Crimes (Theft by Employer) Amendment Bill

I move, That the Crimes (Theft by Employer) Amendment Bill be now read a first time. I nominate the Education and Workforce Committee to consider the bill.

I hear a lot of speeches in this House about crimes. This bill is a tough-on-crime bill. When employees steal from their employers, they face serious consequences, including possible imprisonment, but when the employers deliberately steal money from their workers, they can get away with it. The most the victim may get is the money owing, but usually that doesn’t happen, because the victims are normally migrant workers who do not have the resources or the knowledge to pursue action against the thieving employers. Employer theft is an intentional failure to pay any kind of wages owed to their employees.

This bill inserts new section 220AA into the Crimes Act 1961, which provides that an employer’s intentional failure to pay an employee any money owed in relation to their employment is theft. If an employer is an individual, the maximum penalty is either one year of imprisonment, a fine of $5,000, or both. In any other case, the maximum penalty is $30,000.

This bill arises out of my own experience and the experience of many workers like me in New Zealand. I came here as a refugee, and I was told that New Zealand was a paradise, compared to the country from which I originated, and a place where the rule of law will apply to everyone and where it’s there to protect the most vulnerable. I soon found out that was not always the case. Not long after arriving in New Zealand, I got my first work in the Wairarapa. It was farm work, with my employer shuttling me from Lower Hutt to Martinborough each day for work. At the end of my first week of work, I was told by a contractor that I had done a poor job that was not worth the cost of shuttling me to and from work, and that I did not deserve any pay. I was told that if I had any decency, I should be paying back the employer his costs for the week as the work that I’d done had amounted to nothing. I was told that I would not be paid and that if I did not like it, then I should piss off. Not knowing what my rights were, I just walked away from my payment for my week’s work, but as I became involved more with migrant workers, I found out that my experience was not the exception. I found out that the problem of intentional theft by employers is rife in the low-paid casual sectors that rely on migrant labour. It is common for these workers to have the hours they work under-reported, leading to lower pay, or for the employers to argue down the work the employee has done. It is already against the law in almost all circumstances to withhold pay or deliberately underpay staff, but the law is regularly flouted, and there are no criminal sanctions.

Without this bill, the sanctions for wage theft in this country are very light. All you can get is backpay and a small fine. In Norway, for example, they criminalised wage theft last year. Thieving employers there can get a significant fine or a prison sentence from two years to six years. In the Australian state of Victoria, the maximum prison sentence is as high as 10 years, and a fine is $222,904 for an individual or over $1,000,000 for companies. Some businesses rely deliberately and regularly on underpaying their employees, and they have baked it into their business model. Serious criminal sanctions will stop this.

The problem I experienced is also identified by an official report in 2019 on the exploitation of temporary migrant workers in New Zealand, commissioned by the Ministry of Business, Innovation and Employment, which found that wage theft was one of the most common forms of migrant labour exploitation in New Zealand. A few cases of wage theft have gone to the Employment Relations Authority, but these are the tip of the iceberg. Let me mention a couple of examples. In November 2018, Jagran Property Services, which operates both Crewcare Commercial Cleaning and the Green Acres Mobile Care Valet, were ordered by the authority to pay $37,000 for underpaying six members of staff. They were found to have underpaid six migrant workers by more than $17,000. They also failed to pay minimum wage and holiday pay and had demanded a premium from one worker for his visa.

In another example, in February 2019, a migrant worker was found to have worked for 985 hours for no pay in Canterbury at a bakery. In March 2019, at around the same time that these cases were occurring, three migrant workers were reported as being underpaid by a Bottle-O franchiser. One worker claimed to have worked 84 hours a week but to have only been paid for 32 hours, which is equivalent to $7 per hour. There was no criminal sanction for any of these employers.

In November 2019, the New Zealand Herald reported on a Waikato cafe owner who allegedly stole wages from staff in August of that year. After the cafe suddenly closed down, the employer disappeared without notice. An employee, who asked not to be named out of concern it would affect her job prospects, said she was owed 32 hours of wages on top of unpaid holiday pay. Her boss had also deducted KiwiSaver and tax from her wages for the past two months, but these had not been paid out. “ ‘She blocked us all on Facebook, on Instagram, blocked us from the shop Facebook page, changed her phone number, changed her email. She ghosted us all,’ said the worker.” In the aftermath, the employee sought legal advice and was shocked at how complex the process was. She believed that this was a significant deterrent for others who had been victims of wage theft.

