Guide to delivering pay equity funding for social work through contract
variation
Context
In August 2019, The Public Service Association - Te Pūkenga Here Tikanga Mahi (PSA) raised a pay equity claim in
five NGOs for social workers and people doing the same or substantially similar work (the original claim). The
work assessment for this claim identified four categories of work. These categories are:
• Category 1: registered social workers
• Category 2: registered professionals employed in a social work role
• Category 3: professionals undertaking work substantially similar to social work
• Category 4: registered social workers or other registered professionals leading social work practice
Sex-based undervaluation was identified for the claimant group and the parties agreed a new pay scale to settle
the claim and appropriately reflect the level of skills, responsibility effort and experience required for the four
different categories of employee (the original settlement agreement).
The settlement also identified sex-based disparity in professional support costs and these inequitable terms and
conditions of employment were corrected. The claim was settled and ratified by affected employees.
In November 2022 Cabinet agreed to extend the benefits of the pay equity settlement to all social workers and
those undertaking substantially similar work in community and iwi organisations (the pay equity extension). This
means that components of the original settlement agreement that correct sex-based undervaluation are made
available to social workers and those undertaking substantially similar work in community and iwi organisations.
The components are:
• Introduction of a new step-based pay system, providing annual progression through steps
• Pay correction - translating employee salaries to the appropriate place on the new pay spine (based on
years of experience)
• Access to a suite of professional support funding
In February 2023 the Pay Equity Taskforce ran a data collection process to identify workers employed in
community and iwi organisations undertaking social work whose roles fit within the 4 categories of work identified
in the original claim. The data collection process also identified the government contracts for services, outputs,
and outcomes that these workers are employed to service.
In June 2023 Cabinet agreed to appropriate funding of $435.583 million over four years to 15 government Funding
Agencies to affect the new social work pay equity extension (the Funding). Cabinet also directed Public Service
chief executives to vary or update all current funding contracts as identified in the data collection process which
support the employment of social workers and those in social work roles to implement the new pay equity rate,
including relevant terms and conditions, as a minimum from 1 July 2023.
For more information on pay equity and the pay equity extension process please see here:
Extension of pay equity
settlement - Te Kawa Mataaho Public Service Commission (ssc.govt.nz)
Purpose
This guidance provides agencies with practical information to help meet the requirements of the Cabinet directive
[SWC-23-MIN-0063 refers] to vary or update all current funding contracts as identified in the data collection
process (designated contracts/funding agreements) to implement the new pay equity rate, including relevant
terms and conditions, as a minimum for all workers undertaking social work in the community and iwi sectors
from 1 July 2023.
Designated contracts/funding agreements
In early 2023, The Pay Equity Taskforce at Te Kawa Mataaho led a data collection process (the data collection). The
data collection was open from 14 February 2023 to 3 April 2023 and identified contracts and funding agreements
that are serviced by social workers or workers undertaking social work eligible for coverage under the pay equity
extension.
Contract numbers and/or other identifiers have been provided to agencies along with data regarding the number
of full time equivalent (FTE) roles servicing these contracts/agreements that are in scope of the pay equity
extension and the level of funding upli required per contract to deliver the benefits of the pay equity extension to
eligible workers.
This guidance should be read in conjunction with the template contract clauses that have been developed to
support the implementation of the Cabinet directive by way of contract variation.
Future contract rates for social work services
Cabinet also agreed [SWC-23-MIN-0063 refers] that Funding Agencies who commission services that employ social
workers or other registered professionals undertaking social work (employees in category 1 and 2) will review the
funding they provide to ensure providers can maintain pay equity rates for social work in the community and iwi
sectors, and that this review should occur:
a) at the point of renewing/renegotiating contracts;
b) when commissioning new contracts; or
c) at least every three years for longer-term existing contracts.
In addition, Cabinet agreed that Funding Agencies who commission services that employ un-registered
professionals (category 3 employees) undertaking social work in the community and iwi sectors, review the
funding they provide to ensure providers can maintain pay equity rates until November 2024.
Purpose of this guidance
The following guidance has been developed, in conjunction with template contract clauses, to support the initial
implementation of the Cabinet directive for designated contracts. However, the template contract clauses may
also be used for new contracts/funding agreements that may be serviced by social workers or workers undertaking
social work roles.
Pay equity rates for social work
Under the Equal Pay Act 1972, parties to the original claim are required to review the settlement at least every
three years, to ensure that sex-based undervaluation has not reoccurred.
This means that Oranga Tamariki will support the employers named in the original claim and the union
representing the claimant group to undertake research to ensure the rates established in the original settlement
are still equitable. If this review uncovers an upli in rates is required to address sex-based undervaluation that has
reoccurred, this information will be published on the
Extension of pay equity settlement - Te Kawa Mataaho Public
Service Commission (ssc.govt.nz) website.
Template Contract clauses
Please find the template contract clauses here.
We provide below an explanation of the template contract clauses we’ve developed to assist agencies with
implementing the pay equity extension for designated contracts and to support a consistent approach across
agencies.
The template contract clauses set out:
• An explanation of the components of additional funding and their purpose.
• The appropriate application of the additional funding to:
o translate worker salaries from their current position to the appropriate new pay equity rate on the
new pay spine;
o maintain step-based pay progression for workers; and
o deliver the professional support allowance.
• A provision to ensure that funding flows down through all subcontracting arrangements where
appropriate.
• A mechanism for agencies to obtain assurance on an annual basis from a provider that the new pay equity
rates are being paid and workers are receiving step-based salary increases no less than annually.
• A right for agencies to undertake an audit to ensure compliance with the funding requirements.
