Pay equity claims: What they are and how they're changing

Last week, the government made sudden and controversial changes to how pay equity claims can be made - sparking protest and fury.

Not only did it bin dozens of existing claims from female-dominated workforces which considered themselves underpaid in comparison to those dominated by men, but it raised the bar for future claims to be successful.

Workplace Relations Minister Brooke van Velden said under the previous rules, claims were "able to progress without strong evidence of undervaluation", or without proving the difference in pay was "due to sex-based discrimination or other factors".

But what exactly is a pay equity claim? How do they work, and what thresholds do they have to meet to be successful?

What did the law say?

In 1961, the Government Service Equal Pay Act required government employees to be paid the same amount for the same work, regardless of whether they were men or women.

It was followed by the Equal Pay Act 1972, which extended that requirement to the private sector.

However it was not until 2020's Equal Pay Amendment Act (which passed with unanimous support) that the concept of 'pay equity' became unambiguously part of the law - that work requiring similar levels of skill, responsibility and effort should be paid similarly, regardless of the workforce's gender makeup.

"In certain occupations where the work is, or was, predominantly performed by women, wages have often been kept lower than occupations where the work has been performed predominantly by men," a document produced by the Ministry of Business, Innovation and Employment (MBIE) and the Ministry for Women in 2020 said.

"Today's 'going market rate' for employing people in traditionally female dominated occupations may not be a fair or equal rate, but a suppressed wage due to historical and or current pay discrimination."

The 2020 version of the Equal Pay Act outlined how employees who believed their remuneration had been suppressed due to discrimination could put forward a claim, whether individually or - more commonly - via a union.

In order for a claim to be considered, the work had to be "that is currently, or that was historically, performed by a workforce of which approximately 60 percent or more members are female".

Determining whether the work had been undervalued included factors such as its history, social and cultural factors, and whether it had been characterised as "women's work" or expected to have been done for free.

Another consideration was if there had been past failures to "properly assess or consider" what that work was worth, taking into account "the nature of the work, the levels of responsibility associated, [working] conditions… and the degree of effort required".

Once filed, an employer had 45 days to respond - either by accepting it was a pay equity claim and going into bargaining, or disputing it.

Bargaining "involves an assessment of the work of the claimant and suitable comparator occupations" to find out what the claimants should be paid - whether that is what they are already on, or more.

A "comparator" occupation is one which requires a similar level of skills, responsibility, experience and degree of effort required - and is used as a yard-stick for comparison during the claim.

If a resolution cannot be reached between the parties, mediation is available. If this fails, the Employment Relations Authority can get involved to make a determination.

A detailed outline is available on the MBIE site and another by the Public Service Commission.

What led to the 2020 amendment

In 2012, aged care worker and future New Zealander of the Year Kristine Bartlett and the and the Service and Food Workers Union (now part of E Tū) took legal action against Terranova Homes and Care. They argued its caregiver workforce - including a few men - were underpaid because their work was considered "women's work".

They won the case, the first of its kind to be brought under the 1972 act, prompting the National-led government of the time to convene a working group to figure out how the law could be updated to achieve pay equity across all types of work. The resulting bill was highly criticised by unions, and thrown out when Labour formed a new government in 2017.

After reconvening the working group, a new bill was introduced which brought pay equity claims into the existing bargaining framework, with court action only as a last resort. This became law in 2020.

Then-Minister for Women Julie Anne Genter of the Green Party said it was about fixing the injustice of female-dominated workforces being paid less than male-dominated workforces to do work that requires a similar level of skill, effort and education".

Some opposition MPs criticised the bill and its timing - as the country sought to recover economically from the first Covid-19 lockdown - but voted for it anyway.

What happened next

Since the change, the Public Service Commission says more than 100,000 employees "have had their pay corrected over multiple settlements in the public and publicly-funded sectors".

These include school administration support staff, librarians, rest home workers, expert advisers in te reo, mental health and addiction support workers, mātauranga Māori and tikanga Māori, health workers, care and support workers, social workers and more. Some have received back pay, others increases in remuneration measured in double-digit percentages and improved benefits.

