Treating wages like an overdraft facility
A Lower Hutt restaurant was fined $90,000 after two Indian migrant workers were systematically underpaid between 2017 and 2021. One worker was paid for 36.5 hours while regularly working close to 54. Combined unpaid minimum wage entitlements totalled $36,217.78, with a further $36,284.43 owed in holiday and leave pay, more than $72,000 in arrears between just two employees. The restaurant also deducted $50 per week for food while simultaneously inflating the hourly rate on paper to satisfy visa requirements.
This is not an isolated case. In Auckland, Aziz Chtouk pleaded guilty to six charges of exploiting restaurant workers, with approximately $62,500 in underpayments. In Rangiora, another restaurant owner was ordered to pay over $40,000 in arrears and penalties after an employee regularly worked up to 25 hours per week unpaid. In every case, the employer agreed to certain pay rates during the visa approval process, then paid less once the worker arrived.
Visa dependency is the mechanism
The pattern is consistent. Workers on employer-sponsored visas cannot easily complain because their right to remain in New Zealand depends on continued employment. The employer holds the leverage, and some exploit it deliberately.
MBIE’s national manager of investigations Jason Perry has been explicit about where responsibility sits: “Employers are solely responsible for meeting visa-related pay requirements and must never pass those costs on to workers. Using visa requirements or a worker’s immigration status to influence their employment is unlawful and will not be tolerated.”
The hospitality sector is particularly vulnerable. MBIE’s own data shows 43.7% of front-line hospitality employees earned below $25 per hour, clustering them near the minimum wage floor where even small systematic underpayments compound into significant arrears.
The liquidation escape hatch
The problem extends beyond hospitality. Auckland property developer Anthony Corin’s company, Longevity Construction, faces High Court liquidation proceedings after the Employment Relations Authority ordered it to pay more than $300,000 to two former employees. Almost a year after the ruling, the company had paid just $770.12 of the $206,638.47 owed to one worker. Corin’s defence was that the economy had “destroyed” his companies.
This illustrates a well-documented evasion strategy. First Union’s general secretary Dennis Maga has noted that employers could previously “liquidate their business and form or join another business entity” to escape ERA liabilities, resetting the clock on unpaid obligations while continuing to operate. For the worker holding a piece of paper worth $206,000, the ERA order is functionally worthless.
The competitive damage nobody talks about
Most coverage frames wage theft as a worker welfare issue. It is. But for B2B readers, there is an equally important dimension that gets ignored.
In hospitality, labour typically accounts for 30-35% of revenue. An employer underpaying staff by $20,000 a year per worker is not just breaking the law. They are operating at a structural cost advantage over every competitor paying full entitlements. The legitimate operator loses on price, on staffing availability, and potentially on tendering. This is not an ethical abstraction. It is a pricing problem.
The UK offers a sense of scale. The government recently identified 389 employers facing penalties totalling £12.6 million for minimum wage violations, with around 60,000 workers found to have been underpaid. The pattern is consistent across jurisdictions and concentrated in the same sectors.
A new law with an enforcement gap
The Crimes (Theft by Employer) Amendment Bill has passed into law, making intentional failure to pay wages a criminal offence. The critical qualifier is “intentional.” Peninsula Group’s analysis notes that non-payment due to payroll malfunction or genuine misunderstanding lacks the required mental element. Legitimate employers with honest mistakes have nothing to fear.
But the bigger question is who enforces it. Irene Nikoloudakis, writing in The Conversation, identifies a critical gap: the legislation does not specify which agency investigates wage theft crimes. If police are expected to handle employment-related disputes, the law may struggle from day one. They lack the sector-specific expertise and caseload capacity of a dedicated labour regulator.
Unite Union’s national secretary Shanna Olsen-Reeder frames it directly: “We know from experience that many bad employers were not at all deterred by the law as it was but making it a criminal offence will hopefully make them think twice about ripping off their workers.”
Good law, bad plumbing
The criminal liability is the right signal. But signals without enforcement infrastructure are just press releases. The government now has a law that says wage theft is serious enough for prison time. The question is whether it will fund the Labour Inspectorate to actually investigate, or whether rogue operators will keep running the same playbook: underpay migrant workers, undercut honest competitors, and liquidate when someone finally notices.
Sources
- 1News: Restaurant exploited, underpaid, overworked migrants (2026-03-27)
- Indian Weekender: Lower Hutt restaurant fined $90K for exploiting Indian migrant workers (2026-03-27)
- NZ Herald: Businessman Aziz Chtouk pleads guilty to six worker exploitation charges
- MBIE: Restaurant owner penalised for unlawful wage deductions
- RNZ: High Court liquidation threat looms as ex-staff chase unpaid six-figure awards
- RNZ: Unions and employers divided over wage theft law
- Mondaq: New law means employers face risk of criminal prosecution for intentional wage theft
- The Conversation: Wage theft is now a criminal offence in NZ – investigating it shouldn’t be left to the police
- Peninsula Group: Wage theft is now a criminal offence
- UK Government: Hundreds of employers handed penalties for illegally underpaying workers