Chorus signals changes to subcontracting

Broadband company Chorus has confirmed it will make changes to its subcontracting model after action against contractors by the Labour Inspectorate and a related inquiry it launched in October.

Spokesman Ian Bonnar said he could not say what the changes would be. ‘‘But we are not going to stand up and say: all is well, carry on as you were.’’

Last month, Labour Inspectorate spokesman Michael Docherty said it had lodged claims with the Employment Relations Authority against three firms that carried out work for Chorus on the ultrafast broadband network after detecting ‘‘widespread’’ breaches of employment law.

These were Auckland firms 3ML, Sunwin Technologies and Babylon Communications.

Infringement and improvement notices had been issued to another 34 companies with action against dozens more in the pipeline. Chorus responded to the Labour Inspectorate’s concerns by establishing its own inquiry headed by former deputy state services commissioner Doug Martin which has since expanded to also consider accusations made by a group of whistleblowers.

The latter included accusations of subcontractors not being paid for ‘‘scoping work’’ connecting homes to UFB as agreed, and allegations of conflicts of interest among Chorus and Visionstream managers over which Bonnar has said both companies have since taken action.

The whistleblowers also told Martin, at a meeting brokered by Stuff in December, that they suspected a Visionstream manager had regularly accepted bribes for approving linesmen to carry out work on the broadband network.

Bonnar said it was ‘‘pretty unlikely’’ Chorus would completely drop either of its prime contractors, Visionstream and UCG, as a result of Martin’s report, due to be completed within weeks.

‘‘But let’s wait for the report and see what it says.’’

Tim Gunn, an Auckland-based partner at Australian law firm Shine Lawyers, reiterated that it expected to file a class action lawsuit against Visionstream, which is Chorus’ largest contractor, within months.

The class action would be on behalf of at least ‘‘hundreds’’ and possibly thousands of individual subcontractors, whom he said had been working under ‘‘slavish’’ conditions but who Shine Lawyers will argue were legally entitled to be treated as employees.

The E tu¯ union has backed the legal action, which will seek back pay, holiday pay and sick pay.

One former linesman in the class action said the business model was designed to pass business risks on to small subcontracting firms, such as one he ran that went bankrupt.