Unions and business come together in a fair pay play

by Jonathan Underhill / 07 July, 2016
Unions and business sign off on a pay-equity strategy, leaving the Government to bite the bullet.

It’s not hard to see why Kristine Bartlett is the poster child for pay equity. After 23 years of working for rest-home operator Terranova Homes & Care, she has achieved the status of senior carer and her responsibilities include training new staff and showing trainee nurses the ropes.

Among her elderly charges are patients with dementia, the lonely, the infirm and the incontinent, and she deals with grieving families: for that she earns 50 cents above the minimum wage – a miserly $15.75 an hour, or $32,760 a year gross for a 40-hour week.

What she’s really worth is a matter of speculation. The Service & Food Workers Union (now part of the E tu union) reckons it’s $26 an hour, based on its assessment of pay rates for equivalent work in fields other than those dominated by women. That is the key measure since a 2013 Employment Court ruling, subsequently upheld and refined by the Court of Appeal, that in female-dominated work, the Equal Pay Act 1972 “requires equal pay for work of equal value (pay equity), not simply the same pay for the same work”. That was a change from how the law had previously been interpreted.

Terranova, supported by industry group the NZ Aged Care Association (NZACA), tried and failed to get the ruling overturned in the Supreme Court in late 2014. It hasn’t said what it thinks would be a fair wage for Bartlett, and it may not do so until the case returns to the Employment Court for resolution. The parties are awaiting a hearing date.

Four years into her case, Bartlett might be expected to be bitter but she’s not.

“I’m obsessed with my work,” she says. “It’s really hard, tiring, exhausting work. You’ve got to have compassion and empathy to be a carer. I’ve nursed people in their last days on Earth and we comfort their families as well. It isn’t just showers and wiping bottoms.”

Huge ramifications

The case has huge ramifications. NZACA has estimated the aged-care sector alone would need to find an additional $500 million a year to lift caregiver pay rates to the $26 an hour proposed by the union.

NZACA’s members aren’t just the highly profitable listed retirement village companies such as Ryman Healthcare, Metlifecare, Summerset Group and Australia’s BUPA. Many are welfare, religious or not-for-profit aged care homes. The association says that most break even or lose money and wages account for 60% to 70% of their costs.

And the landmark employment test case will probably affect other female-dominated sectors, such as laundry and linen services. Four companies – Spotless Facility Services, Alsco, Apparelmaster and Canterbury Linen Services – supply much of the laundry services for hospitals, hotels, factories and other institutions.

The Government wants to avoid having such a sweeping change to the rules for setting pay being dictated by a single test case, especially since it’s at risk of being the biggest loser in terms of funding pay rises. Apart from being the country’s biggest employer, the Government effectively sets care worker wages in the private sector because it pays rest-home operators for elderly care.

The aged care residential sector is funded by district health boards through a service contract that pays these businesses on a bed-day basis depending on which area of the country the aged care facility operates and on whether the care is rest-home-, hospital-, dementia- or psychogeriatric-based.

Funding arguments

John Ryall, E tu’s assistant national secretary and a driving force behind Bartlett’s original claim, says there have been arguments over state funding and whether the private retirement village companies should contribute to the wages using the profits they make from buying and selling occupation rights to residents.

But, he says, in many cases, the companies “have carved off the residential aged-care side from their retirement village side so that they operate independently and the aged-care residential side is making a loss”.

Health Minister Jonathan Coleman announced last October that the ministry was facilitating negotiations between unions and providers over pay rates for about 50,000 workers in residential, home and community services in the aged care and disability sectors. Simultaneously, the Government set up a joint working group to develop principles for dealing with pay equity claims under the Equal Pay Act.

Under the auspices of the State Services Commission and chaired by Governor-General-elect Patsy Reddy, the working group included traditional adversaries CTU president Richard Wagstaff and former BusinessNZ chief Phil O’Reilly, the Public Service Association and industry representatives. Its report to the Government last month recommended that parties to a claim come to an agreement as soon as possible under the good-faith bargaining arrangements of the Employment Relations Act 2000.

O’Reilly says there was “a remarkable level of goodwill” in the working group and adds that in going down the good-faith bargaining route, New Zealand would avoid the “highly legalistic arrangements” in jurisdictions such as Canada and the UK, where the courts make decisions, imposing penalties and arrears.

“We came to the conclusion that if you want to have a ‘you win, I lose’ conversation about this, it will take years, involve enormous legal costs and do damage to workplace relations,” he says.

The broad guidelines leave some questions for the Government to resolve, such as how to fund mediation services for both workers and employers and how complex data such as salary surveys might be handled. They would also require amendments to the Employment Relations Act and the Equal Pay Act. “Although a lot of progress has been made through this process, it’s important we take the time to get it right,” says Workplace Relations and Safety Minister Michael Woodhouse.

E tu’s Ryall says it would be a brave government that rejected the working group’s recommendations or tried to meddle, given it represents a rare meeting of the minds of business, unions and government officials.

“This is what the state has deserved through the process, since the 1980s, of privatising continuing care for the elderly and moving beds from public hospitals [where the workers got paid better] into the private sector, where collective bargaining was weaker and the state funders could crank down the cost of service provision,” he says.

“The Government privatised all this work and got away with funding it at a very low level. The model relied on low-paid female workers. Now the historical pigeons have come home to roost.”

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