Business lobbyists’ concerns over wage theft bill dismissed

Wednesday, 4 September 2024

When workers steal from their employers they are charged with theft. When employers deliberately underpay their workers, the theft law does not apply. (file photo)

Ministry of Justice officials have dismissed as groundless concerns from business lobbyists over an attempt to make employers who deliberately underpay their workers subject to the crime of theft.

Lobbyists told MPs they feared employers would be charged with theft over simple misunderstandings of complex employment laws, or during disputes with workers, if the Crimes (Theft by Employer) Amendment bill become law.

However, the Ministry of Justice dismissed the concerns about the Private Members’ Bill by Labour MP Camilla Belich, which would add a new offence to the Crimes Act to capture employers who owe wages and intentionally do not pay them to employees.

Former Labour MP Ibrahim Omer tells Education and Workforce Select Committee about the scale of wage theft committed by employers against vulnerable workers.

This behaviour would include the unlawful withholding of wages, salaries and things like KiwiSaver contributions. Offences would be punishable by fines, and in egregious cases a term of imprisonment of up to a year.

The New Zealand Law Society considered it was possible innocent employers could be prosecuted under the proposed law, but the ministry said: “The risk of criminalising non-intentional conduct, as addressed earlier, is not considered to be a tangible risk.”

The Council of Trade Unions had quite the opposite concern: that the law was not worded in a way to make prosecutions easy, and suggested that the bill be changed to cover employers who were reckless as to whether they paid their workers all their entitlements.

But, in a briefing document published on Parliament’s website, ministry officials said they did not consider the difficulty of prosecution in and of itself as a reason to amend the proposed law.

“Criminal offences should require the appropriate level of proof and the corresponding difficulty of proving this is similarly appropriate,” it said.

As with many laws, the mere existence of them does not guarantee stretched authorities will act on breaches of them.

It was likely the Labour Inspectorate in the Ministry of Business, Innovation and employment would be the agency charged with investigating and taking prosecutions.

Labour MP Camilla Belich is trying to steer the bill through Parliament, but it looks doomed as National and ACT spoke against it at its first reading.

But, the ministry said: “The resource commitment required means it is likely that prosecution would be considered only in the case of very serious offending, as is the case in relation to serious civil penalties currently.”

However, there was a question about whether the Labour Inspectorate had the powers it would need to investigate criminal behaviour.

“Labour Inspectors have a range of powers, including the power to enter workplaces at reasonable times, interview employees and employers about compliance with employment standards, and inspect and copy any wage and time records,” the ministry told MPs. “However, these are not as far reaching as the search and seizure powers held by the police.”

The rise of the contractor model in many industries would mean some people who look and feel like employees, but who are employed as “contractors”, like lowly paid cleaners, or supermarket security and trolley collectors would not be covered by the law.

Submissions on the bill indicated groups like unions and some private unions would like to see the law extended to cover things like employers routinely working staff beyond their contracted hours, something that was especially common in the early child education sector.

Former Labour MP Ibrahim Omer during his time in office.

The Law Society considered that was not appropriate, and if that kind of extension of criminal law was wanted by Parliament, it would be better to do so through a new offence in the area of deceit, or misrepresentation.

The bill was first created by former Labour MP Ibrahim Omer, who was himself a victim of wage theft when he first came to New Zealand as a refugee.

Despite the potential impact of the law, very few people and organisations bothered to make submissions to the select committee, perhaps realistic about the bill’s chances of becoming law.

At its first reading, which took place last year before the change of government, but National and ACT MPs spoke against the bill.

National’s Paul Goldsmith, now Justice Minister, said the bill was unnecessary as the Employment Relations Act contained penalties for employers who did not act in good faith.

ACT’s Simon Court saying: “The ACT Party trusts employers to get this right. If they don't get it right, there are already mechanisms for employees to take action and recover their wages. ACT won't support this any further.”