Employment Law

Court of Appeal confirms Employment Court’s Pay Equity Decision

Terranova Homes & Care Ltd v Service and Food Workers Union Nga Ringa Tota Inc [2014] NZCA 516

Introduction

The Court of Appeal’s recent decision on pay equity has broad implications for workers in industries or occupations traditionally dominated by female employees.

The issues on appeal concerned the criteria to be applied in determining whether men and women are being paid differently based on gender. The argument was made that, while wages paid by Terranova to its caregivers are the same whether they are male or female, wages are lower than they would be if caregiving of the aged were not work predominantly performed by women.

Background

Ms Bartlett works as a rest home caregiver, employed by Terranova Homes & Care Ltd (“Terranova”). In 2012, Ms Bartlett applied to the Employment Relations Authority claiming that Terranova had breached both the Equal Pay Act 1972 and its good employer obligation under the Employment Relations Act 2000. Ms Bartlett was being paid $14.46 (gross) per hour. She alleged that this was “less than the rate of remuneration that would be paid to male employees with the same, or substantially similar, skills, responsibility, and service performing the work under the same, or substantially similar, conditions and with the same, or substantially similar, degrees of effort.”

The Service and Food Workers Union Nga Ringa Tota also made a similar application to the Employment Court under section 9 of the Equal Pay Act; both matters were heard together in the Employment Court.

The Employment Court Decision

The full Court considered the wording of the Equal Pay Act in light of its two stated purposes – to remove and to prevent the effects of gender discrimination on women’s rates of pay. The Employment Court found that the narrow approach argued by Terranova, which would require that an appropriate comparator be identified within the workplace itself, would have little chance of removing or preventing the effects of gender discrimination on women’s rates of pay.

The Court preferred the broader approach advanced by the Union, holding that section 3(1)(b) requires that equal pay for women in roles exclusively or predominantly performed by women is to be determined by reference to what men would be paid to do the same work “abstracting from skills, responsibility, conditions and degrees of effort as well as from any systemic undervaluation of the work derived from current or historical or structural gender discrimination.” In making such a determination, the Authority or Court is entitled to have regard to what is paid to males in other industries, where it would be inappropriate to make comparisons with other employees of the same employer or of other employees in a similar industry.

The Court dismissed Terranova’s concerns that a broad interpretation of section 3(1)(b) would be impractical for employers.

The Court of Appeal Decision

While ultimately upholding the Employment Court’s decision, the Court of Appeal considered the issues to be more finely balanced than was suggested in the Employment Court’s judgment. Although disagreeing with some of the Employment Court’s reasoning, the Court of Appeal reached the preliminary conclusion that “the Act is not limited to providing for equal pay for the same or similar work.” The Court of Appeal accepted that it may be relevant to consider wages paid by other employers and within other sectors, and evidence of systemic under-valuing of the work.

The Court of Appeal accepted, however, that there was force in Terranova’s argument that it would be unjust and unworkable to require individual employers lacking expertise and resources to “shoulder the burden of rectifying society-wide structural discrimination.” The Court felt that these workability issues would be best left to the Employment Court to consider in stating general principles under section 9 of the Equal Pay Act.

What next?

It is important to note that this decision, although significant, relates only to the preliminary issues before the Employment Court. Accordingly, the Court of Appeal has suggested that the Employment Court first deal with the Union’s section 9 claim, and state the principles to be observed for the implementation of equal pay. It will then be guided by these principles when hearing Ms Bartlett’s substantive claim. We await the substantive decision with interest.