UPDATED 8.02PM In a major boost in the fight for pay equity, women will be able to file claims with employers and not have to go through the courts.

LISTEN ABOVE: Business NZ chief executive Kirk Hope spoke with Larry Williams

The move has been hailed by the Public Service Association as enabling New Zealand to "once again claim to be a leader in gender equality".

And the Human Rights Commission said it was a "historic step forward for gender equality".

The changes will mean employees who believe they are underpaid because they work in fields dominated by women will be able to approach their employer to raise a pay equity claim.

The Government has today announced it has accepted the recommendations from a joint working group, led by Business NZ and the NZ Council of Trade Unions, that were delivered to Cabinet this year.

When making a pay equity claim, employees need to find a non-female-dominated job they can compare their work to.

As well as establishing a process for employers and employees to follow to address pay equity, ministers have also decided to clarify how to choose an appropriate job for comparison when making a pay equity claim.

PSA national secretary Erin Polaczuk said Cabinet had proposed a "start close then move out" mechanism, where employees must try to find a comparison in their own business, then their industry, then their sector.

She said the PSA would now raise pay equity claims for thousands of low-paid women.

"We firmly believe women are worth 100 per cent, and with this decision the Government has acknowledged that New Zealanders agree."

The Human Rights Commission welcomed today's decision, saying it signalled the start of significant change in addressing pay equity and "the realisation of a fundamental human right".

Equal Employment Opportunities Commissioner Dr Jackie Blue said the legislation would be a "historic step forward for gender equality".

"We are strongly advocating that New Zealand follows in the steps of countries like the UK, where from 2018, businesses with over 250 employees must disclose what they are paying in salaries and bonuses to their male and female staff."

The Employers and Manufacturers Association (EMA) said the planned changes would help businesses manage a complex issue.

"To have certainty around the process and know it will be conducted under the good faith requirements of the Employment Relations Act, which employers are familiar with, is important for any commercial operation," said Mark Champion, EMA's general manager advocacy and industry relations.

Minister for Women Louise Upston said gender should not affect what people are paid.

"Occupations shouldn't be lower paid just because women make up most of the employees. The Government's response today means that employees and employers can resolve concerns about equal pay in good faith.

"In addition, there will be a pathway for resolving issues, as happens with other employment matters, including mediation and ultimately the Employment Relations Authority."

-NZ Herald