This bill addresses that. It simplifies the process significantly by making it a criminal offence, as it should be. It also means that those employers who steal from their employees face criminal penalties just like any other thief. That means employers are deterred from stealing wages rather than employees being deterred from claiming their rights. It also sends a strong message of disapproval to bad employers. This does not impose any new obligations on businesses. It only applies to those who intentionally do not pay their employees. Businesses are already required to provide back-pay after complex civil proceedings if they do not do this; the problem is too many bad employers rely on the complexity of the system to avoid enforcement. Those employers who commit wage theft are gaining commercial advantage over competitor employers by deliberately not observing the minimum legislated employment standards.

Dawn Duncan, a lecturer at the University of Otago’s Faculty of Law, told the New Zealand Herald in November 2019 that wage theft was most common in New Zealand’s hospitality industry. This was the same point made by the Employment Relations Authority in the 2018 decision in the case of Jagran Property Services: “These types of businesses not only exploit vulnerability. They also undermine legitimate businesses who are doing the right thing by their workers and start a ‘race to the bottom’.” Just as has occurred in other jurisdictions around the world, it’s time that we recognise the intentional theft of worker wages as a crime.

Since my bill was drawn from the ballot, I have received many messages and emails from workers who have been subject to wage theft. One of them told me of her experience. She’s a young woman. She was young and living in poverty, and she did not have a strong understanding of her rights in the complex system. She was living pay cheque to pay cheque, doing physical labour for a small construction company. However, her health declined, and she asked her boss for time off with a medical certificate. When her condition got quite extreme, he told her she had to come back to work, and when she refused, he fired her. He never paid for the work that she had done before he fired her. He never compensated her for transport costs incurred during the work. She told me, “I was living on the mattress on the floor of a living room in an old and tiny apartment shared with three other people. I could not afford to lose these wages.” Trying to navigate a complex system, she went to mediation, and her employer just laughed and offered a $100 goodwill payment. He knew the system; she didn’t. She could not afford the lawyer or the risk of having to pay for one if she took him to court. She felt abused and humiliated. Stories like hers are too many.

I would like to thank, at the end of this, the Council of Trade Unions for their support, Peter Cranney, John Ryall, and my good friend Camilla Belich for her support in this bill. This is a good bill. I commend it to the House.

Thank you, Mr Speaker. I thank you for the opportunity to speak on this member’s bill by Ibrahim Omer, on the Crimes (Theft by Employer) Amendment Bill.

Look, this bill, as the introducer of this bill said, criminalises intentional failure to pay employees. That sounds like a very simple thing, and nobody would stand in the House and defend non-paying employers. So what is the issue? Well, the issue is that it is actually a reasonably complex area of employment law, and this one-page bill, which sort of just baldly states that anybody who intentionally fails to pay an employee goes off to face potential criminal charges. We in the National Party won’t be supporting this bill as it is drafted, simply because, primarily, it’s unnecessary in the sense that the Employment Relations Act has mechanisms in place, it has the duty to act in good faith, and there are penalties if employers do not act in good faith. Secondly, of course, any actual theft of money is already dealt with in criminal law.

What this bill, in essence, does is it can potentially turn disputes around employment practices—when you say “intentionally failing to pay”, it may relate to all matter of deductions from pay slips, for example, for a host of various things, then there could be a dispute about that. An employer may have intentionally deducted something from a pay and it may or may not have been justified. Now, that’s all dealt with, currently, through the employment law. What this bill, effectively, does is shift that into criminal law, and we don’t think that is a justified or a sensible thing to do.

The member talks about widespread and systematic practices of wage theft, but he offers no particular evidence to back that up. I certainly think there is widespread concern around worker exploitation in the immigration space, and that is a matter that does continue to need to be dealt with and policed effectively. If immigration laws need work in that space, well then that’s something we should continue to look at, and I agree with that. But does that mean you change all the employment relations to deal with that?

