Employers could face hefty penalties, including fines, prison terms
Employers could be deemed thieves for failing to pay employees money owed to them if proposed changes to the Crimes Act are successful.
The Amendment Bill – which is still in development – also proposes setting hefty penalties for this new crime – including prison terms and fines ranging from $5,000 to $30,000.
We are watching with interest to see if the Bill ultimately gets passed by Parliament.
The Education and Workforce Committee has recommended that the Crimes (Theft by Employer) Amendment Bill not be passed.
The committee’s report was presented to the House of Representatives in late August 2024 and recommended the Bill be sent back to the House for further amendments.
Amendment to Crimes Act
The Amendment Bill proposes to insert a new provision into the Crimes Act that would mean an employer’s intentional failure to pay an employee any money owed to them is theft. The Bill would also set maximum penalties for this new offence. If the employer is an individual, the maximum penalty would be one year in prison, a fine of $5,000, or both. In any other case, the maximum penalty would be a $30,000 fine.
The Bill is intended to provide “clear direction to employees that they have the right to be paid what they are due.” The explanatory note to the Bill says existing processes for responding to wage theft are too complex and can be a deterrent for victims. It also states that existing offences related to theft by a person in a special relationship are insufficient to account for wage theft by employers.
The committee’s recommendations were made unanimously and include:
- Clarifying that the term “employment agreement” has the same meaning as that in s. 5 of the Employment Relations Act 2000.
- Making it clearer that payments required to be made to employees bound by a collective agreement are also covered.
- Linking to the definition of “homeworker” in s. 5 of the Employment Relations Act in proposed new s. 220A(3) of the Crimes Act 1961. The committee says this would make it clear that engaging a homeworker would be considered employing them for the purposes of the new section.
- Making it clearer that the payment in question must be required under an Act of Parliament.
- Amending s. 2 of the Crimes Act to exclude theft by employer from this classification as a crime involving dishonesty. This recognises that intentional wage theft does not always involve dishonesty on the part of an employer.
Wage theft in New Zealand
Wage theft by employers is currently treated as a civil matter, whereas theft by employees is most often treated as a crime. Civil wage claims are often difficult for employees to initiate and can be time-consuming and expensive. This bill has the potential to assist employees, who under the scheme of the Employment Relations Act, are recognised as holding less power in the employer-employee relationship.
The new Bill would also bring New Zealand in line with other jurisdictions, including California, Victoria, Queensland, Norway, and most recently the Commonwealth of Australia, all of which have passed legislation criminalising wage theft by employers.
The committee’s recommendations have not altered the substance of the Bill and so it will be interesting to see whether it ultimately gets passed by Parliament.
