Intentionally failing to pay employees is now a crime, after a Bill to amend the Crimes Act was given royal assent on 13 March 2025.
The Crimes (Theft by Employer) Amendment Act means employers can face criminal prosecution for not paying employees what they are entitled to under their employment agreement or applicable laws, unless they have a reasonable excuse.
As wage theft is now part of the Crimes Act, employees are able to go to the police and report their employer’s actions.
Prior to this, employees who were not paid (or who were underpaid) could take a case to the Employment Relations Authority and ask for an injunction to be made, requiring their employer (or ex-employer) to pay them anything owed to them.
The new law aims to combat deliberate exploitation of workers. It brings New Zealand into line with other countries, such as Australia and Norway, that have made wage theft illegal.
What is wage theft?
The new law defines wage theft as the “unlawful withholding of wages, salaries, and other monetary entitlements within an employment relationship”.
Wage theft occurs when an employer intentionally fails to pay an employee their full legal entitlements, whether that be their wages, overtime, holiday pay, sick leave, or underpayment of minimum wage requirements.
New penalties for deliberately underpaying employees
Under the new legislation, employers found to have deliberately withheld money owed to employees can face these maximum penalties:
- If the employer is an individual - up to one year in prison and a fine not exceeding $5,000 (or both).
- In any other case (for example, where the employer is a charity, a government agency, a limited liability company etc) - a fine not exceeding $30,000.
Liability
The intention of the employer is fundamental to assessing whether a crime has been committed, under the new section 220AA of the Crimes Act. For an employer to be liable they must have “intentionally failed” to pay what is owed to an employee, and not have had a “reasonable excuse” for doing so.
However, what constitutes a “reasonable excuse” is yet to be tested in court - we assume employers are unlikely to be liable if the failure to pay the employee is unintentional and they can prove a reasonable excuse for the failure.
At this stage, we’re unsure if repeated failures to pay wages will be a single offence under the law or whether each underpayment will be a separate breach (something the New Zealand Law Society has questioned).
Our advice
Hopefully this comes as a surprise to no-one, but correctly paying your employees is not a new obligation!
Employers are required to pay employees in accordance with their employment agreement and statutory laws, e.g. the Holidays Act, Minimum Wage Act, Wages Protection Act.
Now that deliberate non-payment (or underpayment) has been made a crime, employers should do everything they can to reduce the risk of being prosecuted.
This means regularly checking all employee entitlements and carefully reviewing payments in your payroll system. If a mistake comes to light, address it as quickly as possible, and be transparent with your employees about what’s happened and the steps that you’re taking to resolve the issue.
If you need any assistance, MyHR’s advisory team is expert at minimising legal risks. The HR health check every organisation receives on sign-up ensures your employment documentation and processes meet all statutory obligations. Our powerful software enables you to stay on top of employee leave and entitlements, and integrates seamlessly with leading payroll providers.
