They were exposed to fumes from petrol-driven equipment in the tunnel, which lacked a ventilation system.
Gas monitor alarms were set off but a group of six contractors, who were about 3km into the tunnel, continued working until they started suffering the effects of the gas.
In a statement following the incident, a contractor from Concrete Solutions said the workers became ill and started dry retching after inhaling fumes and dust.
"The gas detector was flashing and beeping continuously."
Another worker said the foreman was sitting on the side of the tracks, suffering form a migraine and tunnel vision.
"We noticed that the gas detector hadn't stopped beeping and I was already feeling drowsy ... and the others were telling me they felt the same."
The workers left through the farthest exit, which exposed them to carbon monoxide levels well over the short-term exposure limit for a period of more than an hour and a half.
A KiwiRail worker found them lying on the ground outside the tunnel, where they were trying to regain their breath.
KiwiRail said its recovery procedures for an event of that level were followed on the day, including rest, fresh air, food and drink. It has now changed its procedures to include medical tests.
Former New York firefighter Mike Ross, who has attended many carbon monoxide poisoning incidents, including fatalities, said he was astonished the workers were not given immediate medical help.
"Carbon monoxide exposure that's severe enough to cause the symptoms that were reported - light-headedness, dizziness, migraines - that should absolutely provoke an immediate medical response.
"Those guys should have been having their blood gases monitored, they should certainly have been given oxygen immediately - that's the number one first aid for carbon monoxide."
Mr Ross said carbon monoxide exposure did not have life-long repercussions, but put extra strains on the body.
"These guys obviously weren't doing well and I'm just astonished nobody called an ambulance."
Rail and Maritime Transport Union general secretary Wayne Butson said the workers were completely unprepared for the hazards. The incident had raised concerns about New Zealand's health and safety record, which was a "diabolical disgrace".
"And the main reason is there is no punitive regime in place to hold managers to account for undertaking these sorts of reckless gambles with workers' lives."
The union is calling for an official investigation to be carried out by the Ministry of Business, Innovation and Employment or the New Zealand Transport Agency, which regulates the rail industry.
"Someone needs to be held to account and someone's head needs to roll over this."
The incident was reported to NZTA, but the agency exercised its discretion not to refer it to the Transport Accident Investigation Commission, which is tasked with investigating serious rail incidents.
In a statement, KiwiRail said it took safety seriously and the recommendations from its internal investigation were immediately implemented.
It accepted the evacuation should have taken place sooner, and said it had changed procedures to ensure all staff working in the tunnel had gas awareness training.
KiwiRail said carbon monoxide levels on the day had barely exceeded a quarter of the ceiling at which gas masks were compulsory, and no significant level of nitrous oxide was detected.
It disputed there was not enough safety equipment, saying all staff had gas masks.
It also disagreed the workers had been disoriented by the gas, saying they left the tunnel on hi-rail trucks through the far exit because a section of rail had been removed.
A Kaimai Tunnel health and safety focus group would meet in two weeks' time to discuss the terms of reference for a comprehensive review of operations and safety in the tunnel.
Neither Labour Minister Simon Bridges nor Transport Minister Gerry Brownlee would not comment on the incident, but a spokesman for Mr Brownlee added the union's version of events was incorrect.
Labour's spokeswoman on labour issues Darien Fenton said the dismissal of the union's account was "outrageous".
"KiwiRail did their own investigation and they've admitted there were mistakes made and claimed they've put things in place so it wouldn't happen again."
Ms Fenton said heads should roll.
Council of Trade Unions secretary Peter Conway said the union's investigation a wake-up call about the importance of proper health and safety procedures.
He said the trend towards contracting out work created greater health and safety risks.
- Additional reporting: Kate Shuttleworth
