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Employment (Pay Equity and Equal Pay) Bill (Consistent) (Sections 5, 14, 19) [2018] NZBORARp 22 (13 March 2018)

Last Updated: 3 January 2019

13 March 2018

Hon David Parker, Attorney-General

LEGAL ADVICE

LPA 01 01 23

Consistency with the New Zealand Bill of Rights Act 1990: Employment (Pay Equity and Equal Pay) Bill

Purpose

1. We have considered whether the Employment (Pay Equity and Equal Pay) Bill (‘the Bill’), a member’s Bill in the name of Denise Lee MP, is consistent with the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990 (‘the Bill of Rights Act’).
2. We note that the Bill is essentially indistinguishable from a previous Government Bill, the Employment (Pay Equity and Equal Pay) Bill 2017, which lapsed on 22 August 2017. This Bill differs from the previous Government Bill in that there are some minor and inconsequential changes to terminology in the explanatory note, and updates to dates contained in the transitional provisions in Schedule 1 of the Bill.
3. We have therefore reached the same conclusion contained in our previous advice that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act. In reaching that conclusion, we have considered the consistency of the Bill with s 14 (freedom of expression) and s 19 (freedom from discrimination). Our analysis conforms with our previous advice, and is set out below.

The Bill

4. The Bill repeals and replaces the Equal Pay Act 1972 and the Government Service Equal Pay Act 1960. It also makes amendments to the Employment Relations Act 2000.
5. The purposes of the Bill are to:
   1. promote enduring settlement of claims regarding gender discrimination on pay equity grounds;
   2. provide for the elimination and prevention of existing and future gender discrimination in remuneration and other terms and conditions of employment;
   100. set out the different processes by which employees may make claims relating to gender discrimination; and
   4. re-enact, in an up-to-date form, the relevant provisions of the Equal Pay Act.
6. To that end, the Bill sets up processes for employees to make the following claims:
   1. equal pay claims, which are claims alleging that the rate of remuneration paid discriminates on the basis of sex between employees who perform the same or substantially similar work;

2. unlawful discrimination (non-remuneration) claims, which are claims alleging that the terms and conditions of employment (other than remuneration) discriminate on the basis of sex between employees who perform the same or substantially similar work; and
   100. pay equity claims, which are claims that for work that is exclusively or predominantly performed by female employees, the rate of remuneration paid for the work contains an element of sex-based discrimination.

Consistency of the Bill with the Bill of Rights Act

Section 14 – Freedom of expression

7. Section 14 of the Bill of Rights Act affirms the right to freedom of expression, including the freedom to seek, receive, and impart information and opinions of any kind in any form. The right to freedom of expression has also been interpreted as including the right not to be compelled to say certain things or to provide certain information.1
8. Parties to a pay equity claim who are having difficulties in resolving that claim may seek the assistance of the Employment Relations Authority in resolving those difficulties, through a process called facilitation. Clause 33(2) of the Bill provides that a party to facilitation may make a public statement about facilitation only if it is made in good faith, and limited to the process of facilitation or the progress being made. The clause therefore appears to limit s 14 of the Bill of Rights Act.
9. Where a provision is found to limit a particular right or freedom, it may nevertheless be consistent with the Bill of Rights Act if it can be considered a reasonable limit that is justifiable in terms of s 5 of that Act.
10. We consider that the limitation arising from cl 33(2) is justified under s 5 of the Bill of Rights Act. The objectives of promoting enduring settlement of pay equity claims and eliminating sex discrimination in employment are sufficiently important. We consider a requirement that parties to facilitation maintain confidentiality in that process is rationally connected to those objectives.
11. As cl 33(2) still allows for public statements to be made about facilitation processes and progress, we consider it impairs the right to freedom of expression no more than is reasonably necessary. Given the importance of confidentiality to the use of facilitation to resolve employment claims, the limits are in due proportion to the importance of the objective. In particular, we are advised that settlement is more likely to be achieved if parties to facilitation can make representations in a confidential and without prejudice manner.
12. A number of clauses in the Bill also compel the provision of certain information:
    1. cl 16 provides that an employer who receives a pay equity claim must notify other employees, doing the same work, that a pay equity claim has been made;
    2. cl 17 requires employers to give notice to an employee of whether they view the employee’s pay equity claim as having merit;
       

1 RJR MacDonald v Attorney-General of Canada (1995) 127 DLR (4th) 1.

100. cl 19 requires employers, where pay equity claims have been consolidated, to provide all claimants with one another’s names and addresses (except where a claimant has requested confidentiality);

4. cl 22 requires parties to a pay equity claim to provide each other information that is reasonably required to support or substantiate the claim or a response to the claim; and
5. cl 41 requires employers to keep records about pay equity claims, with failure to do so attracting a penalty of up to $20,000.

13. We consider any limitations arising from these provisions to be justified under s 5 of the Bill of Rights Act. The provisions form part of a mechanism that aims to promote enduring settlement of pay equity claims and the elimination of sex discrimination in employment. We consider these objectives to be sufficiently important. Requiring employers to keep records and to provide information about claims and other claimants to employees is rationally connected to those objectives. The requirement that parties provide relevant information to each other is also rationally connected to those objectives.
14. The provisions relate to information that is factual in nature, and there are safeguards in cases where claimants request confidentiality. We therefore consider the provisions impair the right to freedom of expression no more than is reasonably necessary in order to achieve the objectives, and the limits are in due proportion to the importance of those objectives.
15. For these reasons, we conclude that any limits to the freedom of expression imposed by the Bill are justified under s 5 of the Bill of Rights Act.

