A principal who was under investigation for sleeping naked with students and using sexualised language on a school trip was still on the Ministry of Education payroll despite the serious allegations.

This month Uenuku Fairhall, the former principal of Te Kura o Te Koutu in Rotorua, had his registration cancelled and was censured by the Teaching Council's Disciplinary Tribunal Council.

Fairhall was investigated after being accused of sleeping naked with students during a school trip to Mexico in 2017.

He was involved in sexualised talk, wandered around partially clothed and washed one student's back when he was in the shower.

When students teased one student for sleeping with the naked principal, Fairhall joked that the student put his leg over the top of his genitals in his sleep and he had an erection at the time.

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Despite the serious nature of the allegations, Fairhall's sole-charge company Tarapō, which provides Maori medium resources to schools, was kept on the Ministry of Education payroll during the investigation.

The Ministry of Education has defended using the company, saying it sought assurances Fairhall had nothing to do with schools or school children.

Fairhall's wife and daughter were named as shareholders of the company.

Today acting deputy secretary early learning and student achievement, Pauline Cleaver, said the ministry had previously contracted Tarapō Ltd to provide specialist Maori medium resources.

"We did not work with Mr Fairhall at any time. Tarapō Ltd assured us Mr Fairhall had nothing to do with schools or school children."

Cleaver said that as a direct result of the Teaching Council findings released last week:

"We have advised Tarapō Ltd that we will no longer contract Tarapō Ltd while Mr Fairhall is involved in any capacity."

But National Party education spokeswoman Nikki Kaye said she had serious concerns about the decision to employ an under investigation contractor in the education field.

She said any contractor working for the ministry should be employed with caution because it is a sector with children involved.

Kaye had serious concerns about the ministry's processes and had asked to be briefed by Education Minister Chris Hipkins on the case.

There needs to be more of a cautionary approach to make sure children are not at risk."

The 2017 trip to Mexico, involving 21 students and three teachers, including Fairhall, was meant to last 12 weeks but was cut short by five weeks.

The three-yearly trip, which sees students billeted with Mexican families to ensure immersion in the Spanish language, has become a part of the school's culture.

Fairhall was found to have slept naked in the same bed as a student, engaged in sexualised talk with students and been partially clothed in front of students.

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His actions were described by the Teaching Council's Disciplinary Tribunal Council as "despicable" and met the test for serious misconduct.

His teaching registration was cancelled and he was censured.