Reflecting on the current government’s track record on employment matters over the past term, it appears that the “tail has truly wagged the dog”. The ACT Party has decimated long established employment laws that have been largely been settled and agreed to for many years by both the two main parties, the National Party and the Labour Party.
National came to power on a platform of Blame, Blame, Blame and tiny tax cuts that are costing $14.6 billion over four years. “Our plan is carefully targeted to ensure that those who will benefit the most are working New Zealanders. It’s about time they got some relief from Labour’s cost-of-living crisis and National will deliver that to them”, Mr Luxon said.
The following budget, the government clawed back some of these tax cut costs with its retrograde steps to addressing pay equity issues that had previously been agreed to between the Labour Party and the National Party. The cost to addressing those inequities was significant. The previous budget had allocated some $17 billion over four years, suggesting that in the government funded sector the costs of settling pay equity claims could be considerable. The Prime Minister has admitted that those changes to pay equity laws are going to save the government “billions of dollars”, he now says that this was not the motivation for changing the legislation. David Seymour, the Deputy Prime Minister, was more forthright at the time - "I actually think that Brooke van Velden has saved the taxpayer billions”.
The ACT party has put the minimum wage firmly on the election agenda with a proposal to freeze the adult minimum wage at $23.95 an hour for three years and introduce a new training wage for workers under 20 at 60 per cent of the adult rate for their first 12 months with an employer. At today’s rate, that would be $14.37 an hour.
The proposal is based on ACT’s argument that mandated wage increases have outpaced productivity and that lower employment costs will encourage businesses to employ more people, particularly young people. The party says higher wages ultimately depend upon businesses becoming more productive and profitable.
There is an obvious counterargument. The minimum wage is intended to establish a floor below which employees cannot be paid. As the Employment Court has previously observed, the Minimum Wage Act is of fundamental importance because it is directed at preventing exploitation and recognises the diminished bargaining power of those in low-paid employment. What ACT is proposing most effects those minimum wage earners working multiple, often part-time jobs, to just pay their bills, to feed their families, to pay the rent. For ACT there would no longer be a “fair days pay for a fair days work”.
The current adult minimum wage of $23.95 was introduced in April this year, an increase of 45 cents an hour. The government's own policy analysis acknowledged the difficult balance between protecting the incomes of low-paid workers and minimising possible employment effects. That balance is lost when inflation is considered. The minimum wage has increased by about 5.5 per cent since 2023, while consumer prices increased by 15.5 per cent over the three years to March 2026. Since then, annual inflation has risen further, reaching 4.1 per cent in the June 2026 quarter.
A three-year freeze on the minimum wage the way inflation and prices continue to rise would increase the negative impact inflation has on those minimum wage workers. If prices continue to rise, the real value of the minimum wage will continue to fall. ACT's argument is that the trade-off may be greater employment opportunities, particularly for people currently struggling to get into the labour market. Under this government the unemployment rate has climbed to 5.6% in the three months to June — the highest in 11 years since September 2015.
While the ACT Party is only a minor party sitting on the so-called “right” wing of politics it certainly has not been a minor party in this government on employment matters. The CEO/Poobah of the National Party, Prime Minister Christopher Luxon, has not been very effective in negotiating and constraining the ACT Party on numerous contentious and divisive issues; employment law and treaty issues spring to mind. Should this current government be re-elected the cost of living appears set to be even more unmanageable for our most vulnerable workers on the minimum wage (or those close to it).
Employment rights may often be human rights. They are always human rights in a literal sense. There is a human involved, often with a family or dependents that may be reliant on them. Or the human is reliant on that worker for their support, providing them with the basics - a home, with food, hopefully affordable health care and an education. Those basics seem likely to become even more unaffordable if ACT has its way. As Nelson Mandela said "A nation should not be judged by how it treats its highest citizens, but its lowest ones." Read more...
Pay equity has taken a backward step in New Zealand under the current government. The law change in 2025 was rushed through Parliament under urgency and without Select Committee scrutiny with the object of freeing up “billions of dollars” for the 2025 Budget. The cost has been that some of our most valued occupations that have been historically dominated by women will continue to be underpaid for the work they do, compared to occupations that have historically been male dominated.
But pay equity should not be confused with pay equality. In a twist to the basic concept of “equal pay for equal work” last week in the United Kingdom the fashion and homeware retailer Next has managed to have a 2024 Employment Tribunal ruling overturned in the Employment Appeal Tribunal. That ruling had required Next to pay its shop staff the same higher basic pay rates as its warehouse workers under equal pay rules.
Next employs more than 20,000 store staff across 458 stores in the UK and Ireland. In the Next business, women made up almost 78% of retail sales jobs, while men made up about 53% of warehouse staff. Warehouse staff were able to earn up to £3.13 more an hour than retail sales workers.
The retailer argued that it had to pay a higher market rate to warehouse staff because of recruitment and retention pressures, which it said did not apply to the workforce in its stores. Next relied on several factors to explain the difference in pay:
· Market forces and market price (which the Employment Tribunal found to essentially mean “paying the going rate”)
· Recruiting and retaining sufficient warehouse labour
· Maintaining 24/7 work in the warehouse, including night shifts, overtime, Sundays and public holidays
· Incentivising high productivity within the warehouse, generally and during peak periods of demand
· Incentivising high attendance in the warehouse, in particular during peak periods of demand
The UK Employment Appeal Tribunal accepted that Next was entitled to pay its warehouse workers more because of the different labour-market conditions applying to those jobs. The original Tribunal decision had concluded that Next had not shown a legitimate justification in setting different rates of pay. The Appeal Tribunal overturned this and said that market forces and recruitment and retention difficulties could provide a legitimate justification for paying one group more than another, even where the work had been assessed as being of equal value.
