Employment issues with criminal consequences – the criminalisation of wage theft

This means a section will be inserted into the Crimes Act 1961 criminalising ‘wage theft’ by employers.  That is, where an employer fails to pay money owing to its employees under an employment agreement or legislation, such as the Holidays Act 2003 and Minimum Wage Act 1983. 

Aren’t there already laws in place for this? 

There already are laws in place designed to protect employees from wage theft but currently claims can only be proceeded in the employment jurisdiction as civil claims by employees or the Labour Inspectorate.  

So, what’s new?

Now, employees will have the option of going to the police if they are not paid money owed to them by their employers, and employers may face criminal penalties as a result.   

This does not necessarily create new obligations for employers, but it means there may be criminal consequences if existing obligations are not met. One idea behind this is that employees can be prosecuted for stealing from their employers under the Crimes Act, so employers should face the same risk.  

A common mistake we see employers make in this area is failing to consult and failing to get appropriate consent before deducting money from an employee’s pay. Importantly, it’s not enough to just rely on a general deductions clause in an employment agreement, and doing so gives rise to a breach under the Wages Protection Act 1983.  

Should employers be concerned?

The bill was introduced to prevent the exploitation of employees in New Zealand. It also contains two important constraints: employers must intentionally have failed to pay the wages owing and they must not have a ‘reasonable excuse’.  This suggests that it may have a very narrow application and is not intended to capture employers who make genuine mistakes.   

There is, of course, still uncertainty about how it will be applied, including how the term ‘reasonable excuse’ will be interpreted when it comes to decisions made by employers, such as suspending employees without pay. We might also see more employees taking claims to the police rather than their employer in the hopes of a more punitive outcome. 

It’s certainly an area to keep an eye on.  Our advice to employers is to ensure you understand your obligations, and to seek legal advice at the earliest opportunity when wage queries arise and before deciding to withhold money from an employee, for example before making deductions from final pays or declining payment of leave entitlements.  

Stay compliant and protect your business

With wage theft soon to be a criminal offence, ensuring your payroll practices align with the law is more important than ever. Don’t leave your business exposed to legal risks—get expert guidance on navigating these changes and avoiding costly mistakes.

Book a consultation with our employment law specialists today to ensure you’re meeting your obligations and protecting both your business and your employees.