Section 19 – Freedom from discrimination

16. Section 19 of the Bill of Rights Act affirms that everyone has the right to freedom from discrimination on the grounds set out in the Human Rights Act 1993, including sex.2
17. The key questions in assessing whether there is a limit on the right to freedom from discrimination are:3
    1. does the legislation draw a distinction on one or more of the prohibited grounds of discrimination under s 21 of the Human Rights Act?
    2. if so, does the distinction involve material disadvantage to one or more classes of individuals?
18. In determining if a distinction arises, consideration is given to whether the legislation proposes that two comparable groups of people be treated differently on one or more of the prohibited grounds of discrimination.4 The distinction analysis takes a purposive and
    

2 Human Rights Act 1993, s 21(1)(a).

3 See, for example, Atkinson v Minister of Health and others [2010] NZHRRT 1; McAlister v Air New Zealand [2009] NZSC 78; and Child Poverty Action Group v Attorney-General [2008] NZHRRT 31.

4 Quilter v Attorney-General [1997] NZCA 207; [1998] 1 NZLR 523 (CA) at [573] per Tipping J (dissenting), relied on in Atkinson v Minister of Health and others [2010] NZHRRT 1 at [199]; McAlister v Air New Zealand [2009] NZSC 78 at [34] per Elias CJ, Blanchard and Wilson JJ and at [51] per Tipping J; and Child Poverty Action Group v Attorney-General [2008] NZHRRT 31 at [137].

untechnical approach to avoid artificially ruling out discrimination.5 Once a distinction on prohibited grounds is identified, the question of whether disadvantage arises is a factual determination.6

Limitation on back pay in pay equity claims

19. Monetary claims (for example equal pay claims under both the Equal Pay Act and the Bill, and minimum wage claims) generally have a six-year limitation on back pay. Clause 40 provides that, where the Employment Relations Authority determines a pay equity claim, the back pay awarded may be paid only in respect of the period beginning with the date the claim was lodged, instead of six years prior. This limitation does not apply to pay equity settlements negotiated between employers and employees. It also does not apply to other types of claims under the Bill, such as equal pay claims.
20. Pay equity claims by definition relate to work exclusively or predominantly performed by women, so the limitation on back pay in such claims disproportionately affects women. The Equal Pay Act, which is repealed by this Bill, allows for back pay to six years. We note that all existing and undetermined pay equity claims brought under the Equal Pay Act will be discontinued under the Bill in accordance with the transitional provisions at Schedule 1, and recommenced under the provisions of the Bill. Accordingly, this change will also impact on those existing unresolved pay equity claims.
21. We therefore consider the material effect of cl 40 disproportionately affects women, and therefore that the Bill limits the right to be free from discrimination on the prohibited grounds of sex affirmed in s 19(1) of the Bill of Rights Act.
22. In our consideration, we have noted that a pay equity claim is substantially different from an equal pay claim. Equal pay claims involve direct discrimination from an individual employer. Through actual intent or unconscious bias, the employer has caused discrimination against the employee. Pay equity relates to a systemic social issue. It takes account of historical discrimination against an occupation, and therefore is not caused by the individual employer. The employer in a pay equity dispute has paid the market wage in good faith, and is therefore less blameworthy.
23. We consider the limitation is justified under s 5 of the Bill of Rights Act because:
    1. the Bill aims to implement a pay equity bargaining framework, to address historical and systemic discrimination against predominately female professions;
    2. back pay has been limited to the date of lodging the claim to ensure the process is balanced and fairly reflects the nature of the grievance against the individual employer; and
    100. it does not prevent the parties to a pay equity claim from reaching a negotiated settlement that includes back pay to a date before the date of the pay equity claim.
24. We therefore conclude that the limitation on the right to be free from discrimination is reasonably justified.
    

5 Atkinson v Minister of Health and others [2010] NZHRRT 1 at [211]- [212]; McAlister v Air New Zealand [2009] NZSC 78 at [51] per Tipping J; and Child Poverty Action Group v Attorney-General [2008] NZHRRT 31 at [137].

6 See for example Child Poverty Action Group v Attorney-General [2008] NZHRRT 31 at [179]; and McAlister v Air New Zealand [2009] NZSC 78 at [40] per Elias CJ, Blanchard and Wilson JJ.

Language distinguishing between the sexes

25. We have also considered whether the distinctions based on sex throughout the Bill constitute a limit on the right to be free from discrimination. For example, cl 8 of the Bill provides that pay equity claims relate to work that is exclusively or predominantly performed by female employees.
26. However, we consider the Bill is covered under s 19(2) of the Bill of Rights Act, which provides that measures taken in good faith for the purpose of assisting or advancing disadvantaged persons do not constitute discrimination. The Bill provides a scheme to address systemic workplace discrimination on the basis of sex. It is therefore necessary to make some distinctions based on sex.

Conclusion

27. We have concluded that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act.
    

Jeff Orr

Chief Legal Counsel Office of Legal Counsel