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The Government has strengthened consequences for improper financial dealings between employers and employees, making it clear that exploitation will not be tolerated.
The law change encourages all employers, including farmers and rural businesses, to maintain careful compliance with employment regulations, ensuring fair treatment for their staff. While most rural employers already meet or exceed legal requirements, the new penalties help safeguard employees and promote consistent standards across the sector.
Farming and rural work often involve long hours and physically demanding tasks, with many businesses relying on seasonal and migrant labour. Although most employers operate fairly, isolated cases of underpayment have occurred, underscoring the importance of accurate payroll practices.
Recent Employment Relations Authority decisions highlight the significant financial consequences for wage breaches in the dairy sector. Penalties awarded by the courts have ranged from around $20,000 for failures such as poor record-keeping and minimum wage non-compliance, through to more than $200,000 for serious and systemic exploitation of workers.
Under the new amendment act, similar cases could now result in criminal charges, underscoring the importance of proactive payroll management to protect both employees and businesses.
The Crimes (Theft by Employer) Amendment Act 2025 which came into force earlier this year makes intentional underpayment of staff a form of theft under the Crimes Act 1961. Potential penalties include up to one year imprisonment and a $5,000 fine for individuals, or fines of up to $30,000 for businesses.
Wage theft is defined as the intentional withholding of wages, requiring proof beyond reasonable doubt of deliberate non-payment. Administrative errors and honest mistakes are not included, but unintentional underpayments remain a financial risk because employees can claim unpaid wages from the last six years, regardless of cause.
The amendment addresses a gap in the law where intentional underpayment previously carried no criminal consequences. This will provide a faster and more effective path to remedy for employees.
Payroll in the rural sector can be complex, particularly with laws like the Holidays Act, which are widely regarded as difficult to interpret. Proposed simplifications to the Holidays Act are expected to reduce misunderstandings and improve compliance.
No prosecutions have yet occurred under the new rules. The primary focus is on preventing deliberate underpayment while supporting employers in maintaining accurate and fair payroll systems.
Migrant workers are particularly vulnerable due to limited knowledge of their employment rights. In 2024, the Ministry of Business, Innovation and Employment (MBIE) issued approximately 176,000 work visas, many of which were for positions in agriculture.
To mitigate risks and maintain best practices, we recommend farmers and rural employers:
Stay up to date with the current minimum wage and maintain written, up-to-date employment agreements outlining staff entitlements.
Ensure correct payments for availability provisions and overtime, seeking advice before withholding or deducting wages.
Keep accurate records of all payments, including wage, time, holiday, and leave records, for six years, even after an employee leaves.
Regularly review salaries against actual hours worked, as extended hours can unintentionally affect minimum wage thresholds.
The amendment act reinforces the importance of clear, accurate payroll practices. By staying informed and implementing robust systems, rural employers can confidently continue supporting their staff, ensuring fair treatment while protecting their businesses and contributing to a sustainable, well-managed agricultural sector.
Findex NZ Limited trading as Findex.
The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Findex.
November 2025
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