What happened to Pay Equity? A Recap on the Equal Pay Amendment Act 2025
I Introduction
New Zealand’s pay equity framework was formed by decades of litigation, and rebuilt in an afternoon. Pay equity addresses the systematic undervaluation of female-dominated fields of employment relative to comparable male-dominated occupations. Following the case of Terranova, the Equal Pay Act 1972 was interpreted to permit pay disparities regarding pay equity. However, after the 2025 reform, the Equal Pay Amendment Act significantly narrowed this framework. This article examines the Act’s legal history, substantive reforms, procedural complications, and political implications.
II Legal History
The Equal Pay Act 1972 states that employers must pay men and women equally for the work they do, including work predominantly performed by female employees. New Zealand ratified the conventions on pay equity in 1978, yet in the 2000s, there was criticism of its failure to comply with the principle of equal pay for work of equal value. The systemic issue of lower employee wages in female-dominated industries than in male-dominated ones was not addressed until the last decade.
Before Kristine Bartlett and E Tū (previously called the Service & Food Workers Union) brought a legal proceeding against her employer, Terranova Homes and Care, there was a perception that the 1972 Act could not be interpreted to address the comparisons of rates between different industries. When this case was first heard in the Employment Court in 2013, the minimum wage was $13.75. This illustrated an issue of systematic undervaluation as Ms Bartlett and others like her were being paid $14.46 an hour, despite their expertise in caring for elderly people in the aged care sector.
The Court of Appeal delivered a judgment that pay equity was within the scope of the 1972 Act. Ms Bartlett was not paid less than her male coworkers; rather, they were paid lower wages because their work was in a female-dominated industry. The court saw no reason to exclude gathering evidence for the hypothetical male comparator, which is the selection of another occupation for comparison, drawn from male rates in other sectors. This case would go all the way to the Supreme Court, but they dismissed Terranova's appeal and upheld the Court of Appeal's decision.
Following the recommendations of the Joint Working Group, which the government established specially to address pay equity, the government reached a settlement with 55,000 workers in aged care and disability residential care and home and community support services. Over the following five years the $2 billion settlement was for funding the 20–40% pay rises. The Equal Pay Amendment Act 2020 established a clearer path to pay equity, which did not exist at the time of Ms Bartlett’s case. However, this was not an isolated incident; many applicants from various industries were waiting to lodge a claim.
III Changes made to pay equity
Changes to the evidence requirements and the comparator assessment were among the most crucial provisions of the Equal Pay Amendment Act 2025. Minister Brooke van Velden introduced the 2025 amendment and said that the previous way of handling evidence was that claims were “able to progress without strong evidence of undervaluation”. This change became one of the reasons for protests from multiple groups.
The People’s Select Committee on Pay Equity Report recommended that the new evidentiary threshold be repealed, and that the arguability threshold already in the 2020 amendment be retained. The Committee noted that in the previous section of the 2020 amendment, an employer's agreement that the claim is arguable does not mean there is undervaluation. If there is no undervaluation after the investigation process, this provides assurance to all parties.
The 2025 amendment, which added a ‘merit’ requirement, meant that undervaluation must be proven, and another process of assessment would then take place to determine whether there was merit in the claim. This amendment duplicates the process. Minister van Velden justified the amendments as necessary to make the pay equity scheme more workable and, in doing so, would significantly reduce the costs to the Crown. However, these amendments place evidentiary burden on the claimants. Ginny Andersen, Labour spokesperson for jobs and income, said that it was hard for individuals and smaller unions to provide historic wage data and independent job evaluations.
Furthermore, the Committee explained that the comparator amendments should be repealed and recommended adopting the standard in the 2020 amendment. The comparator process was already a methodical assessment, examples such as fisheries officers serving as comparators for librarians. The new change placed a limit on comparator groups. It introduced a new hierarchy that considers occupation within the same organisation first, then continues until a possible comparator is found in the same industry or sector. The Committee explained that if there is an undervaluation in a particular workforce, comparing them to similar work is like “trying to make a picture straight by lining it up next to one that is already crooked”. By changing the process, New Zealand risks non-compliance with the principle of equal pay for work of equal value.
IV Procedure
Introduced and enacted on the 6th of May, the Equal Pay Amendment Act 2025 was not passed through typical Bill procedure. The Act was passed under urgency, a shortcut of sorts that enables legislation to be passed in the absence of Select Committee review. Further, no Regulatory Impact Statement was produced, with officials citing ministerial time constraints. However, this explanation is weakened by evidence sought under the Official Information Act revealing that the Bill was effectively drafted behind closed doors. Parliament was notably discreet, restricting access to Cabinet papers, hand-delivering documents, and terming the internal plan ‘Project 10’ to discuss the Act before passing it under urgency.
The Act’s main point of contention arises in its retrospective effect. 33 existing claims under the 1972 Act were discontinued under the amendment, raising concerns about the Act being passed under urgency and the consequent immediate retrospective implications. The official justification for this is that the claims should proceed under a single, consistent framework; the People’s Select Committee, by contrast, recognised that the 1972 Act enabled two systems to run in parallel without incident, requiring no retrospective action.
Passing legislation under urgency is both lawful and increasingly used, intended to enable majority governments to act proactively when required. However, reshaping an entire compensation framework retrospectively, absent of a Select Committee Review or a Regulatory Impact Statement, contrasts the safeguard purpose of those systems. In this case, lawful procedure and sensible procedure are not the same thing.
V Political Environment
The fiscal motive was evident. Prime Minister Christopher Luxon denied any monetary motivation for the timing, however, noted the amendment's ability to save billions. These forecasts were realised in the 2025 budget itself. Conversely, ACT’s David Seymour was less vague than Luxon, crediting the amendment as the outright saviour of the 2025 Budget.
The opposition was strong. Labour’s Chris Hipkins recognised economic recovery should not come at women’s expense, and the Greens’ Marama Davidson claimed it was inequitable to make women bear the cost of tax relief for wealthier New Zealanders. Additionally, former MP, and political commentator David Cunliffe termed the Act a ‘MAGA-style override’. The rhetoric was overshot, leading to backlash for a Labour branch when they were made to issue an apology for depicting Minister van Velden in a Nazi military uniform.
The public response was organised. Nationwide protests ensued following the Bill’s assent, including a large gathering outside Parliament during the 2025 Budget announcement. The public backlash became institutional when 10 former MPs formed the ‘People's Select Committee’ on the 26th May 2025. This Committee established its purpose as standing in for the scrutiny process initially bypassed by urgency, and later regarded the legislative reform as a “flagrant and significant abuse of power”.
The Act’s future is not an electoral matter. Hipkins has confirmed that Labour will repeal the reform and is committed to reinstating the 33 claims abandoned under it, if elected in 2026. The political uncertainty is not confined to the parties either, with Cunliffe predicting the reform will cost the current coalition at the ballot box. Cunliffe claimed that National ‘lost a lot of women voters’ over the changes. Whatever the outcome of the upcoming election, claimants and employers are left to navigate an unstable framework heavily dependent on political outcomes.
VI Conclusion
The Equal Pay Amendment Act does not abolish pay equity, but rather raises the evidentiary burden required to invoke it, justified through fiscal means, but criticised as substantive regression. The Act was passed under urgency, thus bypassing formal legislative procedures, including a Select Committee review and Regulatory Impact Statement. Politically, the Act’s sustainability lies in electoral turmoil, with the 2026 election likely to directly impact the Act’s long-term effect. Overall, this significant reform to employment rights, achieved with minimal official consultation, has been met with resistance from New Zealanders and is likely to change in the coming years.
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