Subcontractors exploited in huge breach: MBIE
Dozens of subcontracting companies that are rolling out ultrafast broadband for network company Chorus are facing civil action from the Labour Inspectorate, which has alleged widespread breaches of employment law.
The inspectorate, which is part of the Ministry of Business, Innovation and Employment (MBIE), conducted 75 visits in a joint operation with Immigration New Zealand and the Inland Revenue Department in June.
It found 73 subcontractors rolling out broadband in Auckland had breached minimum employment standards, national manager Stu Lumsden said.
Breaches it had observed to date included contracting firms failing to maintain employment records, failing to pay employees the minimum wage and holiday entitlements, making unlawful deductions from pay, and failing to provide employment agreements, he said.
‘‘In a number of cases it was found that contractors deliberately used practices such as ‘volunteering’ or extended trial and training periods without pay. We have had some straight cases of obstruction where companies have refused to co-operate and not provided records,’’ he added.
The investigation might be the biggest that the work-rights watchdog had undertaken, in terms of the number of companies involved, he said.
Asked if the inspectorate was considering enforcement against Chorus itself, Lumsden said at the moment it was concentrating on subcontractors. ‘‘If we found [Chorus] were culpable then we would be looking to hold them to account.’’
The investigations were the ‘‘first phase’’ of an inquiry into employment breaches within the network industry and further probes were planned across New Zealand, Lumsden said.
Chorus is responsible for building most of the ultra-fast broadband (UFB) network and maintaining the country’s copper broadband network, but farms the fieldwork out to an army of contractors and subcontractors.
About 2000 people are believed to working on the rollout of UFB at the moment.
The probe appears to have laid bare Chorus’ reliance on migrant subcontractors.
Lumsden said about 900 subcontracting firms worked indirectly for Chorus.
About 420 data-cabling companies had been involved in 9500 visa applications since work on the UFB network began, he said.
Chorus spokesman Ian Bonnar said Chorus had not been aware of widespread breaches of employment law by its subcontractors and was extremely disappointed by ‘‘the initial findings’’ of the Labour Inspectorate.
‘‘We have repeatedly sought assurances from service companies and been given them, and do our own auditing, and haven’t turned up any systemic failures.
‘‘We have got to sit down with MBIE and see exactly what is going on.’’