Wage theft: 'It’s widespread. It’s ugly. It’s a bloodsport in our country'.

Sunday, 21 May 2023

Ibrahim Omer says it’s not fair that workers who steal from bosses can be sent to jail, but bosses who steal wages from workers cannot.

Twice Ibrahim Omer was victim of a crime that isn’t a crime – wage theft.

Omer came to this country as a refugee from war-torn Eritrea in 2008, during the Global Financial Crisis, to start a new life.

The country welcomed him, but unscrupulous employers were ready to exploit him with business models including intentional wage theft.

Now an MP for Labour, Omer has made it his Parliamentary mission to have wage theft included as a crime in the Crimes Act.

* Watch: The car and the clashes - morning of volatility and arrests on the streets around Parliament

The full speech: Labour list MP Ibrahim Omer gives his maiden speech in Parliament.

* Speak up for a living wage for 'those who make our lives possible'

If Omer’s private member’s bill becomes law, an employer who failed to pay employees their full wages could be fined up to $5000 and face one year in prison, and a company could be liable for a fine of $30,000.

The first debate on the bill has yet to be timetabled, but should happen within months, after which it will be scrutinised by the Education and Workforce Select Committee, which will invite ripped off employees, unions and employers to tell their stories.

The origin of Omer’s mission to criminalise wage theft traces back to a day in 2008. Omer had completed a gruelling week of pruning in an agricultural business, only to be told he would not be paid by the middle-man who had organised the work, and driven him to it.

“He said you should be paying me for the fuel and transport that I have wasted on you because you have done such a poor job. You have cost me money. The boss is not happy with me,” Ibrahim recalls.

“I didn’t get a penny. The best I could do was slam his car door.”

Later, after leaving a second low-paying manual job, in which he was bullied and belittled, his employer neglected to pay him for his accrued leave.

He joined a union, learnt his rights, went to university, and entered Parliament as a list MP in 2020, but never forgot what he had seen, and what he had heard from fellow low-paid workers; predominantly migrants, but also backpackers, Māori, Pasifika and some Pākeha.

“They were victims as well,” he says. “No-one was exempted from this.”

“It’s systematic. It’s widespread. It’s a business model. It’s a way of maximising profit,” he says.

“It’s endemic. It’s widespread. It’s ugly. It’s a bloodsport in our country.”

Refugees and migrants were especially prone to exploitation, he says.

“You don’t know the law. You don’t know your rights. Standing up to bosses is kind of taboo in our cultures.”

Omer believes many victims of wage theft are those we called ‘essential workers’ during the Covid-19 pandemic.

The victims are poor marginalised people.

“That’s why it has been ignored,” he says.

Wage theft isn’t just the practice of withholding money that should be paid for work. Systematic, intentional time theft, making people work longer than their contracted hours, but paying them for less, is also wage theft.

“Paying someone less than the minimum wage, which has been clearly defined under our laws, is a crime,” he says.

It’s taken since 2020 to get the bill ready, but he says he was careful to make sure he had support from Labour ministers, though the bill is still a private member’s bill, and not part of the Government’s priority law reform agenda.

“We’ve compromised a bit. If an employee steals from an employer, the penalty is five years. It’s a crime. It’s always been a crime,” he says.

His bill sets the maximum prison sentence for an employer for intentional wage theft at one year.

Norway has criminalised wage theft by employers.

Employment lawyers say New Zealand’s penalties for wage theft are light compared to other countries.

Melissa Johnston, Hiruni Wijewardhana, and Gus Hardie Boys from McVeaghFleming commented on the bill saying: “Failure to pay employees their wages and other entitlements when they are due is already unlawful, and may be in breach of a number of existing legislation including the Holidays Act 2003, Wages Protections Act 1983 and the Minimum Wage Act 1983.”

But, they said: “The existing legislation focuses on compliance and penalties. The bill on the other hand, seeks to increase the costs and risks involved for employers who fail to pay their employees.”

New Zealand’s penalties for thieving employers were “relatively light”.

The forestry sector is under scrutiny for devastation caused by ‘slash’, but it also has a spotty record in complying with employment law.

And around the world, countries are beginning to criminalise wage theft.

In January 2022, Norway criminalised wage theft, with a maximum penalty of six years in jail, the McVeaghFleming lawyers said.

Omer does not expect his bill to be unopposed, and nor does he expect the law to get unscrupulous employers to change their ways. Once passed, it will need to be enforced.

“You will see the pushback,” he predicts.

“We have heard the opposition say they want to be tough on crime. This is a crime. It’s time to get tough,” he says.

“It’s about human dignity, and these people who work hard for us,” he says. “I hope everyone has the decency to get behind this bill.”

How much wage theft is happening is a moot point, but there have been repeated indications that it is a big problem.

In 2016 the Council of Trade Unions found workers had been repaid more than $35 million for payroll errors that year.

A 2017 audit of the forestry industry by labour inspectors form the Ministry of Business, Innovation and Employment found almost 90% were breaching basic employment law standards.

In 2018, the ministry released a list of 277 employers barred from hiring migrant workers due to breaches in employment practices.

In 2019, wage theft in shearing sheds led to the sector’s first collective agreement in 24 years.