Fonterra sale could deliver $3.2b windfall to farmers
A windfall of billions of dollars is good news for the agricultural sector and the economy in general, following the sale of Fonterra's global consumer businesses.
By ratcheting up the consequences for improper financial dealings between employer and employee, the Government is signalling that exploitation won't be tolerated.
Welcoming the change, financial services provider Findex describes the development as a call for scrupulous compliance for farmers and rural employers relying on salaried staff and seasonal migrant workers.
"It's fair to say the law change won't affect the vast majority of farmers and rural business owners, who reward their staff in accordance with both the lettter and spirit of all employment laws, and in return for the value created by their employees," says Lou Baines, HR consultant at Findex.
"However, we know isolated cases of exploitation do occur and for these operators, harsher penalties and more serious consequences should contribute to stamping out inappropriate practices."
She adds that the rural sector is known for tough jobs, with long hours and demanding work, often relying on migrant labour. Exploitation has cast a shadow over agriculture, with a recent example being a 2024 Employment Relations Authority case that saw a Southland dairy farm ordered to pay $215,000 in penalties for breaches against three Indonesian workers.
Under the new amendment, such cases could now trigger criminal charges, underscoring the need for proactive payroll reviews to protect both businesses and vulnerable employees, says Baines.
The change is the result of New Zealand's Crimes (Theft by Employer) Amendment Bill, recently passed into law. In criminalising wage theft, the amendment makes intentional underpayment of staff a form of theft under the Crimes Act. This change introduces potential penalties of 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 by employers, with liability requiring proof beyond reasonable doubt of deliberate non-payment. While administrative errors and honest mistakes are excluded, unintentional underpayments remain a financial risk, as employees can claim unpaid wages from the last six years regardless of cause.
Baines says the amendment addresses a previous gap in the law, where intentional underpayment carried no criminal repercussions. "That left affected workers to seek remedies only through employment dispute resolution," she notes. "In itself, that is a lengthy process, with the Southland case initiated in 2020 and only seeing resolution by 2024; criminalisation, one hopes, may help accelerate the process, which can be crucial for under-resourced complainants."
Migrant Workers At Risk
Migrant workers, a key at-risk group, are particularly vulnerable due to a limited understanding of their employment rights. According to the Ministry of Business, Innovation and Employment (MBIE) statistics, approximately 176,000 work visas were issued in the 2024 calendar year, with many recipients finding employment in agriculture - a sector historically plagued by exploitation issues.
To stay compliant and mitigate risks, HR consultant at Findex Lou Baines recommends that farmers and rural businesses:
- Keep abreast of the current minimum wage and maintain written, up-to-date employment agreements clearly outlining staff entitlements.
- Ensure payments for availability provisions and overtime as required and seek advice before withholding or deducting wages.
- Maintain accurate records of all payments, including wage and time records, as well as holiday and leave records, for six years - even after an employee departs.
- Regularly review salaries against actual hours worked, as a common pitfall for salaried staff in farming is exceeding minimum wage thresholds due to extended hours inherent to the industry.
"Payroll can be tricky, but this amendment is a clear signal: intentional wage theft will no longer be tolerated," Baines says.
"By embedding robust HR practices, rural employers can not only avoid criminal liability but also foster a fairer workplace that supports New Zealand's vital agricultural workforce."
