Vineeta Rao
Auckland, February 27, 2025
A new Bill that introduces strict penalties for wage theft, tabled by the Labour Party in Parliament, passed through the Select Committee stage on February 19, 2025.
Under the provisions of The Crimes (Theft by Employer) Amendment Bill, dishonest bosses could face up to a year in prison and companies could be fined up to $30,000 along with other existing remedies that may be sought through the Employment Relations Authority and Employment Courts.
Labour MP Camilla Belich said that employers who undertake this practice (wage theft) should be held to account. It is already law in Australia and it is time it was law in New Zealand.
The scope of Wage Theft
“This includes actions to unlawfully withhold wages, salaries, and other monetary entitlements. We all know that this is wrong, but in an unusual quirk of history, this is one area in society where we know this type of theft regularly occurs but there are no criminal sanctions,” she said.
When an employer deliberately fails to pay their employees their full legal entitlements, whether unpaid wages, unpaid overtime, holiday pay or underpays them their minimum wage, it is considered wage theft. The scope of wage theft does not include administrative errors and mistakes. If an employer can prove that it was a mistake and is willing to make restitution, it is not subject to the Crimes Act, although they may still be subject to fines where applicable
Support across Parties
The Bill saw NZ First cross coalition lines to vote alongside Labour, Green and Te Pāti Māori when it was tabled at the committee stage on the 19th of February. It has also been welcomed by unions. Richard Wagstaff, President of The Council of Trade Unions (CTU) said, “Theft is theft. It is past time that the legal system recognises that ‘theft by employer’ is every bit as serious and criminal as any other type of theft. Currently, workers who suffer theft of their wages or minimum entitlements only have civil remedies available to them. Workers must spend their own money to argue their case in the court or the Authority, a cost that is too high for many. Too often cases of ‘theft by employer’ go unpunished and unresolved.”
Green MP Francisco Hernandez, who supported the Bill, said: “In 2018, there were 20,000 cases of just migrant work exploitation; that has not even been covering the broader workers. That is migrant workers alone. There has been a kind of rhetoric from the other side that ‘Oh, well, we will just deal with the civil court system. We will just deal with the normal processes; the civil court system will kind of fix this problem.’ Did the Government increase the legal aid funding so that people who are being exploited could take legal aid cases against employers? Did they increase the legal aid funding in the Budget? No,” he said.
But several others thought it was redundant.
Employers and Manufacturers Association (EMA) Head of Advocacy and Strategy Alan McDonald said, “I just do not think the issue of wage theft exists on the scale that this new legislation is necessary. There is existing legislation like the Workplace Inspectorate, Wage Protection, and the Vulnerable Workers Legislation and even the Workplace Slavery Legislation if that ever goes ahead, that can be used.”
ACT MP Parmjeet Parmar agreed. “The system is already working, and if employers are in breach of their obligation, then there are systems available; there are provisions available. What we need is more awareness for these vulnerable employees to take up these options and to go out and seek justice.”
Mr McDonald said that despite its good intentions, the new Bill would make it harder to prosecute errant employers.
“You have to prove that an employer has deliberately withheld wages to a standard that will stand up in court and to Police prosecution. That is a very high bar,” he said.
National’s Grant McCallum described the pressure he thought the law change would place on small-business owners. “Employers in this country are the backbone of this country. They risk their capital. They make the difference and we are the ones who are about to turn this country around, and we will not be held up to be criminals because you might make a mistake which might be interpreted as a criminal activity—and that is what the problem is. That is why we are completely against this bill,” he said.
Kamil Lakshman, Principal Lawyer at IDESI Legal Limited, an Immigration and Refugee Law Firm, said that Mr McCallum may have a point.
“Anything to do with the employer-employee relationship is a civil matter. This new piece of legislation places it squarely in the Crimes Act, which makes it tricky because now wage theft will have the same equivalence as assault and other crimes,” she said.
Potential Pitfalls
Ms Lakshman said that the new legislation should be approached with caution to ensure that it works to complement rather than clash with existing laws.
”I think that it is important that everyone involved with the legislation review existing the Crimes Act and other similar legislation more closely so definitions and terms used are consistent across the board, including new proposed legislation. For instance, the definition of theft is that of “taking” and not necessarily in control or possession of the object. With wages, the focus changes from taking to withholding,” she said.
In addition to the potential legal pitfalls, Mr McDonald said that the government may be creating problems for itself. He said that because, under the parameters of the new Bill, unpaid holiday pay constitutes wage theft, the government may emerge as one of the biggest defaulters given the very large outstanding back pay due.
“Everybody knows the Holiday Act is a shambles. But if this legislation was in place, you could arguably start a whole lot of prosecutions. The government would be taking itself to court in several cases. It owes nurses and healthcare workers $2.2 billion, and teachers $1.2 billion; MBIE, the agency that enforces this, fined itself $23 million. The Police had to fork out $19 million in back pay,” he said.
We ask you, our readers for your comments. Do you think this complements or clashes with the existing legislation?
Please share your opinions and experiences. Email: vineeta@indiannewslink.nz