If it’s in relation to modern slavery, again, that’s something that Michael Wood promised was an urgent matter more than two years ago and promised to introduce legislation to deal with that. Instead, we have Carmel Sepuloni giving press releases, saying, “We are tough and we are going to do something about that eventually. We are going to work on some legislation and it might be ready in three years’ time.” So I would encourage Ibrahim Omer to encourage his colleagues to actually get on with doing something in that space rather than just talking about it.

Then, of course, if the worry is that the Employment Relations Act system that we have in place is not working, because it’s too slow and too complicated, well, then I think there is a very good argument that the Employment Relations Authority is quite slow and cumbersome. Unfortunately that’s a reality in all the courts across the land and should be, rightly, a focus of any Government to speed up access to justice and get on with it. It’s sad that after six years, that hasn’t been an area of focus for this Government and the justice sector and the employment relations sector. I’d encourage Ibrahim to encourage his colleagues to get on with making that work better.

Then I noticed today, when a story was running on Newstalk ZB, that only 2.3 percent of retail thefts have led to an arrest. I suppose it’s a bit ironic—

💬 DEPUTY SPEAKER: Mr Goldsmith, you’ve had a pretty good run. Let’s get back to the bill, shall we?

Well, the purpose of the bill is to criminalise wage theft, and the only point I’m making is—right here, right now, this morning, we’ve had a story saying that only 2.3 percent of retail thefts were actually leading to an arrest, down from 50 percent in the previous Government. So I think, before the members of this Government bring in new criminal offences, they might look at whether the current ones are actually being effectively enforced and dealt with. That might be something to consider.

Look, the only point I would make is, yes, nobody would defend people taking money from employees, and the current laws in relation to theft and in relation to the Employment Relations Act cover that extensively. What is being proposed here is to transfer disputes, potentially around deductions from payslips and not paying, from the employment relations space into the criminal space, and we think that would have all manner of unintended consequences. It may well be that the proposer of this bill has thought through all those ramifications, but there is certainly no evidence of that from the one-paragraph introduction to the piece of legislation that we have before us.

No doubt, the Government with its numbers will pass this bill at stage one, it’ll head off to select committee, and we’ll be very interested to see and get some details from the people who are engaged in the sector, and from officials, to run through the consequences of this.

My only point is that, on the basis of what we have in front of us, we cannot agree to it at this stage. Mr Speaker, thank you very much.

Kia ora. Thank you, Mr Speaker. It’s my pleasure to rise in support of the Crimes (Theft by Employer) Amendment Bill. I just want to take a moment to congratulate the member who brought this bill before the house, Ibrahim Omer. Ibrahim’s story about how he came to New Zealand and entered the workforce, and the challenges that he faced, is just a fine example of why we need people like him in this House, advocating on behalf of the community. Even before he entered Parliament, Ibrahim was working as a union organiser, raising awareness on this issue, and fighting for the rights of exploited workers. I want to thank him for continuing this work here in Parliament.

This bill will send a strong signal that wage theft is a crime that will need to be taken seriously. As it stands now, it is often quite hard for workers to go after employers withholding wages. This process can be costly, complex, and time-consuming, and it’s often hard for migrants with limited resources to navigate the current system. The bill also addresses a double standard: when employees steal from their employers, they receive a criminal conviction; wage theft is usually treated as a civil matter. This bill proposes an amendment to the Crimes Act 1961 and introduces a new section that defines “wage theft” as theft by an employer. The amendment aims to ensure that employers pay their employees the wages owed, as agreed upon in the employment relationship. This bill clearly defines the withholding of wages as theft. Deliberately withholding wages or monetary entitlements will be considered theft and punished by a term of imprisonment or substantial fines.

This is an important first step when we know that sanctions against wage theft in New Zealand are relatively light compared to other countries. In Queensland, for example, wage theft has a maximum penalty of 10 years in prison, and the fines can reach in the amounts of hundreds of thousands of dollars. By clarifying the definition of wage theft, this bill will simplify the process for the victims and make it easier for workers to get what they are owed for their labour and their hard work. It’s time to hold everyone to account.

