Intentionally not paying employees their wages now deemed theft

(a)  employs another person (B); and
(b) is required to pay any money owed to B in relation to the employment under –

(i) an employment agreement (whether or not the agreement is in writing); or
(ii) an Act (for example, the Holidays Act 2003, the Minimum Wage Act 1983, or the Wages Protection Act 1983).

(2) A commits theft if A intentionally fails, without reasonable excuse, to pay the money to B.

The Amendment aims to prevent employers exploiting employees by not paying money owed to them under their employment agreement or by statutory law. This could include an employer failing to pay its employee their salary or wages as listed in their employment agreement, or other monetary entitlements owed under, inter alia, the Holidays Act 2003 or Minimum Wage Act 1983 (i.e. not paying an employee their holiday pay or paying under minimum wage).

Exploitation of vulnerable workers

The purpose of the Amendment is to address the exploitation of workers, particularly vulnerable workers, in New Zealand. The Amendment does not immediately criminalise the failure to make employee payments and has two essential elements that constrain its application:

• Employers must “intentionally” fail to pay money owed to its employee(s).  It is not enough that a nonpayment has occurred. This rules out non-payment due to a technical payroll error or a genuine misunderstanding. The prosecution would need to establish beyond reasonable doubt that the non-payment was intentional.
• Even if the non-payment can be proved to be intentional, an employer may have a “reasonable excuse” not to pay money owed to an employee. If it does, that is a complete defence.

What constitutes a “reasonable excuse” is yet to be determined, but will likely be viewed from an objective perspective, of what, in the circumstances, is deemed reasonable.

2025 is set to be a busy year in the world of employment law, with many more proposed legislative changes on the horizon.

Mary Weatherall is a Solicitor in the Employment Law Team and Jim Roberts is Head of the Employment Law Team, both at Hesketh Henry in Auckland.