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  • Writer's pictureSam

What is pay equity and how does this impact your business?

Updated: Oct 9, 2023

#yourquestionsanswered An employee can raise a pay equity claim with their employer if they do work that is (or was historically) female-dominated and there are factors that indicate the work is currently or has historically been undervalued

Why is this important?

In New Zealand, pay equity and pay transparency are becoming increasingly important topics for employers. This is due in part to the introduction of the Equal Pay Amendment Act 2020, which aims to address gender pay gaps and ensure equal pay for work of equal value.


What happens if an employee raises a pay equity claim?

You must respond that you have received it within five working days. Then you have 45 working days to assess whether the claim is arguable - basically do the points add up and is it possible they may have a case. We'd recommend taking advice about this as soon as possible to ensure that you are managing any risk.


Then generally both you and the employee attempt to work together with MBIE's assistance to resolve the situation and come to an outcome.


What should you do to ensure your practices are equitable?

  • Act fairly and reasonably.

  • Address any concerns that employees might have about pay in a timely manner.

  • Provide regular performance reviews, training or development opportunities.


What else could you do?

You could conduct a pay equity analysis across the workforce. MBIE provides a good guideline for this here. This involves reviewing pay data to identify any disparities based on gender, ethnicity, or other factors. While this can seem like a lot of work, it can provide a really good snapshot of how equitable your business is and what risk you might have of a pay equity claim.


You could develop a pay policy. This can help build trust and understanding with employees. This policy could outline how pay decisions are made, how employees can request information about pay, and how the company will respond to these requests. If you do this, make sure you regularly review this to ensure it's up to date.


Note: These aren't legal requirements, but they can be helpful to ensure that you are paying your employees equitably.

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