Businesses are not doing enough to look after their staff and meet compulsory employment standards, says Workplace Relations and Safety Minister Iain Lees-Galloway.

The Minister's comments come as businesses scramble to work out whether they have underpaid staff for work done outside rostered hours, and the Government prepares to announce an inquiry into exploitation of migrant workers.

The Labour Inspectorate, the country's employment regulator, says more than $700,000 in workplace penalties was dished out in the 2017/2018 financial year, up from $477,000 the previous year.

And 161 employers were placed on Employment New Zealand's stand-down list, barred from hiring migrant workers for varying amounts of time. Many of the companies and employers on the list are themselves run by migrants.

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The number of Employment Relations Authority applications has also increased over the past five years.

The First Union's retail, finance and commerce secretary Tali Williams puts the apparent increase in employment breaches down to more people speaking out.

"What we're seeing is an insurgence of trade unionism and people actually raising the issue of exploitation," said Williams.

"A recent case of this was the Smith City case, which brought to the fore something that had been insidiously happening behind the scenes, and as a result a lot of workers have started to come out of the shadows and say 'this is happening to me'.

"I've been a unioniser for 15 years and I've never seen an environment where employers are not exploiting, but what I have seen in the past few years is people increasingly doing something about it, and particularly, the most vulnerable people in our society," she said.

Labour Inspectorate national manager Stu Lumsden said people would be surprised by the level of exploitation in New Zealand's workforce.

"The Labour Inspectorate has found exploitation happening around the country, and from our perspective there does not appear to be any industry immune to such issues," Lumsden said. "Too often, the Inspectorate is encountering people who are working long hours, being paid far less than the minimum wage, are being deprived of other entitlements such as holiday pay, and being made to pay a 'premium for employment'."

Examples include a worker, formerly employed at Auckland Filipino fine dining restaurant 3 Kings Food, working for at least 10 hours a day, for a six-day week, without breaks. He was paid for only 40 hours a week, and not at all during his final three-and-a-half months in the job.

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An Auckland District Court Judge described the case as "a form of modern slavery". Restaurant co-owner Virgil Balajadia was sentenced to 26 months imprisonment for exploitation under the Immigration Act.

Tauranga kiwifruit orchard Ahead was fined $12,000 in February for breaching employment law minimum standards by failing to provide staff with individual contracts, pay holiday entitlements and keep full wage and leave records.

And in perhaps the highest-profile case: the bosses of Indian restaurant chain Masala were found guilty of underpaying and exploiting migrant workers, who were paid as little as $3 an hour, with the hope of securing a New Zealand visa and residency.

The Government is preparing to launch an inquiry into the exploitation of migrant workers, said Lees-Galloway.

"We're working on the terms of reference for an inquiry ... and I anticipate that piece of work will give us a very strong guide for the kinds of changes that need to be made to tackle exploitation of migrant workers and also ensure that everybody working in New Zealand is able to benefit from the minimum standards that we set out in our legislation.

"We've made good progress on how we're going to run that inquiry and an announcement is due very soon."

Lees-Galloway said New Zealand needed to "do a better job" of enforcing employment law. "There does seem to be an issue with migrant employers perhaps not understanding what their obligations are under New Zealand law. That's not an excuse, and my message to all employers is they have an obligation to know what New Zealand employment law is and to ensure that they are meeting the minimum standards set out."

Lees-Galloway said funding in the Budget to double the number of labour inspectors would ensure a crackdown, but blamed a deunionised workforce for the problem in the first place.

Kiwifruit orchard Ahead was fined for breaching employment law minimum standards. Photo / Getty
Kiwifruit orchard Ahead was fined for breaching employment law minimum standards. Photo / Getty

"People are not aware of their rights and you see various breaches of employment law carrying on for long periods of time. It means taxpayers' money has to be spent on enforcement and it means when something is discovered after a long period of time, employers often face a hefty bill.

"When you've got people in the workplace who are trained to know what employment law states and to know what standards people working in New Zealand can expect, then these kinds of issues can be dealt with very quickly and you don't need a government agency stepping in to enforce the law."

Lumsden said the regulator proactively vetted the retail, hospitality, horticulture, viticulture, construction, cleaning and fishing sectors - industries it believes have compliance issues.

Indian Workers Association co-ordinator Mandeep Bela said he was often approached by workers being exploited, many of them tied to their employer because they were on assisted visas.

"Most of the cases where we're unable to help are assisted visas because the majority of the time employees want help but they are scared to raise the alarm because their visas are tied with the employer," Bela said.

Bela believes people are becoming more confident about coming forward.

"Lately there have been a lot of exposes on exploitation cases and other migrants are feeling confident to come forward as well. I think it's not necessarily an increase in exploitation, it's just that a lot more people are now coming forward."

Labour Inspectorate national manager Stu Lumsden. Photo / Supplied
Labour Inspectorate national manager Stu Lumsden. Photo / Supplied

Bela said it was no surprise that many employment breaches involved migrant-owned and operated businesses.

"A lot of those employers who have come to New Zealand as migrants ... exploitation has happened to them in the past and they sometimes are of the view that it is okay to do it to others, because their employer never got caught, or if they've seen their employer get so rich without getting caught or without any fear.

"What we often see is if there is a migrant employer, that employer tends to only hire migrants from the same country ... the majority of the time it's because, for them, they know how to get around employment matters and how to have full control of those employees because they are from the same background, and would have similar situations which that employer might have gone through in the past.

