or worker to contract out of the agreement.
The Award set out rates of pay for cooks, cook-generals (defined as a person engaged in cooking in addition to duties beyond the kitchen) and “other workers including general aids”. For each category, there were separate male and female rates.
The Equal Pay Act came into force on 20 October 1972, and has remained in force ever since. By the end of the initial five year implementation phase, the Act had been effective in eliminating separate male and female rates in awards and other types of employment agreements.
Between 1972 and 1978, the ratio of female to male hourly earnings increased from approximately 70 per cent to 78.5 per cent.
1979 Review of the Pay Equity Legislation
The Act was reviewed in 1979. The review committee recorded that despite progress, in some agreements the equal pay rate for work that had been traditionally performed by women was too low to attract males and was therefore still a female rate. It recommended that future reviews of the Act should compare earnings in female-intensive occupations with those in male-intensive occupations to determine whether despite the Act there was still sex discrimination in pay treatment of women in predominantly female occupations.
The recommendation was never adopted.
Although the Act provided for Department of Labour Inspectors to take enforcement proceedings in the Arbitration Court, very few complaints were received after the initial implementation phase. The Court of Appeal was only able to find a total of 10 cases decided under the Act.
“Cup of Tea” Economics: The 1987 Lange Labour Government
In 1986 the Clerical Workers Union submitted a case to the Arbitration Court designed to test the continuing applicability of the Act and whether the Act encompassed pay equity. The Clerical Workers Award at the time covered 30,000 workers, of whom 90 per cent were women.
The Union sought to argue that the wage rates under the award were lower than the rates payable under other awards covering work of equal value, such as the Building and Related Industries Tradesmen and Other Workers Award, and that this had come about because the great majority of clerical workers were female and the great majority of building tradespersons were male.
This was the first case that raised the notion that Courts should “look across” industries, and compare labour rates against predominately male and predominately female industries.
The Arbitration Court confirmed that the Act was “still alive”, but rejected the Union’s argument.
It held that the choice of the Act as “a vehicle for remedy of the perceived problems in the present case” was an error of law and that the Act contained “no powers or other provisions by which the Court [could] address the issue raised by the union and [gave] no powers to the Court to do what the union ask[ed]”.
In the Court’s view, its jurisdiction under the Act was limited to ensuring equal pay between male and female employees covered by the same award.
Female Work is a “Stopgap” Activity Until Marriage
In response, the Department of Labour commissioned an equal pay study to canvass issues such as the existence and extent of the gender pay gap, the reasons for it, the justifications for reducing it and the most effective ways of doing so.
The 1987 Phase One Report from that study found:
- there was still a substantial gender pay gap in New Zealand and,
- that although the causes of the gap were complex and interrelated, many contained elements of discrimination.
The main causes identified by the report was the segregation of women into occupations and industries characterised by low rates of pay. There was found to be a strong statistical link between female dominance in an occupation and low pay rates. But by the sounds of it, that was the limits of their investigations.
The Report found there was growing literature supporting the view that the lower level of earnings in many female-dominated occupations was discriminatory, being in large measure attributable to historical factors no longer relevant – such as the fact that paid employment for women was seen as a stopgap until marriage and therefore not deserving of higher earnings – and to the undervaluation of skills needed in female-intensive jobs, such as manual dexterity.
Such skills were undervalued because they were seen as innate or natural skills (as opposed to acquired skills) and/or as an extension of women’s unpaid work in the home.
Not a lot of economic thinking going on…
I love this bit from the judgement:
[37] We pause here to interpolate that it is this view that is encapsulated in the Employment Court’s phrase “systemic undervaluation of the work derived from current or historical or structural gender discrimination” (systemic undervaluation).
Service and Food Workers Union Nga Ringa Tota Inc v Terranova Homes and Care Ltd [2013] NZEmpC 157, (2013) 11 NZELR 78 [Employment Court judgment] at [44] and [118]
As for the effectiveness of the Act, the 1987 report concluded that the Act had failed to reduce the gender pay gap significantly and had failed to deliver equal pay for work of equal value to working women in New Zealand. It recommended that work should be undertaken to deliver legislation on equal pay for work of equal value, culminating in Parliament enacting the Employment Equity Act 1990.
Within three months, however, there was a change of government and the Employment Equity Act was repealed.
🙂
Labour Market Economics – the Employment Contracts Act 1991 – Unions Retrench to the Public Sector
New Zealand’s labour market economics changed forever with the Employment Contracts Act.