Templates | New Zealand Government Procurement
How to use the template contract clauses
The template contract clauses have been designed to be incorporated in existing agreements/contracts by way of
contract variation. Their addition does not alter other terms and conditions of service/output/outcome delivery
set out in the existing agreements/contracts but provide an additional payment for the purpose of delivering pay
equity for social workers and employees undertaking social work.
Please note the template contract clauses are draed in the context of the New Zealand Government
Procurement’s social services Outcome Agreement (Bilateral) and therefore reference that agreement throughout.
If an agency uses a different form of agreement or contract, it is recommended that any reference to Outcome
Agreement is replaced with a suitable alternative defined term.
The template contract clauses may be used to vary an agency’s designated contract/funding agreement and give
effect to Cabinet’s decisions [SWC-23-MIN-0063 refers].
However an agency chooses to vary or update its designated contracts/funding agreements to give effect to
Cabinet’s decisions [SWC-23-MIN-0063 refers], those contracts/funding agreements must include the following
elements:
a) Additional funding terms must be effective on 1 July 2023, ensuring that, funding to workers will reflect
(where applicable) an additional sum of monies calculated from 1 July 2023 to the point at which the first
payment for salary correction is made.
This means that no matter when the new contract clauses are incorporated or when the contract variation
is signed, the new funding is effective from 1 July 2023 and states that this funding should also be passed
through to workers as effective from this date.
This provides workers with assurance that although funding may reach employers at different times and it
may also take time for funding to be applied to updating employment agreements, they will not be
financially disadvantaged when compared to other workers for receive payment more quickly.
b) Defines the additional funding, appropriate application of that funding and ensures:
i. workers identified in the data collection that service the contract/agreement and are eligible for
the pay equity extension receive the pay correction and additional professional support
allowances; and
ii. the identified workers progress through salary steps set out in the pay spine no less than annually.
c) Includes the obligation for Providers to supply annual written confirmation that they have applied the
additional funding to paying salaries at the new rates and progressing workers through the pay steps.
d) Includes the right to audit for compliance with the appropriate application of the funding.
The Template Contract Clauses
Here is a high-level overview of each of the template Social Work Pay Equity Extension Funding contract clauses:
• Clause [X].1 (Definitions): sets out the relevant definitions used throughout the new Social Work Pay
Equity Extension Funding provisions.
• Clause [X].2 (Use of Funding): sets out the central obligation of the Provider to ensure all relevant
employees undertaking social work are paid at a rate no less than the social work pay equity extension
rate applicable at the time, are being progressed through the annual pay steps as defined in the pay spine
and have access to relevant professional support.
Breach of this provision is expressly identified as being a material breach of the contract/agreement, so
that the agency has the option to terminate the contract/agreement for non-compliance by the Provider.
• Clause [X].3 (Full Time Equivalent Professional Support Allowance): defines the professional support
component of the additional funding. Different allowances are applicable to different social work
categories. A table is included to help Providers understand how the professional component of the
additional funding needs to be applied.
• Clause [X].4 (Professional Support Allowance): sets out the amount of funding for professional support
included in the total additional funding to be paid by the agency. Professional support funding is applied
on an FTE basis according to the social work category of each worker.
This provision also helps Providers understand what amount of funding from within the total additional
funding needs to be applied to each Specified Role.
• Clause [X].5 (Annual Additional Payment): defines the total annual additional payment amount (the
new funding) and details the components of that funding each year for the contract term.
• Clause [X].6 (Payment schedule): is a place holder for agencies to insert a payment schedule for the
annual additional payment. Each agency may choose payment intervals/a payment schedule that best
aligns with its existing contract/agreement payment schedule or as may be negotiated with a Provider.
• Clause [X].7 (Subcontractors): sets terms relating to a Provider’s payment of a portion of the funding to
its subcontracted entities.
In some instances, the data collection identified workers in scope of the extension whose roles are funded
through subcontracting arrangements. Where possible, the data collection process gathered information
about the Provider who held the head agreement with a government funding agency. In these situations,
the total additional funding for the subcontractor is included in the funding for the head contract holder
and information about the subcontractor and the workers in scope of the extension has been passed on to
agencies.
This information should in turn be supplied to the head contract holder so they are able to pass through
the appropriate amount of funding to the subcontractor/s to give effect to the pay equity extension for
their workers.
This clause has been draed to ensure any funding that includes funding for subcontractors is
appropriately passed through. It also covers situations where subcontracted entities were not specifically
identified in the data collection process and may have been rolled into a head contract holder’s data.
• Clause [X].8 (Annual review): sets out the Provider’s obligation to undertake an annual remuneration
review to ensure workers covered by the extension are being progressed through the step-based pay
system.
• Clause [X].9 (Annual Additional Payment confirmation): sets out the Provider’s obligation to supply
annual written confirmation of compliance with all of the provisions of the new Social Work Pay Equity
Extension Funding clause to the agency. An agency can ask the Provider to supply sufficient evidence in
support of such written confirmation also.
• Clause [X].10 (Funding audit): sets out the right for an agency (or its auditors) to audit the Provider’s
compliance with the requirements of the Social Work Pay Equity Extension Funding clause.
The right to audit for compliance regarding the additional pay equity funding is a required assurance
mechanism to ensure additional pay equity funding is being appropriately applied. Agencies may choose
not to include an additional audit clause if the framework terms and conditions in the base contract
provides sufficient assurance that the agency has the right to audit for compliance with the new the Social
Work Pay Equity Extension Funding clause.
• Clause [X].11 (Recovery, reduction or suspension of Annual Additional Payment amounts): sets out
the right for agencies to recover, reduce or suspend the funding and the situations in which this right may
be enforced.