Wage theft is now a criminal offence in NZ – investigating it shouldn’t be left to the police

Being robbed is a horrible experience under any circumstances. But being robbed by your employer involves a unique betrayal of trust.

So it was a sign of real progress when “wage theft” finally became a crime in New Zealand earlier this month with the passage of the Crimes (Theft by Employer) Amendment Act.

Heralded by trade unions and the Labour Party as a victory for workers, the new law makes it a criminal offence under the Crimes Act for an employer to intentionally (and without reasonable excuse) fail to pay workers what they’re entitled to.

Wage theft can include deliberately underpaying wages or holiday pay, or making unlawful deductions from pay packets. The question now is how well the new law will be enforced.

While there is little research on how widespread wage theft in New Zealand is, we do know it all too often affects temporary migrant workers and those in labour-intensive industries such as hospitality, construction and horticulture.

But if, as seems likely, the police are tasked with investigating allegations of wage theft, the new law may struggle to be enforced effectively.

Who investigates wage theft?

Until the law change, wage theft was only addressed through the civil system, not the criminal courts. Underpaid employees could take an employer to court to recover what was owed – if they had the means to navigate what could be a complex process.

It took an initiative by former Labour MP Ibrahim Omer – who as a refugee in New Zealand had experienced wage theft – to begin the reform process. He introduced a members’ bill to parliament in 2023 seeking to make wage theft a criminal offence.

Under the new law, the maximum penalties for wage theft are the same as for general theft. For serious offences, this means employers can be imprisoned for stealing their workers’ pay.

The trouble is, the law doesn’t state which government agency will be responsible for investigating such crimes. This is important because adequately enforcing the law is the whole point.

A 2024 report by the Ministry of Justice had suggested investigative responsibility might sit with New Zealand’s workplace regulator, the Labour Inspectorate. This seemed a logical move.

But when the legislation was being debated in parliament, it became clear MPs assumed enforcement responsibility would lie with police. Confirming the law change this month, Labour MP Camilla Bellich said:

Theft is theft, and before this bill was law workers had to take up a civil case. Civil wage claims are difficult for any employee to initiate and often time consuming and expensive. Now workers can go to the police and report wage theft as a crime.

How Australia does it

On the face of it, the police might seem like the logical enforcement agency. They investigate crimes and play an important role in crime prevention. But wage theft isn’t an area they have dealt with before. And uncovering wage theft in practice is very difficult.

First, those most at risk – such as migrant workers and young employees – are the least likely to report it, often for fear of the consequences or because they simply don’t know how to make a formal complaint.

Secondly, bad employers are good at covering their tracks, leaving no paper trail or fudging the books.

Without specialised knowledge or experience in these areas – as well as dealing with their existing resourcing challenges – the police will potentially struggle to uncover wage theft offending.

A better model might be Australia’s criminal wage theft regime, which came into effect at the start of this year. Overall, it is tougher and more targeted than New Zealand’s.

The Australian law applies hefty maximum penalties for wage theft offences – up to ten years’ imprisonment and monetary fines in the millions. Investigations are the responsibility of the national workplace regulator, the Fair Work Ombudsman.

This makes sense, because it’s the Fair Work Ombudsman which has significant experience in uncovering breaches of national employment laws, not the police.

Put the Labour Inspectorate in charge

The equivalent enforcement agency in New Zealand is the Labour Inspectorate, whose entire remit is to uncover breaches of employment standards.

The Labour Inspectorate, far more than the police, will understand the intricacies of wage theft, including which workers and industries are most vulnerable, and what methods dodgy employers use to hide wage theft.

If necessary, the inspectorate’s powers and resources could be reviewed and modified to ensure it has the tools to conduct criminal investigations, including the ability to search and seize evidence.

Finally, empowering an agency with the right tools, knowledge and experience to investigate wage theft would leave the police to deal with the other serious crimes already demanding their attention.