Introduction

On 6 May 2025, the Government introduced, under urgency, a Bill proposing amendments to the Equal Pay Act 1972 (the Act).

The Bill passed its first and second readings on 6 May 2025, bypassing the usual select committee process, and completed the remaining stages of the legislative process on 7 May 2025.

The Equal Pay Amendment Bill is now awaiting the Royal Assent.   

The Equal Pay Act 1972 has two main focuses:

• facilitating equal pay, and
• facilitating pay equity.

Equal Pay

Equal pay means that men and women who do the same job should be paid the same.

The Act requires employers to ensure that there is no differentiation, on the basis of sex, between the remuneration (and term and conditions of employment) offered to employees performing the same, or substantially similar, work.

Pay Equity

Pay equity means that work that is predominantly performed by women should receive the same remuneration as work that may be different, but is of equal value to, work performed by men.

The Act requires employers to ensure that there is no differentiation, on the basis of sex, between the remuneration offered for work that is predominantly performed by female employees and the rate of remuneration that would be offered to male employees who have the same (or substantially similar) skills and experience and work under the same (or substantially similar) conditions.

In 2020, the Act was amended to establish a process for raising “pay equity” claims. The purpose of the pay equity provisions is to set a low threshold for raising a claim and to provide a simple and accessible process for resolving the claim.

Background to the 2020 Amendments: Kristine Bartlett

The 2020 amendments to the Act were prompted by the significant case Kristine Bartlett (and her union, E tū) brought to the Employment Relations Authority in 2012. Bartlett claimed her low rate of pay was due to gender discrimination. She argued care and support workers were underpaid because their work was systemically undervalued.

The Court of Appeal held the Act required pay equity, not merely equal pay.

To minimise further litigation over pay equity, the Government began work on a framework for facilitating pay equity claims. To address Bartlett’s claim, the Government passed the Support Workers (Pay Equity) Settlements Act 2017, applying these pay equity principles in remuneration for care and support workers.

Since the Act was amended in 2020, 100,000 employees in the public and publicly funded sectors have had their pay corrected to reflect their value.[1]

Amendment Bill

The Equal Pay Amendment Bill proposes significant amendments to the pay Equity claim process. The Minister for Workplace Relations and Safety, Brooke van Velden, says these changes will ensure a more ‘robust’ process for raising claims.

Threshold

The Bill will raise the threshold for raising a pay equity claim.

Currently, the Act provides that an individual or union can raise a pay equity claim with an employer if they consider the claim is “arguable.” A claim is “arguable” if:

• the work is, or was historically, performed by a workforce of which 60% or more members are female, and
• it is arguable that the work is currently, or was historically, undervalued.

The Bill raises this threshold by providing that a pay equity claim may be raised if there is evidence that the claim has “merit”.[2] A claim has merit if:

• the work is performed by a workforce that is at least 70% female, and that workforce has been at least 70% female for at least 10 consecutive years; and
• there are reasonable grounds to believe the work has been historically undervalued for one of the reasons specified in the Bill; and
• there are reasonable grounds to believe the work continues to be subject to systemic sex-based undervaluation, taking into account all relevant matters.

The Government say this will help ensure a more considered assessment on whether a pay equity issue may exist when a claim is raised, and support employers to determine whether the scope of a claim is appropriate when raised.[3]

Comparators

The Bill will introduce new rules for choosing appropriate comparators to assess whether an employee’s work is undervalued. The Bill will:[4]

• introduce a hierarchy of comparators, meaning the comparator will need to be
  • employed by the same employer, or if that is not possible,
  • employed by a similar employer, or if that is also not possible,
  • an appropriate comparator from within the same industry or sector,
• remove the possibility for comparators from a different industry or sector being included in the hierarchy,
• add more detail to the process for assessing undervaluation, and
• allow employers to provide notice that the work is not the same or substantially similar.

Employers will also be able to opt out of a multi-employer claim without needing a reason. According to the Minister, there are “librarians who’ve been comparing themselves to transport engineers. We have admin and clerical staff at Health New Zealand comparing themselves to mechanical engineers.”[5] The Cabinet Paper provides that these changes will reduce the level of judgement needed when undertaking comparison, as comparators will be in closer proximity to the employer. There will be less variables when determining whether differences in remuneration are due to sex-based factors, as only comparators from the same industry/sector (at least) will be considered. Employers will also have further tools to contest claims that are broadly scoped.

Review Clauses

The Bill will also remove the requirement and ability for settlements to have a review clause. The Government says, currently, the short timeframe of the review cycle makes it difficult to determine whether any differences in pay are due to pay equity issues having reemerged, or to short-term labour market dynamics. Instead, it will enable a claim to be re-raised 10 years after a settlement if it meets the new requirements.

Significantly, and unusually, the Bill proposes that this change will be retrospective which means that all review clauses in existing pay equity settlements will be unenforceable.

Disputes and Remuneration

The Bill will also make changes to

• raise the threshold for applying to the Authority to fix remuneration,
• remove the ability for the Authority to award backpay,
• allow employers to meet their pay equity obligations in a way that is sustainable for their business, such as through phasing in remuneration, and
• if the Authority is asked to fix remuneration, it must be phased in over three annual increments.

The government says this will incentivise parties to resolve claims themselves and avoid disruption to employers’ operations due to the cost of pay equity settlements.

What this means for existing pay equity settlements and current pay equity claims?

The Bill does not affect existing pay equity settlements, except that their review clauses will become unenforceable.

If a claim has been raised with an employer or lodged with the Authority or Court but has not been settled, it will be discontinued. The Minister has explained that current claims will be stopped and will need to restart under the new threshold. The Minister estimates that 33 current claims will be discontinued.

Our Take

The retrospective repeal of review clauses in existing pay equity settlements through an amendment bill passed under urgency without public consultation is highly unusual.

The reason for urgency seems to that the changes will achieve savings for the Government.

We noted the Minister’s comment that, “I think it’s fairly clear that the policy changes that I am delivering today will go some way – and quite a substantial way – to find very real and significant cost reductions to Government.”

We think it inappropriate for the Government to seek to balance its budget at the expense of underpaid women.

The other changes proposed by the Amendment Bill, such as the proposed changes to the threshold for raising a pay equity claim and comparators for establishing a pay equity claim, are matters that relate to fundamental employment rights and should be subject to public consultation through the select committee process.

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