Employers Could Face Criminal Charges for Wage Theft

Tuesday 1 April, 2025

Wage theft, where an employer intentionally withholds a worker’s wages, is a serious issue some employees may face. Ensuring a worker is paid for the hours they have worked is a foundational concept in every single employment agreement.  

What is it

Theft by an employer is defined as an employer intentionally failing to pay their worker. This includes the unlawful withholding of wages, salaries, and other monetary entitlements. Currently, if an employer is intentionally failing to pay their worker, the worker must bring a claim in the Employment Relations Authority (ERA) for wage arrears, or a civil litigation claim against them for “theft in a special relationship.” 

Bringing a claim in the ERA or a civil litigation claim can be complicated, lengthy and very expensive, whereas a criminal claim provides a clear pathway to recovery.

Proposed changes

The Crimes (Theft by an Employer) Amendment Bill (Bill), a private member’s bill introduced in 2023, aims to criminalise theft by employers. It sets out penalties for individual employers of up to one year imprisonment, and/or a maximum $5,000 fine, or a maximum $30,000 fine in any other case. The Bill has just had its second reading.   

Clause 4 of the Bill proposes inserting section 220AA into the Crimes Act. The proposed new section sets out the employment arrangements and entitlements that would be covered under the new offence including the penalties. 

The intention behind the Bill is to “provide clear direction to employees that they have the right to be paid what they are due”.  The explanatory note to the Bill explains that existing offences related to theft by a person in a special relationship are inadequate.

By criminalising this behaviour, not only will employees have an easier avenue for claiming withheld wages, but the Bill should act as a deterrent for employers to refrain from engaging in this kind of behaviour generally. 

Currently theft by employees is a crime, while wage theft by employers is a civil matter. The Bill aims to balance this relationship through this criminalisation. 

It is important to note the emphasis on the intentional requirement of this amendment. The proposed changes will not punish employers that simply make a mistake or do not ‘intentionally’ withhold an employee’s wage. The Bill targets the few employers who intentionally withhold their workers’ pay. 

What this Means

The enactment of this Bill would bring New Zealand into alignment with many other similar jurisdictions such as California, Norway, and Australia. 

The Immigration Act 2009 already makes wage-theft a criminal offence for the employers of some migrant workers. The Bill will ensure that all migrants are protected, even after changing to a permanent residency or no longer having a temporary class visa.  Fundamentally, regardless of migration status, the Bill will give the same protection to all New Zealanders. 

This Bill has received support from 84% of the submitters to the select committee. However, some employers feel this amendment is unnecessary, and the current laws are adequate to deal with these kinds of issues. They feel that proving the “intentional” requirement will create legal difficulties and create additional burdens for employers, potentially discouraging business development. Some employers worry that the Bill could be misused by employees to unfairly target them or create unintended consequences. 

As things currently stand, it is likely this Bill will pass. While it may be a small amendment, it will certainly provide more protection to employees and enforce worker’s rights. 

If you have any questions in relation to the new legislation, please contact one of our experts below.

Our thanks to Fraser Duncan, Summer Intern, for his contribution to this article with the support of our Employment Team.