Significantly, both the Employment Tribunal and the Appeal Tribunal found that there was no direct discrimination; “It was all about cost. Gender did not enter into the equation” when Next set pay rates.
New Zealand has a long history of trying to address the problem of women being paid less, particularly in occupations which have traditionally been dominated by women. Equal pay and pay equity are not the same thing, but it can sometimes be hard to distinguish between the concepts. Equal pay is about men and women receiving the same pay for the same work. Pay equity is concerned with different jobs which are nevertheless of equal value.
In New Zealand, until last year there was broad political agreement that this was a legitimate problem which should be addressed. The Equal Pay Amendment Act 2020 agreed to by both major political parties was intended to provide a clearer pathway for pay-equity claims. The current government's changes discontinued all unsettled or undetermined pay-equity claims as at 14 May 2025. New claims now face substantially more stringent requirements.
The effect was significant; 33 claims involving female-dominated workforces were cancelled overnight, including claims involving some of our most valued workers such as Plunket nurses, community midwives, hospice nurses, health-care assistants and nurses working in residential care.
Pay differences do not automatically prove discrimination. Equally, the existence of a market rate does not automatically prove that a historical gender-based undervaluation does not exist. A "going market rate" can itself reflect historical undervaluation.
But it is a difficult balance. Getting it right should not come at the cost of some of our most valued but underpaid women in New Zealand’s workforce.
If an employer told an employee one thing, encouraged them to rely on it, and then suddenly changed its position when it suited the employer, surely that would cause outrage. In the employment context the parties would be discussing some important underlying values such as “good faith”, “trust and confidence” and “misleading conduct”.
Governments are entitled to change their minds. Election campaigns are entitled to produce new policies. Circumstances change. Politics may be “politics” but perhaps employment law may provide a useful lesson.
The National Party’s announcement that, if re-elected, there will be “no new taxes” has created another problem for the Prime Minister. Only weeks ago, a bed tax was being actively considered. Now, Mr Luxon is being emphatic - “This is about no new taxes, and I can’t be clearer.”
Yet consideration of “bed taxes” have been part of regional deals with Auckland and Queenstown. Now National says it is off the table. The Auckland Regional Deal provides the most obvious difficulty. As recently as April this year Mr Luxon and Auckland Mayor, Wayne Brown, signed New Zealand’s first City Deal. The agreement describes a long-term partnership between central Government and Auckland Council and includes a commitment to “consider” an accommodation levy in 2027.
Mr Brown is understandably unhappy - “the deal is meaningless if the government cannot honour even a relatively modest commitment to explore an agreed proposal,” he said.
The position of Queenstown is interesting because the regional deal has not yet been signed. It is understood that, like Auckland, consideration of a bed tax was to have been part of that agreement. The proposed agreement was due to have been signed in August, but the signing was postponed amid National’s internal leadership crisis.
Queenstown Lakes Mayor, John Glover, described National’s decision as a “complete U-turn” and said it felt like “policy making in a state of panic”. Destination Queenstown said the reversal was a “massive blow”.
The New Zealand First leader has taken a more principled view to National. “A deal is a deal,” Mr Peters said. He says the signed Auckland agreement states that the levy will be considered in 2027 and that “nothing has changed”.
Politics being politics, Mr Peters went further, saying that when Mr Luxon made the commitment he was speaking on behalf of the Government, not merely the National Party. The Labour Party Leader, Chris Hipkins, made the political point more sharply: “If the mayors across the country can’t trust Christopher Luxon’s signature, why should any New Zealanders?”
Why does it matter? It is about setting expectations and letting New Zealanders rely on them. Back in 2017 the then National-led government passed a forerunner to the pay equity legislation for the health sector. In 2018 when it was in opposition, National supported the Labour government’s new Equal Pay Act, as well as the Equal Pay Amendment Act in 2020. Those changes were designed to extend a pay equity process to all occupations and create a clearer pathway for making pay equity claims. Both major parties were seemingly aligned.
Last year the National lead government made changes to the legislation that meant that existing pay equity claims would be blocked. Those claims were in some of our most valued occupations - Plunket nurses, community midwives, hospice nurses and health care assistants, primary care nurses, nurses in residential care. In making the changes the government also raised the bar for future claims to be successful.
The Employment Relations Act requires employers and employees to deal with each other in good faith. It goes further than simply requiring honesty. The parties must not directly or indirectly do anything to mislead or deceive each other, or anything likely to mislead or deceive. The Act says the obligation is wider than the implied obligations of trust and confidence and requires the parties to be active and constructive, responsive and communicative.
That is a pretty high standard, but it is something New Zealand values and it has enshrined those values in our laws.
Governments, like employers, depend on relationships. An employer may change its mind. But if it has made a commitment, the process of changing course matters. It cannot simply pretend the earlier commitments never happened. It is about maintaining relationships through honesty, communication and consistency. Trust and confidence are damaged when commitments are made and then discarded. Read more.....
