The passing of the Fair Pay Agreements Bill last year was described as one of the most significant changes to New Zealand’s employment relations landscape for a generation. This week, hospitality workers took a major step towards gaining an FPA of their own.

More than 150,000 hospitality workers and 24,000 employers will be covered by a new Hospitality Fair Pay Agreement approved by MBIE yesterday, six months after their union submitted the application with 1,000 hospitality worker signatures. The approval means hospitality employers and employees now proceed to the bargaining table to work out the nitty gritty details of the final agreement. Hospitality are only the second industry to get the green light so far.

“The problem we have in the hospitality industry is that there is a lack of whanaungatanga between other employers and employees, just due to the nature of it being quite an individualised industry,” says Unite Union co-president and hospitality worker Xavier Walsh. “This is such a huge opportunity to bring everyone to the table – literally.”

Since the introduction of the bill in March 2022, Fair Pay Agreements, or FPAs for short, have been applauded by unions who see potential to improve working and living conditions for those they represent. Meanwhile FPAs have received a near unanimous thumbs down from employer associations who believe they will create additional complexity, cost, disruption and inflexibility. 

What are Fair Pay Agreements?

The Fair Pay Agreements Bill passed 76 votes to 43 in its third and final reading in parliament in October last year. Essentially, the aim of these agreements are to create a “floor” of minimum rights for employees in specific industries. An FPA could cover a raft of conditions: wages, guaranteed breaks, holidays, pay increase pathways, secure hours, processes for dealing with bullying and sexual harassment, health and safety, staffing levels, penalty rates, meal allowances and more. 

FPAs will bring together employers and unions within a sector to collectively bargain for minimum terms and conditions for all employees in that industry or occupation. Once a deal has been struck, the parties will sign a legally binding document setting out minimum pay and conditions. 

Who’s included in the hospitality FPA?

The size of the hospitality agreement is pretty huge, with more than 150,000 workers and 24,000 employers involved. While cafe and restaurant workers make up 46% of the total group, the FPA also encompasses accommodation, takeaway food services, catering services, pub, bars, clubs, cinemas and casinos.

Are other industries in line for FPAs too?

Yup, there’s a possibility that the majority of New Zealand workers will eventually be covered by an FPA. Seven worker groups have applied to begin the FPA process. So far, these sectors include security guards, early childhood education, supermarkets, bus drivers, commercial cleaners, stevedoring (dock workers) and hospitality. In March this year, more than 8000 bus drivers became the first group of workers to move to the FPA negotiation table following approval from MBIE.

Now that this hospo application has been given the green light, what’s next?

Over the next three months, all employer groups, employers and other unions in the hospitality sector will be notified that the FPA process has begun so that bargaining sides can be formed. This will be done manually by the union via phone calls and email, as well as through advertising, explains Unite Union national secretary John Crocker. 

Employers will be required to ask their employees whether they agree to share contact information with the unions leading the process. The unions will then get in touch with those employees who agree, to see how they’d like to be involved in consultation.

Bargaining will begin with unions representing employees on one side of the table and representatives chosen by employers on the other. Within this there is an obligation to ensure representation of Māori employees and employers.

Once employees and employers have reached an agreement, everyone in the sector will vote on it, requiring majority support from both sides. The conditions agreed upon will be vetted independently by the Employment Relations Authority and MBIE to ensure the terms are lawful. Eventually, implementation will happen by way of secondary legislation.

How long is this expected to take?

The next phase will take three months, but once bargaining begins the schedule becomes a little less defined, or as Crocker explains, “bargaining takes as long as bargaining takes – it’s quite open ended.”

How has the employer side of the bargaining table responded?

“We knew this was coming,” says Hospitality Association chief executive Marisa Bidois.“We’re ready to go, to put our application in to be a party at the bargaining.” The next step will be notifying their hospitality business members along with the wider industry to ensure they know what’s happening and what their obligations are.

Bidois has had to carefully consider the logistics of representing such a large and diverse group of employers at the bargaining table. “We want different types of people at the table, we don’t just want a single mould, we want a variety of voices at that initial representation and advisory group,” she says. To ensure they’re reflecting that diversity, they’ve set up an advisory group of 14 people representing a cross section of the industry and have begun surveying employers about their hopes for the process. 

So far, hospitality industry associations such as the Restaurant Association have taken an oppositional stance toward FPAs, citing the burden of additional compliance, potential for increased costs and standardisation of employment terms. But Bidois can see some good coming from the process for those she represents. 

“Whenever we have an opportunity to discuss the workplace and the industry, there’s bound to be some benefits that come out of it,” she says. “A lot of us that will be at the table know each other so I feel that there will be some goodwill coming into the conversation. It’s a chance to sit down with unions and employers at the same table, and to negotiate what’s going to be fair for the future.”

What about the employee side?

“This is an opportunity for hospitality workers to engage in a way that they haven’t had before and an opportunity to collectivise, to meet with other hospitality workers, and it gives us an opportunity to expand our coverage,” says Crocker. 

As part of Unite Union’s responsibilities to represent workers throughout the process, Crocker has some concerns about how they ensure they’re reaching all workers. Challenges here include potential language barriers and concerns around the compliance of employers when it comes to passing on information. “The ministry has taken quite a relaxed, high trust approach to this and we don’t think that’s appropriate,” he says. “We would like to see some very strong messaging and enforcement action if necessary from the ministry or the labour inspectorate.”

The relentless news stories of cafes struggling to find staff and ubiquitous “staff needed” posters on restaurant windows reflects a bigger problem that the FPA will help to address, says Unite co-president Xavier Walsh. “What we’re seeing is a lack of continued institutional knowledge and understanding of the industry, which is so important. There are so many hospitality veterans who have so much to give, and yet aren’t getting what they need in order to stay in the industry.”

Walsh points to results in a recent AUT survey which painted a grim picture of the industry. It found 29% of workers in the hospitality industry didn’t get the correct holiday pay and 42% said they didn’t always get the full rest breaks they were entitled to. “What’s really important is that we improve conditions today but remember that this FPA is a platform for future,” says Walsh. “One where we can ensure that everyone has the opportunity to have a legitimate lifelong career in hospitality if they wish.”