Pay equity has taken a backward step in New Zealand under the current government. The law change in 2025 was rushed through Parliament under urgency and without Select Committee scrutiny with the object of freeing up “billions of dollars” for the 2025 Budget. The cost has been that some of our most valued occupations that have been historically dominated by women will continue to be underpaid for the work they do, compared to occupations that have historically been male dominated.

But pay equity should not be confused with pay equality. In a twist to the basic concept of “equal pay for equal work” last week in the United Kingdom the fashion and homeware retailer Next has managed to have a 2024 Employment Tribunal ruling overturned in the Employment Appeal Tribunal. That ruling had required Next to pay its shop staff the same higher basic pay rates as its warehouse workers under equal pay rules.

Next employs more than 20,000 store staff across 458 stores in the UK and Ireland. In the Next business, women made up almost 78% of retail sales jobs, while men made up about 53% of warehouse staff. Warehouse staff were able to earn up to £3.13 more an hour than retail sales workers.

The retailer argued that it had to pay a higher market rate to warehouse staff because of recruitment and retention pressures, which it said did not apply to the workforce in its stores. Next relied on several factors to explain the difference in pay:

·        Market forces and market price (which the Employment Tribunal found to essentially mean “paying the going rate”)

·        Recruiting and retaining sufficient warehouse labour

·        Maintaining 24/7 work in the warehouse, including night shifts, overtime, Sundays and public holidays

·        Incentivising high productivity within the warehouse, generally and during peak periods of demand

·        Incentivising high attendance in the warehouse, in particular during peak periods of demand

The UK Employment Appeal Tribunal accepted that Next was entitled to pay its warehouse workers more because of the different labour-market conditions applying to those jobs. The original Tribunal decision had concluded that Next had not shown a legitimate justification in setting different rates of pay. The Appeal Tribunal overturned this and said that market forces and recruitment and retention difficulties could provide a legitimate justification for paying one group more than another, even where the work had been assessed as being of equal value.

Significantly, both the Employment Tribunal and the Appeal Tribunal found that there was no direct discrimination; “It was all about cost. Gender did not enter into the equation” when Next set pay rates.

New Zealand has a long history of trying to address the problem of women being paid less, particularly in occupations which have traditionally been dominated by women. Equal pay and pay equity are not the same thing, but it can sometimes be hard to distinguish between the concepts. Equal pay is about men and women receiving the same pay for the same work. Pay equity is concerned with different jobs which are nevertheless of equal value.

In New Zealand, until last year there was broad political agreement that this was a legitimate problem which should be addressed. The Equal Pay Amendment Act 2020 agreed to by both major political parties was intended to provide a clearer pathway for pay-equity claims. The current government's changes discontinued all unsettled or undetermined pay-equity claims as at 14 May 2025. New claims now face substantially more stringent requirements.

The effect was significant; 33 claims involving female-dominated workforces were cancelled overnight, including claims involving some of our most valued workers such as Plunket nurses, community midwives, hospice nurses, health-care assistants and nurses working in residential care.

Pay differences do not automatically prove discrimination. Equally, the existence of a market rate does not automatically prove that a historical gender-based undervaluation does not exist. A "going market rate" can itself reflect historical undervaluation.

But it is a difficult balance. Getting it right should not come at the cost of some of our most valued but underpaid women in New Zealand’s workforce.