'Subcontractors who circumvent the law pose a serious risk'

Keeping accurate employment records is a basic legal obligation of every employer

'Subcontractors who circumvent the law pose a serious risk'

A third Chorus subcontractor has been penalised by the Employment Relations Authority (ERA) for employment breaches following a Labour Inspectorate investigation which targeted more than 80 businesses.

The Labour Inspectorate has investigated 77 Ultra-Fast Broadband (UFB) subcontractors working in the Auckland area and has taken compliance action against 69. Several investigations are still underway.

Last week, A1 Communication Limited and its director Harold Hirdeshwar Deo, were ordered by the ERA to pay a total of $27,200 in penalties after the Chorus subcontractor’s repeated attempts to delay the Labour Inspectorate’s investigation. Deo is personally responsible for $8,000 of these.

Moreover, the Inspectorate visited A1 during a proactive operation in June 2018. The Inspector has repeatedly asked A1 to provide copies of employment records, receiving only excuses and empty promises from Deo.

It wasn’t until April 2019 and after the investigation was concluded that the Inspectorate received some documents, with further deficient documents provided in July following the case being filed in the ERA.

Even then, the documents did not satisfy minimum requirements for wage, time, holiday and leave records.

The ERA refused to accept Deo’s excuses citing work and family problems. They found his actions to be an attempt to deceive and delay the Labour Inspectorate’s investigation, undermine the law and gain an unfair advantage over competitors.

Labour Inspectorate Regional Manager Jeanie Borsboom said keeping accurate employment records and providing those to the Inspectorate when requested, without delay, is a basic legal obligation of every employer. 

“Failure to do so will result in higher penalties for both the business and the individual,” said Borsboom.

Personal liability means individuals cannot avoid payments to the ERA even if they close their business.

The Labour Inspectorate has a continuing focus to hold those responsible for employment standards breaches personally to account. 

During the past year, it has taken 20 cases to the ERA or the Employment Court where directors were made personally responsible for employment law breaches.

This totalled more than $760,000 in penalties and wage and holiday pay arrears to workers to be paid by individuals (this includes the $8,000 penalty ordered against Deo).

“This case is also a good reminder to businesses who use subcontractors to take steps to ensure compliance with employment standards within their supply chains,” said Borsboom.

“Subcontractors who circumvent the law pose a serious risk, not only in terms of their ability to deliver their contractual obligations but the reputational damage that can last beyond a project’s lifespan.”

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