The Wage Theft Bill: everything employers need to know

Since April 2023, Parliament has been debating the merits of the Wage Theft Bill (Crimes (Theft by Employer) Amendment Bill) which clarifies that not paying an employee their wages is considered theft. Under the Wage Theft Bill, employers may face criminal penalties for wage theft, along with other, existing remedies that may be sought through the Employment Relations Authority and employment courts.

After several months of discussion, last week the Bill progressed to the final stages of the parliamentary review process. The Bill will now move to its third and final reading before receiving royal assent and being enacted into law.

With the Bill set to pass in the coming weeks, it’s essential that business leaders in New Zealand are aware of these updates. We’ve wrapped up what the Bill means for employers, shared real world examples of what wage theft can look like, and how you can get prepared below.

Why was the Wage Theft Bill introduced?

Photo credit: RNZ VNP / Phil Smith

The Bills sponsor, Labour MP Camilla Belic, shared some insight into the rationale behind the Bill during its first reading:

“If employees steal from their employer, the first thing that employers do is go to the police, and that employee suffers the full force of the law if they are found guilty for that offence.

“There is no justification for having a different rule apply to employers than it does to employees. It’s not right, and this bill will make it right.”

What is the definition of wage theft?

Wage theft occurs when employers fail to pay employees their full legal entitlements. This can include unpaid wages, unpaid overtime, failure to provide holiday pay, and underpayment of minimum wage requirements.

Intentional versus unintentional breaches

An important factor to note is that the Bill relates to intentional underpayments, not unintentional mistakes or administrative errors. That means, for example, if an employer accidentally underpays an employee (and can prove that it was a mistake) it will not be subject to the Crimes Act.

However, the employer may still be subject to fines and other consequences through the Employment Relations Authority and the employment courts. Each case will be different, and for that reason it’s important you seek professional advice where necessary.

Higher penalties, including prison time for wage theft

The Wage Theft Bill introduces strict penalties for businesses found guilty of intentional wage theft. The maximum (criminal) penalties for wage theft are below:

• If the employer is an individual, the maximum penalty would be 1 year’s imprisonment, a fine of $5,000, or both.
• In any other case, the maximum penalty would be a fine of $30,000.

Real world cases of wage underpayment

“[the respondents] incomplete and inconsistent approach to record-keeping undermined their ability to effectively enforce employment standards and placed employees at a disadvantage.”

That was the view of one Employment Relations Authority labour inspectorate last month, who enforced a $30,000 fine on a South Waikato dairy farmer for underpaying their employees, among other breaches of employment law.

Breaches like this have been dealt with by the Employment Relations Authority and employment courts for a long time. But under the Wage Theft Bill, may now result in additional criminal sanctions.

The Waikato farmer case is just one example of how wage underpayments can occur, and the massive impact they can have. But wage underpayment penalties don’t discriminate – whether you’re in agriculture, hospitality, retail or another industry, the cases below show just how easy it can be to end up in hot water.

Case 1: Kiwifruit company hit with $100K fine for underpaying workers

A labour supply company in the Bay of Plenty and its sole director was slapped with a $100,000 penalty after the Employment Relations Authority found they had underpaid three employees for years.

Case 2: Restaurant owner owes $40K in unpaid wages

A restaurant owner in Taupō learned the hard way that wage arrears don’t just disappear when a business closes. Despite the restaurant being liquidated, the sole director was still ordered to pay a former employee over $40,000 in unpaid wages.

Case 3: Dairy owners penalised $16K

A dairy in Piopio, along with its owners, faced $16,000 in penalties after the Employment Relations Authority found 21 breaches of minimum employment standards, many of which affected migrant workers.

How employers can prepare for the Wage Theft Bill

These cases make one thing clear – the consequences for underpaying or failing to pay employees comes with serious consequences for Kiwi businesses. Let’s look at how you can avoid any costly mistakes, from making sure your record keeping is up to scratch, to streamlining payroll processes and more.

1. Review your payroll set up

Regularly reviewing your payroll system and processes can help identify potential underpayments or miscalculations. Employers should ensure that all employees receive correct wages, overtime pay, and entitlements in accordance with the law.

Pay special attention to ensuring all staff are being paid the correct minimum wage, receiving holiday entitlements, sick leave, public holiday pay, overtime pay, and other entitlements.

If you need a reminder about key payroll tasks, we recommend you read through our payroll guide.

Heads up! The minimum wage is increasing from 1 April 2025. The Adult minimum wage will go up from $23.15 to $23.50 per hour. The starting-out and training minimum wage will go up from $18.52 to $18.80 per hour. Make sure you’re ready!

2. Maintain detailed records

Keeping accurate records of hours worked, pay rates, tax deductions, and leave entitlements is essential. Employers should retain these records for at least six years to protect themselves in case of an audit.

Did you know?

Our Employment Operating System digitally stores your records in one central location, so you’ll never lose a time sheet or pay slip again. Find out more.

3. Train management and payroll staff

Many wage underpayment cases occur due to a lack of knowledge rather than deliberate wrongdoing. Providing training for payroll teams and management on employment laws and wage requirements can reduce the risk of accidental non-compliance. Employment New Zealand and the New Zealand Payroll Practitioners Association offer some helpful training modules to keep you up to speed.

4. Conduct internal audits

Regular internal audits can help you identify payroll mistakes before they become serious issues. It’s a good idea to schedule regular audits of your internal processes, particularly with regard to payroll, to catch any mistakes before it’s too late.

5. Consider an automated payroll system

Manual payroll processing increases the risk of human error. Employers can minimise mistakes by using modern payroll software that automatically calculates wages, tax deductions, and entitlements. Find out how.

6. Seek professional advice

Employment laws can be complex, and staying up to date with changes is critical. If you’re ever unsure of your employer obligations, seek professional advice. You can also get on-demand support and guidance from our team of employment experts through our HR Advisory service.

Compliance stealing all your time? Employment Hero has you covered.

We know laws like this can make it feel like you’re navigating a minefield. The thing is, most employers have the right intentions when it comes to paying employees – and yet, mistakes can happen. That’s especially true if you’re manually calculating wages and salary, and running day to day operations at the same time.

That’s why we designed the Employment Operating System – an all in one system to manage all things employment for Kiwi SMEs.

With an Employment Operating System, everything employment is covered: intelligent payroll software, time and attendance, leave management, performance reviews, recruitment and so much more. The Employment Operating System even includes an on-demand HR Advisory service so you can get practical advice when you need it.

If you’re ready to take control of all things employment, talk to one of our specialists today.

Disclaimer: The information in this article is current as at 24 February 2025 and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this webinar.