Five things you need to know about the surprise pay equity change

Tuesday, 6 May 2025

The coalition government's surprise move to introduce emergency legislation to make it harder for employees and unions to raise a pay equity claim has drawn condemnation from the political left, and unions.

Using parliamentary urgency, the Government has rushed through changes to the Equal Pay Act that will make it harder for workers to make claims of unfair pay based on gender discrimination.

The change came out of the blue, with Workplace Relations Minister Brooke van Velden - who is ACT’s deputy leader - announcing her plan at 11am on Tuesday. Parliament was then asked to pass the law, under urgency, that evening.

ACT leader David Seymour congratulated van Velden, saying the change had “saved the Budget” and would save the Government “billions”.

The Government’s sudden law change scrapped all existing pay equity claims. There were 33 claims waiting to be heard, involving upwards of 150,000 workers. Those workers included teachers and other professions which allege they have been undervalued due to being traditional “women’s work”.

The government is announcing changes around pay equity.

Here’s what you need to know about the change:

1. Pay equity claims will still be possible

Van Velden said the Government was not removing the ability of sector-wide sex discrimination claims to be made. But the criteria to make a claim would be tightened.

These changes included:

Raising the threshold of “predominantly performed by female employees” from 60% to 70%.

ACT leader David Seymour says the changes announced by Brooke van Velden will save “billions” for the Government.

Requiring proof that the profession has been female-dominated for at least a decade.
An added focus on whether employers would be able to afford a higher wage bill.

Delivering her pre-Budget speech a few weeks out from Budget Day, on May 22, Willis revealed the Government would spend significantly less than was expected and had identified “billions” worth of savings from existing public sector programmes.

A stricter criteria for how claimants could compare whether their skills were undervalued when compared to other sectors.

2. The change is expected to save the Government ‘billions’

Seymour said van Velden should be praised for finding money to balance Finance Minister Nicola Willis’s Budget, due out on May 22.

“I actually think that Brooke van Velden has saved the taxpayer billions. She’s saved the Budget for the Government,” he said.

While Prime Minister Christopher Luxon insisted the change was not focused on saving money, he conceded this was saving the Government a lot of money.

“I suspect those costs will be lower as a function of the changes that we're making with legislation… it could be up to billions of dollars,” he said.

This cost savings comes in the context of a very tight Government Budget.

Last week, Willis revealed that $1.1b had been cut from the expected operating allowance for Budget 2025. The new allowance, $1.3b, would be less than what Treasury said had already been allocated for spending.

That meant the Government needed to find money to fit within the new allowance.

The Government would save money because it employed many of the professions which had lodged pay equity claims.

Labour leader Chris Hipkins said the only reason the Government needed to use urgency was because it urgently needed to find more money.

“The Government has decided to sacrifice equal pay for women in order to balance the Budget,” he said.

3. Existing pay equity claims will be canned

The changes discontinued all existing pay equity claims.

Brooke van Velden and Christopher Luxon have defended the use of urgency with the pay equity bill change.

There were 33 claims waiting to be decided.

One of the biggest claims was from the Post Primary Teachers Association, with 75,000 teachers claiming they were being undervalued and underpaid because their profession was predominantly staffed by women.

Hipkins said it was unjustifiable to cancel the claims of thousands of workers.

“They’re now back at square one having to start all over again. The Government should be ashamed of that … but ultimately, they’re trying to save Nicola Willis billions of dollars. I think David Seymour and Brooke van Velden let the cat out of the bag. They got caught telling the truth,” he said.

4. The Government says the old pay equity scheme wasn’t working

Pay equity protesters gathered outside Parliament.

Denying the law change was inspired by the desire to save money, Luxon said his ambition was to create a smoother system for hearing pay equity claims.

“It’s got nothing to do with the Budget. This is about making sure we have a piece of legislation that is incredibly workable and not as complex as it has been,” he said.

Van Velden said the change should be viewed as a protection of women’s rights.

“We want to ensure that the setting are right. Is it reasonable that we have people who are librarians compared themselves to engineers, or we have social workers comparing themselves to air traffic controllers,” she asked.

Hipkins rejected the argument that the comparisons were not reasonable. He said the point of the pay equity system was to judge if certain sectors were being under valued, when compared to other work forces which required a similar level of skills and training.

5. The bill has received relatively little scrutiny

Luxon said the Government needed to enact this law change under urgency to “make sure we’ve got one system, not two systems”, and to ensure there was “maximum amounts of clarity”.

Parliament was called to hold all three debates about the bill on Tuesday. MPs were only shown the documents for the bill on the afternoon they were asked to debate it.

The Ministry of Business Innovation and Employment said it did not have time to provide regulatory impact statement about this bill, because of tight time constraints.

The normal process for lawmaking was for a bill to be debated once, sent for scrutiny and public feedback at a select committee, and then return to Parliament for a further two debates.

There was no opportunity for public submissions regarding the pay equity change.