Chorus promises improvement after failing to prevent exploitation

Friday, 12 April 2019

Chorus says it will work to ensure all its subcontractors can earn 'a decent wage' after admitting more than 100 firms involved in the roll-out of its ultrafast broadband network may have breached labour laws.

Subcontractors hired by Chorus have been found to have committed multiple breaches of employment law.

The company announced dozens of changes to the way it oversees work on the UFB network and released a report that said its suppliers needed to ensure their supply chains were free from 'discrimination, harassment, corruption and bribery'.

The report – which Chorus commissioned from professional services firm MartinJenkins – revealed more than half of the 1600 workers hooking up homes to UFB for Chorus were migrants on temporary work visas, and that more than 70 per cent had English as a second language.

The report said Chorus had failed to sufficiently oversee the subcontracting model of its two prime contractors responsible for that work – Australian companies Visionstream and UCG – whose own practices were 'not sophisticated enough' to protect those workers from exploitation.

* Chorus prepared to ring some changes

* Action widens against Chorus subcontractors

* Allegations of bribery and 'improper behaviour' investigated**

Evidence was presented to Chorus' board three years ago that 'with hindsight' should have the alerted it to the risks, according to the report's author, former States Service deputy commissioner Doug Martin.

But faced with higher-than-expected demand for UFB connections, Chorus appeared to overlook early indications that working conditions for subcontractors were poor, he said.

Those indications included customers telling the company that UFB installers were complaining about pay, and complaining themselves that the technicians were 'overworked and rushed' and were delivering poor quality work.

Chorus chairman Patrick Strange said the company's board and management were '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'.

'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,' he said.

The Labour Inspectorate last year identified labour law breaches at 76 of the 365 mostly small subcontracting firms that are connecting homes to Chorus' UFB network, after a series of sweeps in Auckland.

MartinJenkins' report said Chorus had since found a further 33 companies involved in possible breaches and was sharing the results of its investigations with the inspectorate.

More than half of the workers connecting homes to UFB are migrants on temporary visas.

The allegations included workers being underpaid, as well as a 'small number' of more serious allegations of workers being asked to work for free in return for the prospect of paid work, to pay cash back to their employer, and to pay bribes for sponsored work visas.

Migrant workers were afraid of reporting abuses because they were worried it could affect their right to work in New Zealand, Martin suggested.

Workers on the UFB project are paid a fixed price for particular jobs that are coded according to a scheme agreed between Chorus, Visionstream and UCG – such as connecting up a home using an overhead cable.

But MartinJenkins' report said Chorus expressed 'some concern' that the contracting companies had not passed those payments on to workers in a way it had envisaged, shifting commercial risks on to those workers.

Doug Martin said Chorus, Visionstream and UCG were committed to ensuring 'the end worker can make a decent living' during the remainder of the UFB project.

That may have led to some workers earning less than the minimum wage, it said.

Whistleblowers told Stuff and MartinJenkins last year that they were not paid as they expected for 'scoping work' sizing up jobs.

Communications Minister Kris Faafoi said on Wednesday that he had spoken to contractors who had raised concerns, some but

not all of which involved the roll-out of UFB, and passed them on the company.

Communications Minister Kris Faafoi believes he has made the Government's expectations to Chorus clear.

'Our fundamental bottom lines are that regardless of contracts, the labour laws of New Zealand are adhered to, especially with any government-funded projects,' he said.

The company had evidence all might not be right in 2016 but its focus then was on meeting demand, MartinJenkins' report said.

'I think they are pretty clear about what the Government's expectations are.'

Chorus chief executive Kate McKenzie observed that the report said that the use of a subcontracting model was appropriate.

It also said that the use of migrant workers was 'reasonable given the significant demand for labour and the time-limited and one-off nature' of the UFB project, she noted.

But she acknowledged mistakes had been made and said Chorus would 'make the necessary changes to ensure fairness in line with employment laws no matter where in the supply chain workers are contributing'.

Martin also said Chorus, Visionstream and UCG were committed to introducing appropriate safeguards for the remainder of the UFB programme to ensure that 'the end worker can make a decent living'.

Australian law firm Shine Lawyers is planning to bring a class action lawsuit against Visionstream in which it expects to claim thousands of workers engaged on the UFB initiative were entitled to be treated as employees and are entitled to back pay, holiday pay and sick pay.

The case – whether or not it is successful – could have broad implications both within and beyond the telecommunications industry in clarifying what practices are acceptable when businesses choose to go down the path of using contractors.

WHAT CHORUS HAS PROMISED

The principles Chorus says it will aim to deliver:

- All workers engaged in the Chorus UFB supply chain should be able to earn a decent wage for a fair day's work.

- Suppliers must respect the labour rights of workers and take steps to ensure their supply chain is free from discrimination, harassment, corruption and bribery.

- Suppliers must handle all business dealings and transactions with the highest standards of integrity, transparency and honesty.

- Productivity improvements in the supply chain should strike the appropriate balance between the needs of the customers and the needs of the workers.

Some of the 20 specific measures:

- Chorus will publish a supplier code of practice to outline its expectations of all suppliers.

- Chorus will require each service company to appoint appropriate people, independent of their operational delivery teams, to provide assurance and reporting on sub-contractor compliance with labour law obligations.

- Chorus will review the codes that determine what service companies are paid for the completion of individual tasks, and the processes used when jobs are not completed to standard, to ensure they are not creating unintended impacts for sub-contractors and workers.

- Service companies will work to improve their dispatch processes, to improve fairness and efficiency of allocation of jobs.

- A 'Welcome to NZ' technician on-boarding programme for immigrant labour will be introduced.

- A Chorus worker welfare portal that provides information and materials for sub-contracted workers to help them understand their rights.