Employers Who Steal Wages Should Be Made Criminally Liable

There is a saying that when something is punishable by a fine, it really means “legal, for a price”. Rogue UK employers seem to take this to heart.

A shocking investigation by the Bureau of Investigative Journalism published this month shows the penalty system has barely been enforced: out of more than 4,800 firms fined since 2016, just 109 have actually paid. While the government has levied £9.6m in fines, it has recovered only £95,000 or less than 1%.

Enforcing employment rights in the UK largely falls to workers themselves, who must take their employer to a tribunal. For many, the barriers are steep: costly legal advice, the risks of suing your boss, and delays of up to 18 months before a hearing. Trade unions offer support, but only if you are a member before the dispute. We now know that even workers who persevere often find that victory is hollow, as they wait for payment that never comes. 

Under Britain’s Employment Rights Act, there are no rules on wage theft. Section 23 of the 1996 Act is supposed to guarantee that when an employer makes an “unlawful deduction” the tribunal “must order repayment”. Judges can also add compensation “as they think just and equitable”, taking into account the scale of the theft and the employer’s behaviour.

But unlike in other systems where wage theft triggers double or treble damages, the UK regime leaves restitution almost entirely at the tribunal’s discretion. There is no statutory formula, no automatic multiplier. Interest or an “uplift” can be added, but only if the judge decides it’s fair. In effect, bosses caught stealing wages are usually told to give back what they took. Except almost always, they get away without paying a penny.

Over the past two decades, reforms have created a patchwork of enforcement routes, yet none ensuring workers see the money they are owed. Options include hiring bailiffs through county courts or using a “fast track” high court scheme, both of which cost money and can leave claimants worse off. 

The current penalty enforcement scheme, introduced in 2016, aimed to fix this by fining and publicly naming rogue employers if they fail to pay an employment tribunal award or settlement. It aimed to deter rogue bosses by adding a surcharge of up to half the value of unpaid awards. In other words, if a boss underpays an employee by £100, they could be forced to cough up £150 as a penalty. Yet the onus is still on the worker to fill in the form to request this and the results are galling. FOI data obtained by the Bureau of Investigative Journalism reveals a black hole in employment justice. 

The absence of a clear penalty regime, coupled with judicial restraint, means that wage theft remains a low-risk, high-reward strategy. 

How could this happen? One way is that employers simply vanish despite owing wages (known as “knocking” in the construction industry) or dissolve their company without paying wages only to start another one (known as “phoenixing”).

For example, in October 2023, TTB Contracts went bankrupt, leaving about 200 cleaning workers jobless and owed between several hundred pounds and over £1,000. Nicola Stanley, owed £1,200,described the situation as “heartbreaking” and “stressful”. Lisa, owed £900, called the process a “living nightmare”, affecting her family’s mental health. This sort of practice produced around 37% of the total “unlawful deductions” cases brought before an employment tribunal. And when these employers effectively vanish into thin air with stolen wages, the taxpayer picks up the bill. The UK government’s Insolvency Service paid out more than £490 million in redundancy payments to 85,592 people during 2023-24.

This raises the question; why is wage theft not a criminal matter? The answer is that whatever is the case morally, technically workers’ wages are not their own property until they have been paid, and so theft law doesn’t apply.

The obvious answer to this problem is starring us in the face from down under: make employers criminally liable. New Zealand has already done this. Earlier this year, their parliament enacted the Crimes (Theft by Employer) Amendment Act 2025, which amends the Crimes Act 1961 to state plainly that failing to pay workers what they are owed is theft. The new Section 220AA makes it a criminal offence for an employer to intentionally withhold wages, salaries or other entitlements without a “reasonable excuse”. This shift takes wage theft out of the realm of civil disputes and into criminal law. 

Company directors and managers who direct or influence non-payment can also be prosecuted. Individuals face up to a year in prison and fines of $5,000, while corporate employers can be fined up to $30,000. The Act draws a clear line between intentional wage theft and genuine payroll errors, with the latter not attracting criminal liability. Insolvent companies are largely unaffected, since directors already face penalties under existing reckless trading provisions.

But the New Zealand parliament has recognised that when bosses deliberately withhold wages, they are not making a “business decision” or an “administrative mistake”. They are stealing from their workers.

Back in the UK, we’re lagging behind. Justice secretary David Lammy has ruled out reintroducing fees for tribunals after a backlash from trade unions. But the fact that Labour had even considered a plan cooked up by the Tories to charge a £55 fee for workers to sue an employment tribunal service that doesn’t even work, is worrying. Labour has promised stronger enforcement, but it will have to do much, much more to enable employees to challenge exploitation.

One suggestion is that the UK should follow New Zealand and recognise wage theft for what it is: theft.