Wage theft – should this be a criminal offence?

The Crimes (Theft by Employer) Amendment Bill has been introduced into Parliament and raises some important issues for discussion.  In this article, we examine the Amendment Bill and its possible implications for employers should it proceed.

Crimes (Theft by Employer) Amendment Bill

The Crimes (Theft by Employer) Amendment Bill is a Member’s bill which has been introduced into Parliament.  It is intended to create a new criminal offence for employers who owe wages and intentionally do not pay wages to an employee.

The Bill proposes to insert a new offence into the Crimes Act 1961.  If enacted, it would apply to an employer that intentionally fails to pay an employee any money owed to them, in relation to their employment.  This includes the unlawful and intentional withholding of wages and other monetary entitlements in an employment relationship.  Based on the wording of the Bill, the offence would include the intentional underpayment of money which an employee is entitled to receive, whether under their employment agreement or under the law (such as the Minimum Wage Act or the Holidays Act).

Currently employees are already able to take civil legal action against their employer to recover money owing to them.  This generally involves initiating legal proceedings in the Employment Relations Authority, and seeking recovery of the unpaid amount.  Applicants can also seek penalties against their employer for a breach of their employment agreement, and payment of interest on the amount owing.

In essence, the proposed offence provides that an intentional failure to pay wages owing to an employee would constitute the criminal offence of theft.  It is anticipated that this Bill (if enacted) would enable affected employees to report offending employers to an enforcement agency (such as the Police), and employers may be prosecuted and sentenced under the criminal justice system.

If found guilty, a sentence of up to one year’s imprisonment, or a maximum fine of $5,000 could be imposed on individuals, and in other cases (such as a body corporate) a fine of up to $30,000 may be imposed.

We anticipate that the Bill (if enacted) will not preclude any affected employee from taking their own legal action against the employer.  Based on the Bill as it stands, we also note that it would not expressly extend criminal liability to directors or officers of corporate entities (who may have been responsible for the employer’s actions).

Comments and conclusion

While the Bill has been introduced into Parliament, it is still awaiting its first reading and referral to the Select Committee for assessment and public submissions.  If it proceeds, this Bill is likely to generate public discussion about whether non-payment and underpayment of wages should be treated as theft by an employer.  We note that this would not be new, as wage theft is unlawful and carries a maximum penalty of up to 10 years’ imprisonment in Queensland and Victoria in Australia.  Further, theft by an employee is already a crime in New Zealand.