The Crimes (Theft by Employer) Amendment Bill was recently pulled from the parliamentary ballot box and would make it a criminal offence to intentionally withhold money that is due to employees.  An individual employer convicted of this crime could be liable to imprisonment for a term of up to one year, or a fine not exceeding $5000, or both.  Where the employer is a company, it could be fined as much as $30 000.

This is long overdue as unfortunately there are numerous stories of employers exploiting workers and either paying them under the minimum wage or not at all.  Often these workers are vulnerable and are not in a position to take action against their employer to get what they are owed.  Even those who can do this face a difficult and time consuming legal process to seek arrears of wages through the Employment Relations Authority.  The cost of pursuing claims of this nature can also be prohibitive and outweigh the benefit.

These factors have contributed to a situation where bad employers can often get away with literally stealing from their employees.  This practice is far more common than most people would like to think, with recent examples including two Hamilton-based Super Liquor stores that paid their employees well below the minimum wage ($8 to $11 per hour) between 2010-2017 and required them to work over 60 hours per week.  Another case involved a chain of six restaurants where the business owner and director told eight employees to vastly under record their hours worked and also failed to pay them.

This Bill, if it is passed, would provide a far greater disincentive to these employers to steal from their employees.  Not only could they be convicted of a criminal offence and get a criminal record, but the threat of imprisonment would be real. 

The amendment would capture a broad range of situations where employers steal from employees including failing to pay wages and/or overtime, not paying holiday pay or kiwisaver, and making unlawful deductions from an employee’s pay.  However, it applies only where the employer intentionally fails to pay an employee, and so would not punish employers who may have made an inadvertent mistake, or by reason of some technical glitch have omitted to pay their employees on a particular occasion.

It adopts a similar approach to legislation introduced in Victoria and Queensland in 2020 which implement criminal sanctions for wage theft, but where the penalties are significantly higher.  In Queensland an employer can be imprisoned for up to ten years, whilst in Victoria persons convicted of this crime can be imprisoned for up to ten years and fined more than $200 000, with the potential fine for companies increasing to over $1 000 000.

The Bill was introduced by Labour MP Ibrahim Omer, who came to New Zealand as a refugee and has himself been exploited by two different employers.  In introducing the Bill, Omer said that it is not fair that employees can be sent to jail for wage theft, but there is no equivalent penalty for employers. 

The Council of Trade Unions has provided support for the Bill, with its president Richard Wagstaff stating bluntly that wage theft is an “insidious practice that tends to target low-income and immigration workers”.  He also noted “we see too many stories of hard-working people being ripped off by unscrupulous bosses with no real repercussions”.

The explanatory note to the Bill says 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 has yet to make its way through the select committee process, but if it becomes law, it should make a real difference. Bad employers may be prepared to risk financial penalties, but locking them up may provide the incentive they need to treat their employees fairly and with dignity.

This article was originally published on 31 May 2023