There were 33 claims in progress when the law was abruptly changed last week, van Velden said, including at least 10 brought by the NZ Nurses Organisation. NZEI Te Riu Roa said its case, consolidated with one from the Post Primary Teachers' Association covering more than 90,000 people was the "largest ever pay equity claim" when it was launched in 2020, but was now "on the scrap heap" after four years and "huge amounts of work".

The new pay equity regime

Van Velden said last week those claims would be stopped, and need to be refiled and judged against the new, stricter requirements.

She said claims had been concentrated in the public sector, with costs to the Crown of settlements so far costing $1.78 billion a year.

"These changes are better for all women who are working where we can genuinely say, hand on heart, that what they are finding with their claims is genuine gender-based discrimination."

The changes brought in under urgency in the Equal Pay Amendment Act 2025, in the bill's own words, are:

• increasing the threshold for raising pay equity claims by requiring claims to have merit and by increasing the threshold for what qualifies as work that is "predominantly performed by female employees"; and
• requiring unions raising a claim on behalf of multiple employees to provide evidence to demonstrate how the work covered by a pay equity claim is the same or substantially similar; and
• making it clear that employers can give notice to claimants during the assessment phase if they consider that the work that is the subject of a claim is not the same or substantially similar. The claim would be discontinued and would need to be raised again; and
• allowing employers to opt out of a multi-employer claim without needing to provide a reason; and
• introducing a hierarchy of comparators so that comparators in closer proximity to the employer must be selected, where they exist, and allowing parties to agree to use a pay equity settlement (if settled under the Act as amended by this Bill) as an additional comparator; and
• making it clearer that parties must assess market factors that affect remuneration but are not related to sex-based discrimination; and
• requiring parties to only assess whether the workforce that is the subject of the claim has experienced sex-based undervaluation since the work became predominantly performed by females; and
• removing the ability (and requirement) for settlements to include a review clause; and
• restricting the ability to re-raise a claim so that a claim can only be re-raised 10 years after a settlement (unless there are exceptional circumstances) and only if it meets the new requirements for raising a claim; and
• allowing parties to agree to phase in remuneration over a maximum period of 3 years; and
• allowing parties to seek a determination on phasing if they cannot agree on phasing (but have agreed on remuneration); and
• requiring the Employment Relations Authority, when it fixes the remuneration of a pay equity claim, to phase in remuneration in three equal instalments, a year apart from each other, starting from the date of the determination; and
• removing the ability of the authority to award back pay when it is fixing remuneration.

The measure for "predominantly female" has been shifted from 60 percent of workers to 70 percent, meaning fewer cases will qualify, although it's not clear yet which of the current 33 claims would be able to be restarted under that rule.

Van Velden said the changes would not only make the pay equity scheme "workable and sustainable", but "significantly reduce costs to the Crown".

"There are often significant costs involved with pay equity settlements which can involve large workforces… and we need to ensure the process to raise and resolve claims is robust."

Debate over comparators

Much of the debate has focussed on which "comparators" (see the definition above) should be used for each job and whether unfair comparisons are being made between industries during claims.

"You have librarians who've been comparing themselves to transport engineers," van Velden said.

"We have admin and clerical staff at Health New Zealand comparing themselves to mechanical engineers."

She said when possible, pay comparison would now be "between female employees and male employees at the same employer", and to similar employers if that was not possible.

The Public Service Association said that would make it "impossible for people in female-dominated professions to be paid fairly".

Labour spokesperson for jobs and incomes Ginny Andersen said the tightening of the definition of comparators would "limit the ability to compare women's work to better paid, male-dominated roles".

"Gathering the stronger evidence now required, like historic wage data and independent job evaluations, will be expensive and more difficult to prove. Individual workers and small unions may not have the money or even the expertise to compile the sophisticated cases that are now needed to do this. They have made it harder for female workers to get the pay they deserve and that is unfair."

Prime Minister Christopher Luxon said claims the government was "cutting pay for women" were incorrect.

"Equal pay remains, no change. Pay parity remains, no change. Collective bargaining remains, no change. Settlements that have already happened under pay equity, no change."