A review of Chorus' subcontracting model has found serious shortcomings and the company has outlined its plan to address the issues.
The review, by consultancy MartinJenkins found that as the proportion of migrant workers on the UFB deployment increased, the Chorus subcontracting model became increasingly vulnerable to the risk of labour exploitation.
"This risk was not well understood nor adequately managed by Chorus, Visionstream or UCG," the report said.
Chorus relied on assurances provided by Visionstream and UCG in response to specific complaints. However, the quality of the process followed by these two service companies was inconsistent.
"The service companies also relied too heavily on assurances provided by subcontracted delivery partners or by potentially exploited migrants, some of whom are now involved in the Labour Inspectorate’s investigation," the report said.
"The subcontracted model was applied by Visionstream and UCG in such a way that the risks associated with volatility of demand for UFB connection may be disproportionately borne by the end technician."
The review was commissioned in October last year after the Labour Inspectorate identified a number of breaches of employment law amongst small businesses subcontracted to Visionstream and UCG.
It said Chorus and the service companies would benefit from a more joined-up approach to workforce strategy and a shared understanding of needs, pressures and risks, with a particular focus on potential impacts on the viability of individual crews.
"The risk approach taken by the companies was not sufficiently adequate given the particularly complex nature of migrant exploitation as a form of labour exploitation, with labour and migrant exploitation still subsumed within broader risk-management for Chorus," the report said.
The quality of information that Chorus, Visionstream and UCG had about the workers contributing to the UFB Connect work programme was poor.
"In particular, we found that Visionstream and UCG did not have robust information about which workers were working for different delivery partners and whether they were in employment or contractor relationships," the report added.
"This extended to poor information being provided to Chorus about the status of different visa conditions under which workers were employed."
The report said using a subcontracting model for the delivery of the UFB programme was appropriate given the challenges of meeting the volume and productivity requirements of the project.
The use of migrant workers by subcontractors Visionstream and UCG to deliver the UFB programme was also both expected and reasonable given the significant demand for labour and the time-limited and one-off nature of the work required.
Chorus said it and service companies Visionstream and UCG, have committed to a wide range of actions aimed at creating consistently fair conditions, in line with employment laws, for all workers in the Chorus supply chain.
The implementation of many of the changes was already underway.
“Chorus’ Board and management are committed to doing the right thing by people working on our behalf, including those who have come to New Zealand to build a better life for themselves and their family,” said Chorus’ chairman Patrick Strange.
“While the report finds the vast majority of employment law breaches were low level, the way the supply chain is set up means it could still be vulnerable and this will be fixed."
Chorus CEO Kate McKenzie said overall the new workers had been great additions to the workforce, bringing their much needed skills to our country, while lifting our productivity and quality.
"However, the change in the mix of workers did change the risks associated with our supply chain," McKenzie said.
“Chorus, Visionstream and UCG needed to step up what we were doing in order to identify and mitigate the risk of breaches in employment law, which can be very difficult to identify, particularly when working with migrants.
"We underestimated that risk as it emerged, instead focusing on productivity, health and safety and quality. 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.
“We will make the necessary changes to ensure fairness in line with employment laws no matter where in the supply chain workers are contributing."
MartinJenkins also reviewed and researched alternative contracting models to inform its recommendations.
Chorus said its board and management fully endorse the findings and recommendations of the independent report.