This bill is important because the crime it punishes is one where the victims are often vulnerable members of society that can have a hard time fighting for their rights. This kind of practice is common in sectors employing low-paid immigrant labour, and Ibrahim’s experience shows how common this is for migrants here in New Zealand. They arrive here, and they have no support system and only limited knowledge of their rights and legal protections. It’s very easy for a small number of businesses out there—or owners out there—to exploit that vulnerable workforce. We should not accept that situation as normal, and we should strive to guarantee the dignity of all workers here in New Zealand.

This bill will deter those behaviours, and it will make it clear to employers that these practices are unacceptable and will be punished. It will also make it easier for the exploited worker to report those practices with confidence, and it will be taken seriously and punished in accordance with the new Act. When we make sure that everyone receives fair payment for their work and that all workers are protected from exploitation, we will have a better workforce, a workforce that is better represented.

Now, National often claims to be tough on crime. Well, and this is—

💬 Hon Dr Duncan Webb: Not all crime!

That’s right. That’s right, Mr Webb. But the only reason I can explain why National will not support this bill is that they somehow consider white-collar crime to be less serious. Stealing and withholding pay—that’s a crime in the same way that a thief’s stealing from a home is a crime. The only difference is that sometimes the ones committing this crime in the first case are wearing suits. This bill fits with what the Government has done to protect workers: we have established the fair pay agreement system, we’ve expanded workers’ protection, and we’ve raised the minimum wage. I commend this bill to the House.

The ACT Party won’t be supporting this bill, but I do want to acknowledge the concerns that the member has raised by bringing the Crimes (Theft by Employer) Amendment Bill to the House. The crime of theft, in terms of the Crimes Act, means theft or stealing “dishonestly and without claim of right, taking any property with intent to deprive any owner permanently of that property or of any interest in that property”. For those listening at home, I think that’s a point which maybe has been missed so far.

Employees have a number of ways that they can seek redress if their employer has not paid them their due. For example, there are a number of Acts. The Holidays Act: there have been a number of Government departments, local councils, Government agencies which haven’t been able to fulfil their obligations to employees under the Holidays Act requirements. It’s taken years and years and years to sort out back-pay for those employees. Potentially, those employees, under this proposed legislation, would have a claim of theft if it goes on for long enough. Well, this Government has allowed unpaid holiday pay to be withheld from nurses, for example, for years and years and years. Potentially, the liability comes to billions of dollars. Would this bill allow the nurses to bring a claim of theft by an employer against a Government department?

There are the Wages Protection Act 1983 and the Minimum Wage Act 1983. They all provide protections for workers who have not been paid in accordance with their employment contract.

💬 Hon Dr Duncan Webb: No, no, no—that’s a wage deduction Act.

Now, there are many, many opportunities for employees to receive benefits from their employers that may or may not be subject to a wage deduction agreement, Dr Webb, but are often extended to help out employees when they’re starting a new job, for example, or when they are faced with a choice of paying a bill or putting tyres on the car, for example. Sometimes, employers will help out their staff. I’m aware of employers who have paid household bills for their staff because their staff are suffering under the cost of living crisis, which has been exacerbated by this Government’s crazy and wasteful spending that has forced up interest rates and the cost of everything, with inflation over 7 percent at one point—now 6 percent. Employers extend all kinds of loans and allowances to employees, which may not be covered. If the employer needs to recover that loan or that allowance, whether it’s for boots and overalls for a new worker starting out in construction; whether it’s for a set of tyres so a worker can get a warrant of fitness so they can get to work; or whether it’s a food tab or a bar tab, like many of the employees who work in Parliament have at our cafe, Coppers—now, there may well be an opportunity for an employee to get a benefit from an employer and then for that employer to need to make a deduction, and if it’s not documented, then, potentially, that employer is exposed to charges of theft.

What ACT believes is that business owners should be trusted to treat their employees well. Employees are extremely valuable. Anyone who’s ever had to hire someone in the past few years knows how difficult it is to get good staff, how important it is to treat them well, and how important it is to pay them on time. If you don’t treat them well and you don’t pay them on time, then they can leave and go somewhere else and take their labour with them. It’s much harder to do business if you don’t have workers. 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.

This debate is interrupted. The House stands adjourned until 2 p.m. today.

Debate interrupted.

The House adjourned at 12.59 p.m. (Wednesday)