The underlying philosophy of the legislation was to decentralise wage fixing and foster individualism in employment relationships. It abolished the award system and provided that the type of employment contract and its content were matters of negotiation between the parties.
The Employment Contracts Act was itself replaced by the Employment Relations Act, however, the new Act did not reinstate the award system.
As at 2008, only 15 per cent of the total New Zealand workforce was covered by a collective employment agreement. The majority of collective agreements are single-employer agreements. Collective bargaining is now very much a public sector phenomenon, with around 50 per cent more public sector employees employed under collective agreements than in the private sector.
Law is Politics: Human Rights Commission Wades In
Although Terranova is a private provider it was funded by a District Health Board under the Social Security Act 1964. Ultimately, the Government was going to pick up the tab.
In 2012 the aged care sector was the subject of an inquiry by the Human Rights Commission (HRC). The subsequent report stated that low wages, pay inequality and inequity were three issues that had dominated the inquiry. It further stated:
The fact that thousands of (mainly women) are caring for vulnerable older people for barely the minimum wage is an injustice grounded in historical undervaluation of the role. … Pay inequality between home and residential based caring and those doing much the same work in public hospitals cannot continue to be condoned when it is publicly funded.
The HRC report was the catalyst for the Bartlett Case.
Making a Silk Shirt out of a Sow’s Ear: The Court Tries its Best
The central argument in the Bartlett case turned on what was the appropriate comparator to compare Kristine Bartlett’s salary “to”.
Terranova employed four men in the same role – was that the metric of the pay difference that ought to be considered? Terranova also argued the rate it pays male gardener employed in rest homes also ought to be considerd. The reason, it argued, was the suitable male comparator ought to be found in the rest home sector. Business New Zealand argued the comparatore was limited to the particular workplace or employer.
The union argued that the correct comparator was the rate that would be paid to a male performing the work using evidence of what is paid to similar male employees not engaged in the sector and not subject to “evidence of systemic undervaluation”.
Really Badly Written Law!
The first difficulty the Court found was that the Act was very poorly worded. Its syntax was cumbersome and the drafting elliptical. The critical passages of the 1971 Commission report which led to the Act are ambiguous. The wording of s 3(1)(b) is essentially the same as the wording recommended by the Commission.
The ambiguity in the 1971 Commission report meant all parties in Bartlett case were able to identify passages that supported their competing interpretations. The Court noted the same ambiguities were evident in the parliamentary debates as recorded in Hansard.
🙂
Distilling the Legislation Principals Created in 1972 For Use in 2014
The Commission argued women were “crowded into” certain occupations that attract lower rates of pay than male-dominated occupations. However, the Commission also suggested that this resulted from women being less likely to find employment in higher paid fields (in other words, that it is an issue of equality of opportunity rather than pay equity). Systemic undervaluation of skills wasn’t mentioned.
The Commission noted the difficulty of designing a method of determining whether equal rates are paid for work of equal worth. Certain passages suggest that the Commission considered it was too difficult and that its preference was to leave pay equity for another day: making an active choice to limit the scope of the reform to equal pay for the same work. However, other passages suggested that the Commission intended the proposed legislation to include pay equity and was prepared to leave the mechanism by which that would be achieved to the parties and in default the Arbitration Court.
The problems in interpreting the Commission report are further compounded by consideration of the fact that the Commission was operating in a very different legal environment and is likely to have had a different mindset to that of a person trying to make sense of the legislation in 2014.
In 1972 enterprise bargaining was not the norm. The norm was centralised wage fixing and large industry multi-employer agreements spanning whole industry or sector.
Lots of comments in the case like: “We have been troubled by these issues. “, and “Against this confused background, what weight should a court endeavouring to interpret s 3(1)(b) of the Equal Pay Act place on Convention 100?” when refering to the Act’s statutory interpretation.
And “As will be readily apparent, we have found this a difficult case to decide. There are strong arguments favouring both sides of the debate”
… Finally
In light of that language and the purpose, the Court of Appeal agreed with the answers given by the Employment Court.
… equal pay for women for work predominantly or exclusively performed by women, is to be determined by reference to what men would be paid to do the same work abstracting from skills, responsibility, conditions and degrees of effort as well as from any systemic undervaluation of the work derived from current or historical or structural gender discrimination.
Is the Authority or Court entitled to have regard to what is paid to males in other industries?
[yes] … if those enquiries of other employees of the same employer or of other employers in the same or similar enterprise or industry or sector would be an inappropriate comparator group
And.. Gentle Folks, that’s a wrap about how New Zealand got itself into this hot sticky mess.
I wonder why this conversation derived from judicial decisions never made it to media…?