"We have seen many cases where employers have folded up their business as soon as the issue of exploitation has been highlighted in one way or another," he said.

"Employers should be personally responsible for committing such exploitation, and secondly, visas shouldn't be tied to a particular employer because we consider it as a branch of slave labour."

Wage theft rife

Bela said the most common employment breach was "wage theft".

"In many cases a written employment agreement is not provided, there are no set number of hours.

"Then there's under-payment, the cash wages, and the extortion of money which is asked from employees in order to help get the visa.

A recent tactic, "which has been happening quite regularly, is that the employer pays the wages in the employee's account to show it is clean business and then the employee has to withdraw the wages and give it back to the employer in cash," he said. "Part of the reason they do that is because they have to keep their books clean for when they file with Immigration, they need to show they have been paying the employees proper wages and holiday pay."

Indian Workers Association coordinator Mandeep Bela. Photo / Supplied
Indian Workers Association coordinator Mandeep Bela. Photo / Supplied

Bela said migrant employers weren't alone in exploiting migrant workers, and he often encountered exploitation by non-migrant employers.

'Companies face hefty bills'

Some companies face big bills for back pay for work done without payment, as employment law acknowledges complaints that go back as far as six years.

The Employment Court last month ordered retailer Smiths City to pay staff who had been forced to attend unpaid meetings before their shifts began.

Smiths City is conducting an audit to "identify where wages have been paid below the statutory minimum over the last six years", a company spokesman said. It could not comment on how much money it will pay out.

Following the decision, First Union released a survey which gathered complaints from close to 2000 retail workers who claimed they were not paid for work done outside normal hours, for tasks such as cashing up at the end of a shift or attending meetings.

Briscoes, Rebel Sport, The Warehouse, Countdown, Cotton On, Noel Leeming, Farmers, Kmart and Warehouse Stationery were the first companies whose employees complained. The union said it had received adequate responses from those retailers, which had agreed to investigate.

But it urged Harvey Norman, Whitcoulls, Max Fashions, Life Pharmacy, Jeans West, Hannahs, Spark and JB Hi-Fi - companies where it does not have members - to investigate to see if employees were working for free in some instances.

The Herald approached those retailers for comment.

James Pascoe Group, the owner of Whitcoulls and Farmers, said it had no "substantiated claims" that employees were being paid incorrectly. Max Fashion, Life Pharmacy, Countdown, Hannahs and Spark also said they did not have outstanding wages payable to staff for hours worked but not paid.

The Briscoe Group owns Briscoes, Rebel Sport and Living & Giving. Photo / File
The Briscoe Group owns Briscoes, Rebel Sport and Living & Giving. Photo / File

JB Hi-Fi said it had no comment. And following an audit, Briscoe Group found it had "failed" to correctly roster some staff required to cash up at the end of shifts.

"We believe this has affected a modest number of employees," the retailer said in a statement last month. "This is our error and we are now in the process of rectifying it."

Lees-Galloway said companies found to have incorrectly paid staff should put things right.

"I think a lot of employers have known full well that they are not meeting their obligations to their workers and now that they have been caught out they need to rectify that as quickly as they can," he said.

The financial impact could be significant for some companies, Lees-Galloway said. "Frankly, this is a situation they have got themselves into and they need to rectify it."

Minister: Errant firms need to pay up

Some companies face big back-pay bills, as employment law acknowledges complaints about unpaid work going back as far as six years.

The Employment Court last month ordered retailer Smiths City to pay staff who were forced to attend unpaid meetings before their shifts began.

Smiths City is conducting an audit to "identify where wages have been paid below the statutory minimum over the last six years", a company spokesman said. It could not comment on how much it will pay out.

Following the decision, First Union released a survey which gathered complaints from close to 2000 retail workers who claimed they were not paid for work done outside normal hours, for tasks such as cashing up at the end of a shift or attending meetings.

Briscoes, Rebel Sport, The Warehouse, Countdown, Cotton On, Noel Leeming, Farmers, Kmart and Warehouse Stationery were the first companies whose employees complained. The union said it had received adequate responses from those retailers, which had agreed to investigate.

But it urged Harvey Norman, Whitcoulls, Max Fashions, Life Pharmacy, Jeans West, Hannahs, Spark and JB Hi-Fi - companies where it does not have members - to investigate to see if some employees were working for free.

The Herald approached those retailers for comment.

James Pascoe Group, the owner of Whitcoulls and Farmers, said it had no "substantiated claims" that employees were being paid incorrectly. Max Fashion, Life Pharmacy, Countdown, Hannahs and Spark also said they did not have outstanding wages payable for hours worked but not paid.

JB Hi-Fi said it had no comment. And after an audit, Briscoe Group found it had "failed" to correctly roster some staff required to cash up at the end of shifts.

"We believe this has affected a modest number of employees," the retailer said last month. "This is our error and we are now in the process of rectifying it."

Workplace Relations and Safety Minister Iain Lees-Galloway said companies which incorrectly paid staff should put things right.

"I think a lot of employers have known full well that they are not meeting their obligations to their workers and now that they have been caught out they need to rectify that as quickly as they can."

The financial impact could be significant for some companies, he said. "Frankly, this is a situation they have got themselves into and they need to rectify it."