Pay equity reform – reducing cost or reducing equality?

On 6 May 2025 the Minister of Workplace Relations and Safety, Brooke van Velden, announced that the Government would be amending the Equal Pay Act on an urgent basis. The changes have now been passed through Parliament, introducing new limits and restrictions on pursuing pay equity claims.

The Equal Pay Act allows employees or unions to bring a ‘pay equity’ claim that work predominantly performed by female employees is undervalued. Successful claims demonstrating underpayment connected to gender-based discrimination lead to employees being compensated for historical low pay and receiving improved pay going forward.

The claims system is complex and unusual in that it involves a first stage of bargaining to achieve a settlement, with the Employment Relations Authority only making a determination if the parties cannot agree. 

The Government’s changes

Brooke van Velden has introduced a variety of changes, including:

• • Raising the threshold for a valid claim, requiring that 70 per cent of employees performing the relevant work are female and that this has been the case for at least 10 consecutive years.
  • Requiring evidence and reasonable grounds to believe the work is historically and currently undervalued before a claim can be pursued.
  • Allowing employers more scope to ‘opt out’ of dealing with claims. 
  • Removing the Authority’s ability to award backpay, and requiring the Authority to phase the introduction of improved remuneration in three equal instalments (a year apart from each other) when it determines a pay equity claim.
    
    

The new law was passed under urgency, meaning there was no opportunity for members of the public to make submissions on the Bill, nor for those currently involved in pursuing claims. This is particularly unusual and draconian in its impact as the new law specifically discontinues all current pay equity claims. Thirty-three pay equity claims have been stopped, some of which have been in progress for years. 

Implications

The Minister has said that these changes will ‘make the process of raising and resolving pay equity claims more robust, workable and sustainable’. However, for those who consider they have a pay equity claim, the changes impose a whole host of difficulties. Undoubtedly, the changes will save the Government money, but they have been described by Hon Jan Tinetti (Labour) as “taking women’s rights backwards”.

Whether or not the right balance between employers and employees dealing with pay equity issues has now been set, there is a real basis for concern about the way in which the rules have been rewritten. The decision to change the law without consultation and to give it retrospective effect is a drastic step with severe consequences for those who have been seeking pay equity.