Wage Theft - The Crimes (Theft by Employer) Amendment Bill 2023

Employers are generally prohibited by law from withholding an employee’s wages or salary, and other monetary entitlements due to the employee under legislation, with very few exceptions. The Government is now looking to criminalise intentional acts by employers of withholding such payments.

A bill by Labour MP Ibrahim Omer was introduced to parliament this month, The Crimes (Theft by Employer) Amendment Bill 2023 ("the Bill") will amend the Crimes Act 1961. The Bill seeks to criminalise an employer who withholds an employee’s wages, and regulates it as theft by the employer. As with all Bills, it will require three readings until it becomes law, so this may or may not become law.

The Explanatory Note of the Bill states that "currently offences relating to theft by a person in a special relationship are insufficient to account for wage theft by employers. Existing processes are too complex, and can be a deterrent for those that are victims of wage theft". The Bill will make it a criminal offence for an employer to not pay owed wages to the employee, including unlawful withholding of wages, salaries and other monetary entitlements. The proposed change to the law is intended to provide a clear direction for employees that they are entitled to be paid what they are owed in an employment relationship.

Failure to pay employee’s their wages and other entitlements when they are due is already unlawful, and may be in breach of a number of existing legislation including the Holidays Act 2003, Wages Protections Act 1983 and the Minimum Wage Act 1983. However, the existing legislation focuses on compliance and penalties. The Bill on the other hand, seeks to increase the costs and risks involved for employers who fail to pay their employees.

In comparison to other jurisdictions, New Zealand’s sanctions seem relatively light. In January 2022 Norway was the first European country to legislate against wage theft. Employers liable for wage theft can be punished with a significant fine or imprisonment of 2-6 years. Similar practices are adopted in Victoria, Australia where an employer is found liable, there is a maximum penalty of 10 years imprisonment or a fine up to $221,904 for an individual or $1,109,520 for companies.

If the Bill becomes law, an employer who fails to pay their employees could be fined up to $5,000 and face a term of imprisonment up to one year where the employer is an individual or natural person. An employing entity could be liable for a fine not exceeding $30,000. Despite the increased stakes for employers, the Bill interestingly does not include punishment for directors who aid and abet the breach. Therefore, directors of companies could potentially avoid personal liability under the Crimes Act if the current version of the Bill is passed. However under existing legislation, directors who aided and abetted the conduct can be held personally liable to pay penalties.

The Bill has received support from the Council of Trade Unions, with its president Richard Wagstaff making a statement saying that wage theft is an “insidious practice that tend to target low-income and immigration workers. We see too many stories of hard-working people being ripped off by unscrupulous bosses with no real repercussions". Ibrahim Omer, the Member of Parliament who authored the Bill said that "the Bill will make a big difference to workers, especially for those who are students, migrants and low paid workers".

For comprehensive and detailed advice on your specific situation, please contact:

Melissa Johnston (Partner) on (09) 306 6729 (mjohnston@mcveaghfleming.co.nz)

Hiruni Wijewardhana (Solicitor) on (09) 262 4940 (hwijewardhana@mcveaghfleming.co.nz)

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Written by Melissa Johnston, Hiruni Wijewardhana and Gus Hardie Boys