‘Wage-stealing’ bosses in the crosshairs

A workers' rights advocate is calling for tougher penalties against employers found to be breaching minimum employment standards

A new research paper canvassing how the British and Americans handle law-breaking employers is offering a solution to New Zealand’s so-called lazy and drugged-up workforce problems.

Authored by Catriona MacLennan - a barrister, former political journalist and advocate for workers' rights - the 55-page research paper examines how failing to pay a minimum wage, and meet minimum employment standards, is handled in UK and US jurisdictions.

Unlike New Zealand, jurisdictions in the US - federally and at state level - as well as the UK, label these types of employment law breaches as “wage theft”. Bosses found guilty of wage theft are heavily fined, publicly “named and shamed”, and in the worst cases sent to prison.

A similar approach would stem breaches to minimum employment standards which cost workers millions in stolen wages, and address the real problems around filling job vacancies in New Zealand, MacLennan said.

“The real issue is not that New Zealand workers are lazy or drug-addicted, or lacking in skills,” MacLennan, following up on comments made by John Key and Prime Minister Bill English, stated in her research.

It is more about how low wages, wage theft, and violations of minimum employment standards make living in New Zealand increasingly unaffordable and difficult, she said.

Catriona MacLennan. Photo credit: Catriona MacLennan.

“Our minimum wage is very low, it’s $15.75 an hour. As we all know, that’s not enough to live on, especially if you’re in Auckland or Queenstown. The Prime Minister’s talking about how hard it is to get seasonal workers: if people are going to be paid the minimum wage and jobs are short-term, and they’ve got to move to other parts of the country, and it’s pretty hard to get accommodation in quite a number of places in New Zealand - how are they going to make a living by doing these jobs?”

While it was impossible to know exactly how much workers were losing because of breaches to minimum employment standards - which includes paying less than the minimum wage and failing to meet holiday pay entitlements - figures relating to workplace violations showed it was in the millions of dollars. An Official Information Act request made by the Council of Trade Unions last year relating to problems with holiday pay showed that at the end of July, investigations by the labour inspectorate had found 25 employers in breach of the Holiday Act. Workers were paid out $35 million for related payroll errors, the response showed.

Tougher penalties for employment law breaches, like those imposed in the US and UK, would help ensure employers adhered to minimum requirements, and lessen the likelihood of workers - migrant and non-migrant - being exploited.

“New Zealanders are quite rightly expecting that they should be paid the minimum wage and holiday pay and their legal entitlements,” MacLennan said. “Now, they’ve [effectively] been placed in a competition with migrant workers who might be more desperate for jobs and might not know they’ve got any legal rights.”

Employers, if they are able to get away with paying a migrant worker less than the minimum wage, will choose that worker over someone that lives permanently in New Zealand and has higher expectations around pay and work conditions, she said.

Meanwhile, investigations by the Ministry of Business, Innovation and Employment (MBIE) labour inspectors continued to highlight a range of breaches to minimum employment regulations:

  • In November [2016], the wife of the owner of a West Auckland Nando’s franchise liquidated with $70,053 in unpaid wages and holiday pay owing to eight employees was found personally liable for the outstanding amounts.

  • In January [2017], three owner-operators of an Auckland clothing retailer were ordered to pay $60,000 for intimidating two former employees who had been witnesses in a labour inspectorate investigation.

  • In March [2017], the Manukau Auto Valet company was ordered to pay $241,451 in arrears and penalties because it failed to pay either pay minimum wage or holiday pay to employees leaving the company over a six-year period. About 220 workers were affected.

“Quite regularly, there are cases of employers breaching the law by not paying minimum wage, not paying holiday pay, or in the case of migrants asking them to make payments for help with visas and things like that,” MacLennan observed.

Making wage theft punishable by imprisonment, increasing penalty amounts three-fold for employers that do not pay minimum wage, and revoking the licences of businesses that failed to comply with minimum employment standards were some of the measures that could be taken to curb employers flouting of the rules.

Having MBIE publish “name and shame” lists that showed which employers failed to comply with minimum employment standards - similar to what occurred in the UK -, banning these businesses from competing for government contracts, and increasing funding for labour inspectorate investigations, would also help, MacLennan said.

“What these employers are doing is stealing, they’re being fraudulent, and yet we seem to treat it quite leniently. If all they have to pay is the wages that are already due, then they’re still better off because they’ve had use of that money [that] should have been paid to the employee.”

Failing to toughen up on wage-stealing employers also perpetuated New Zealand’s problems around workers and unemployment, MacLennan warned.

“The minimum wage in Aotearoa/New Zealand is very low...and is already not enough for a family to survive on,” she concluded in her paper. “When workers are paid even less than that, they and their families are driven into severe poverty. This means children grow up disadvantaged. The family does not have enough money to obtain healthy housing, to buy nutritious food, or to pay for children to partake in school activities.” 

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