Employees' rights: Limited liability if someone steals from boss

It happens regularly, but responsibly acting employees can't be told to pay up if someone else steals something from their workplace, a leading employment law experts says.

On Monday, the Employment Relations Authority (ERA) ordered a South Auckland Mobil petrol station to pay $20,000 after making at least two employees pay for fuel pump drive-offs when they were working.

Mittal and Son Limited, trading as Mobil Porchester Rd in Takanini, was found to have breached employment law with a policy which said staff on duty would need to cover the cost of stolen fuel in cases where customers drive off without paying.

Labour Inspectorate regional manager Callum McMillan says similar situations have previously been raised across the industry, while employment law expert Max Whitehead says it occurs in an assortment of different retail businesses.

"It happens regularly… employers are likely not aware of what the law is…. They have no right to help themselves to somebody's pay for something they have done wrong."

Why is it illegal?

Stuart Lumsden, the Labour Inspectorate's national manager, told Newshub it was illegal for an employer to force employees to pay for the cost of an item stolen from their business.

"Yes, the Wages Protection Act prohibits unreasonable deductions from employees' wages," says Lumsden.

"A deduction to cover losses caused by a third party through breakages or theft may be unreasonable, particularly if the employee had no control over the third party conduct."

However, Whitehead said if the employee had been negligent or failed to take reasonable care with their duties, they may run into issues.

"If the employee had been negligent in their duties and responsibilities then possibly the employer could ask for compensation".

Negligence would be determined on a case by case basis, he says, and while employees must take steps to ensure theft doesn't occur, they shouldn't put themselves in harms way.

"They have to go to all reasonable steps. They have an implied obligation of fidelity… you have an obligation to look after their goods, to protect them," he told Newshub.

"You wouldn't be required to put yourself in danger. If a person had a gun, for example, you hand over the pay or whatever else, you don't take them on."

For example, Whitehead says it would be "unreasonable" for employees at a service station to constantly watch the forecourt while serving customers at the same time.

"[However], if the employee was filling up the car for a customer and did not make sure they went into the service station to pay, nor did they take any steps to ask the driver to pay, that could be possibly be deemed negligence," he said.

Lumsden says that leaving without paying is a criminal act, so employees can act responsibly by ringing the police if they realise a theft has occurred.

Have you been asked by your employer to pay for a product stolen by a third party? Email news@newshub.co.nz with your story.

A deduction from wages can also not be made for any reason without the employees' written consent, and even with that consent, the deduction can still not be "unreasonable".

Whitehead says an employment agreement or general workplace policy would need to highlight employees would be held accountable if something was stolen and it was proven they had been negligent. 

In the case of the Mobil petrol station, it was found section 12 of the Wages Protection Act has been breached. This states that an employer cannot stipulate how an employee's wages are spent.

Payroll concept image of a pen, calculator and reading glasses on financial documents.
Photo credit: iStock.

What can you do?

If you find yourself in the position of being asked to have your wages deducted due to the theft of a product from a store you are working in, you can contact the Ministry of Business, Innovation and Employment (MBIE) on 0800 20 90 20. 

MBIE says employees' "concerns will be handled in a safe environment".

Employers and employees may be helped to resolve the issue themselves or a Labour Inspectorate may begin an investigation. Reaching out to the ERA is also an option for employees as well as mediation.

Employment lawyers can also help those who want to know if proposed deductions are unreasonable, Whitehead says.

"My advice to employees, if the employer threats to do it, is to not consent to any deduction to be made from the pay. The employer would be in breach of the law if they did help themselves."