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Pay Parity

Payroll

26 June 2025 (Last updated 3 Dec 2025)

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Pay parity is the practice of paying people equitably. This means that employees in the same job and location receive fair pay relative to each other regardless of their gender, race, sexuality, or any other protected characteristics. 

Pay parity can also be achieved by offering equal payment to closely related roles that demand similar skills and have a comparable level of importance to the economy.  

The aim of pay parity is to close the ‘pay gap’ and reduce the extent to which discrimination and bias influence pay rates for different employee groups. 

What is the pay gap? 

Pay gaps occur when certain groups earn less than others despite performing the same or similar work.  

Depending on the circumstances, pay gaps can either be fair or unfair. Sometimes workers are fairly rewarded with greater pay for having more experience or being longer tenured. However, there are also occasions when staff are unfairly underpaid based on bias. 

Who can be affected? 

While pay parity is often simplified as the pay discrepancy between men and women (the gender pay gap), there are many types of people who can be affected by wage inequalities. A list of the protected attributes that should be considered when measuring pay parity include:

  • Age.
  • Race or skin colour.
  • Nationality or ethnicity.
  • Sex (which extends to pregnancy of an employee or delivering a child).
  • Sexual orientation.
  • Disability.
  • Religious beliefs or ethics.
  • Marital status, familiar status, or family violence involvement.
  • Status of employment.
  • Any political opinion.

All of these groups are protected by the Employment Relations Act 2000 and the Human Rights Act 1993.

A worker’s pay should never be negatively impacted by any of these protected characteristics. For this reason, it’s important for businesses to find, measure and understand the underlying causes of pay gaps so that they can be closed. 

What is the difference between pay equity and pay parity? 

These two terms are often used interchangeably, with both referring to an ideal situation whereby people performing similar roles receive equal pay.  

However, there are slight differences in what each term refers to. Often, pay equity refers to paying people fairly and consistently without discrimination. Meanwhile, pay parity demands the same but also calls for employers to show there are no unreasonable pay gaps throughout their workforce.   

Barriers to pay parity

Despite the urgency and importance of achieving pay parity, it is not always straightforward. Achieving pay parity goes beyond just increasing salaries or offering more money to disadvantaged groups. It requires addressing the disproportionate representation of women and ethnic minorities in lower valued roles. We need to introspect whether lower paid roles are valued less because of the traditional undervaluation of work done by women and ethnic minorities or because they are of lower value to companies and organisations.

Cultural and social conventions have embedded expectations that women perform most of the unpaid labour at home, such as looking after the home and taking care of children. This leads to the conclusion that women have less time to carry out paid work and are more likely to have periods of unemployment or part-time work. Constant gaps or reduced working hours can damage career prospects and lead to women having to frequently start over, delaying their chances at senior and higher paying roles.

A complicated financial climate means that businesses are facing rising costs and expenses with job cuts and redundancies becoming the norm. These cost pressures further make pay parity a distant dream.

The history of pay parity in New Zealand 

The history of pay parity in New Zealand has its roots in the education sector. For many years teachers in primary schools demanded the same pay scale as their colleagues in secondary schools. In the 1990s, collective action from New Zealand’s largest education union NZEI Te Riu Roa led to pay parity.  

Following in the footsteps of primary school teachers, Kiwi early education teachers lobbied for pay parity in the early 2000s.  

Now, all early childhood centres, primary, and secondary school teachers in New Zealand are paid the same base rate. This is a perfect example of roles with the same level of skills and economic importance being equitably paid.    

What is the Pay Parity Opt-In Scheme? 

The pay parity opt-in scheme is a funding scheme for education and care services including hospital-based services. Services that opt in can access higher funding rates for paying their certified teachers at or above certain minimum salary steps.

Pay equity in New Zealand? 

Since the 1970s, it has been illegal to pay an employee less simply because they are female. However, until recently, there was not a process to help employers and employees agree on what was equitable remuneration.

In 2020 a claims process was introduced to close the gender pay gap in industries by providing employees with a specific way to raise a pay equity claim directly with their employer. This process was refined in May 2025 and included that there must be reasonable grounds for the claim to have merit.

The Equal Pay Act (1973) clearly outlines a broad range of rules, guides and definitions about equal pay that employers must understand and follow to be compliant with employment law. 

Some of the topics the Equal Pay Act goes into detail about include:

  • The definition of unlawful discrimination 
  • How to determine equal pay 
  • Interim increases 
  • How to recover unpaid wages based on the grounds of equal pay 
  • Records employers must keep 
  • How to manage pay increases for female employees 

By adhering to these rules and regulations, Kiwi employers effectively contribute to pay parity, raising the chances that a worker will be fairly paid relative to their peers.  

What can businesses do to increase pay parity? 

Beyond the legal requirement to follow the laws of the Equal Pay Act, businesses can also increase their contribution to pay parity by: 

  • Regularly reviewing employees’ wages and checking for pay parity among similar roles. 
  • Rather than viewing a full résumé, ensure information about the candidate’s identity is obscured when shortlisting candidates. This can help to remove unconscious bias from the hiring process.  
  • Salary benefits are not the only way to compensate employees. You can offer other perks such as flexible working arrangements, bonuses, additional leave, discounted memberships, and EAPs.

Are you paying all your staff fairly?

Peninsula can help you ensure your pay policies and processes are compliant, minimising the risk of any discrimination claims. Kiwi business owners can call our advice line on 0800 215 030 to learn more.

This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.

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