In the first Employment Relations Authority determination released after a sweeping Labour Inspectorate investigation into Chorus' UFB subcontractors, Clearvision has been fined $72,600 for underpaying staff and poor record keeping.

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Chorus suspends Clearvision from UFB after $73K fine for exploiting workers

It could have been whacked a lot harder.

Penalties totalling $280,000 were in the offing, ERA member Andrew Dallas noted in his determination.

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In the event, Clearvision was ordered to pay $32,200 for five breaches of the Minimum Wage Act and $40,400 for nine breaches of Employment Relations Act documentation requirements.

Dallas discounted from the maximum for factors including that Clearvision had paid arrears to nine affected staff and cooperated with the Inspectorate's Investigation.

However, he did not buy Clearvision's argument that "the keeping of wage
and time records for salaried employees could be seen as 'outdated' and 'not keeping pace with modern work practices'."

It was a fundamental statutory obligation to keep wage and time records, Dallas said.

Cleavision director Sam Abraham told the Herald, "All five staff in the ERA statement earned around $50,000 during the year 2017 when the technical errors happened. And most of them came to the hearing advocating for Clearvision's culture. If they were not happy with us, then they would have left by now, some of them been with us for four years."

The company has now out-sourced its payroll, Abraham said.

The E tū union industry coordinator Joe Gallagher cheered the $73,000 in penalties for Clearvision.

"Along with the report by Martin Jenkins and the Chorus recommendations, the [contracting] industry is being sent a clear message that it needs to clean up its act,"

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The UFB fibre rollout setup has seen dominant network player Chorus contract large chunks of work to the likes of Downer and Visionstream, who in turn have subcontracted to smaller companies such as Clearvision (an Auckland-based Visionstream contractor) - often with just a handful of staff.

Gallagher said he wasn't concerned that Clearvision was not hit for the full $280,000

"We don't want to rub anyone's noses in this," he said.

"We don't want anyone to go out of business. People's livelihoods are at stake. The industry needs to learn from this and move forward."

Although he remains in sharp-elbowed disputes with some subcontractors, Gallagher said the overall UFB setup was at fault. Subcontractors near the bottom of the UFB food chain have told the Herald it is hard to make ends meet with the fixed fees they're paid per fibre install. Gallagher said many were never equipped with the skills or knowledge to follow employment laws. He is now planning a "contractor's collective" to address this issue.

Last October, the Labour Inspectorate announced the results of a months-long investigation, carried out in tandem with Immigration NZ.

Some 73 of 75 Chorus subcontractors investigated were systematically breaching employment laws, the Inspectorate said.

Alleged violations included "volunteer" work or extended training periods without pay, plus sub-minimum wage pay, failure to keep accurate records and failure to pay holiday pay.

"The industry is being sent a clear message that it needs to clean up its act," says E tū union industry coordinator Joe Gallagher.

Although the Inspectorate issued dozens of infringement notices, each carrying a $1000 fine, only three cases were taken to the Employment Court - the aforementioned Clearvision, plus Sunwin Technologies and 3ML Services.

The E tū union said a "climate of fear" inhibited staff from giving evidence.

In the wake of the Inspectorate's investigation, Chorus brought in ex-Deputy State Services commissioner Doug Martin, of Martin Jenkins, to investigate its subcontractors' employment processes.

Martin's reported landed on April 12.

It found that as the percentage of migrant workers increased during the UFB rollout, the subcontracting model became increasingly vulnerable to the risk of labour exploitation.

"This risk was not well understood nor adequately managed by Chorus [or primary contractors] Visionstream or UCG."

Risks associated with the UFB rollout were "disproportionately borne by the end technician," the report said.

In the wake of the Martin report, Chorus blacklist 22 subcontractors following Martin's report; oversaw the "rehoming" of technicians to compliant companies, and overhauled its systems for monitoring contractors and subcontractors.

"When issues arose we relied too heavily on the assurances given, which are not appropriate checks in a situation where there are a large numbers of migrants," Chorus chief executive Kate McKenzie said.

Gallagher is cautiously optimistic things will improve. He welcomed the Martin report and Chorus' attendant changes but said "the proof will be in the pudding" over the next few months.

Although Labour Inspectorate head Stu Lumsden singled out Chorus for criticism last October, the company and its primary contractors such as Visionstream have never been in the gun.

Employment lawyer Jennifer Mills told the Herald that only a worker's immediate employer was responsible for any employment law breaches - hence the Inspectorate targeting legal action at subcontractors like Clearvision who directly employed exploited technicians.