As of 13 March 2025, employers within the New Zealand jurisdiction, who fail to pay their employees' wages can now face criminal prosecution under the Crimes (Theft by Employer) Amendment Act.

This is in line with the continued trend of anti-worker exploitation laws in New Zealand. Until this point, such claims could only be actioned in the employment jurisdiction by the employee or the Labour Inspectorate. 

While failing to pay your employees has always been unlawful, this new law aims to protect employees from wage theft, by upping the ante for those employers who deliberately and unjustifiably fail to pay their workers, and to provide simpler processes for employees to seek justice. Those who intentionally withhold wages, salaries, or other monetary entitlements (including those provided for in the Holidays Act 2003) without a reasonable excuse, as stipulated in employment agreements can now be held criminally accountable under this legislation. Fair employers or those who make genuine mistakes are not at risk, as the law requires the failure to pay to be both 'intentional' and 'without reasonable excuse'. This means:

• Criminal liability will not be triggered by inadvertent nonpayment or underpayment, ruling out liability for cases such as unknown technical pay-roll errors or a communicative misunderstanding.
• Even if intentional, employers can still present a reasonable excuse as a complete defence. 

However, employers will still need to be aware that inadvertent underpayments of wages or holiday pay could quickly become criminal conduct. Once an employer knows of an issue with its payroll or annual leave calculations, allowing that underpayment to continue (without reasonable excuse) is likely to amount to an intentional withholding of the money, and therefore potential criminal liability. Employers assessing their options for remediation should consider whether this could be done for the purpose of seeking legal advice (and the privilege that attracts). 

The development of case law will likely play a key role in what a ‘reasonable excuse’ entails. Further concerns also include the potential costs of litigation, the interaction between the new offence and other legal duties, whether repeated failures to pay wages will be treated as separate offences and how this criminal liability will look in reality for international entities who may or may not operate branch offices in New Zealand. 

As it currently stands:

• For an employer who is an individual, the maximum penalty is one year's imprisonment, a fine of NZD $5,000, or both.
• For corporate employers, the maximum penalty is a fine of NZD $30,000.

Since failure to pay workers is now potentially a criminal offence, this opens up the possibility for the Police to bring claims under the Criminal Proceeds (Recovery) Act. In 2024, a proceeds of crime case was brought in the health and safety context and it will remain to be seen whether such a case will be brought in the context of wage theft. 

All employers should take this opportunity to ensure they are in compliance with general payment requirements and that no processes or personnel within the organisation are intentionally withholding payments which should otherwise be made.

A detailed understanding of the changes and accurate systems will help avoid any risk of criminal prosecution for wage theft. Employers will need to ensure that if they become aware of any potential arrears or underpayment of remuneration, that they take remedial action promptly.

This article was written with the assistance of Luke Ji and Dan Smith, Solicitors, in our Employment team.