What is the Equal Pay Case about?
Who is this case between?
How significant is this case?
Why is this a test case for New Zealand employment law?
What’s the next step in the court case?
Why don’t aged care providers pay caregivers more?
What's the Government's role?
Are the negotiations a positive move?
What implications does this have for the court case?
Who is involved in the Government-facilitated negotiations?


Q. What is the Equal Pay Case about?

A. Long-time caregiver Kristine Bartlett argued that Terranova, her employer and a private rest home provider, paid her less than would be paid to male employees with substantially similar skills, responsibility and service, performing the work under the same conditions and with the same degree of effort.

Terranova pays its female and male caregivers the same rates, but Ms Bartlett argued the pay rate for both was depressed due to a systemic undervaluation of the work, based on gender discrimination. This is incorrect. Staff pay in our sector is based on market rates and ability to pay.

Q. Who is this case between?

A. The original case, lodged in late 2012, was taken by Kristine Bartlett, an aged care worker (the plaintiff) and the Service and Food Workers Union against Ms Bartlett’s employer, Terranova Homes and Care Ltd (the defendant), a privately owned rest home chain.

NZACA decided to stand behind the defence of this case on behalf of Terranova because the equal pay claim is a sector-wide issue that has serious financial implications for our members and the wider aged-care sector and could result in private sector aged residential care homes going out of business.

Q. How significant is this case?

A. The ramifications are very significant. The union has openly talked about raising the average hourly caregiver pay rate to $26, up from the current average of $15.30. Our calculations show that the sector would need to find $500 million annually to increase caregiver pay rates to this level. The majority of NZACA’s members are mum and dad operations or welfare or religious based operations which make very little profit or are not for profit. If they were forced to pay caregivers $26 per hour, many could go out of business.

The ramifications potentially extend beyond aged care to other female-dominated sectors such as teachers, nurses, early childhood care workers and a whole range of other occupations. In late August 2015 The College of Midwives lodged a pay equity case.

Q. Why is this a test case for New Zealand employment law?

A. This is the first equal value case to come before the Employment Court since 1986. The last equal pay for equal value case under the Equal Pay Act was rejected and that decision was not appealed. It has been argued that over the years, that this gave rise to perceptions that the Equal Pay Act 1972 did not, or did not adequately, allow for equal pay claims considering whether there is an element of differentiation based on gender in relation to work of equal or comparable value (as opposed to claims for identical work in the same workplace).

The Employment Court ruled in August 2013 in favour of the plaintiff (Ms Bartlett and the Service & Food Workers Union) on questions of law, allowing gender neutral job comparisons between work done in the female-dominated care sector, with work done in a different, male-dominated industry. Terranova/ NZACA appealed this decision but it was upheld by the Court of Appeal in October 2014.

Q. What’s the next step in the court case?

A. The case will return to the Employment Court in early 2016. The Court will set out general principles for implementing equal pay. These are likely to include guidance on identifying appropriate comparators, how to obtain remuneration evidence from other comparator groups and how to assess and evaluate issues relating to systemic undervaluation. After the general principles have been established, the Employment Court will assess the particulars of Ms Bartlett’s and the Service & Food Workers Union claim.

Q. Why don’t aged residential care homes pay caregivers more?

A. We would dearly love to pay caregivers more, however, we are hamstrung by long-term underfunding by the government, which pays homes to care for the elderly. The Government contract undervalues the worth of caregivers working in the private and NGO sector – a caregiver in a DHB working in a geriatric hospital receives $17.50 an hour – just over $2 an hour more than the average hourly rate of $15.30 in our sector. We have been lobbying government about this chronic underfunding for years.

The majority of our members, many of whom are welfare, religious and not-for-profit homes, run on a break-even or even loss situation, and wages account for 60% to 70% of their costs.

It is vital that all residential aged care operators run financially viable businesses so they can continue to provide high quality care to New Zealand’s elderly. They need funds to reinvest into maintaining their operations and in some cases to invest in new infrastructure which will be required to meet the demands of this growing demographic over the current decade. Currently there are around 36,000 beds required for residential aged care in New Zealand today. The number of beds required is projected to increase to 38,000 by 2016, and up to 52,000 by 2026.

Q. What’s the Government’s role?

A. The Government announced in October 2015 that wants to work towards a negotiated settlement over pay rates for care and support workers. The Ministry of Health will facilitate negotiations between unions and providers. NACA will take an active part in the negotiations, which will take place from November 2015 through until the end of February 2016.

Q. Are the negotiations a positive move?

A. While the negotiations are a positive development, our sector cannot fund an equal pay claim without commensurate increases in its charges to consumers, most of which are paid by the Government in the form of age care subsidies. We will not be able to settle with the unions without a clear indication from Government that they will meet the extra cost.

Q. What implications do the negotiations have for the court case?

A. The union has not announced it is putting its legal action on hold so the court case will proceed as scheduled, due to return to the Employment Court in early 2016.  

Q: Who is involved in the government facilitated negotiations?

A:  The parties include NZ Council of Trade Unions, E Tu (previously the Service & Food Workers Union), Public Service Association, NZ Nurses Organisation, NZACA, NZ Disability Support Network, Business NZ, DHB representatives and the Ministry of Health.