Debt collectors chasing employers for payments to exploited workers

Employers who ignore orders to compensate exploited workers can expect a visit from debt collectors.

The Ministry of Business Innovation and Employment (MBIE) set up the debt collection unit about six months ago and Labour Inspectorate national manager Stuart Lumsden said it was just starting to hit its stride.

He said a legislation change in 2016 allowed the inspectorate to hold employers personally liable for penalties imposed through the Employment Relations Authority or the Employment Court and they were endeavouring to do so.

“Therefore, even if they decide to wind up the company, we can still chase the individuals in respect of the recovery of the debt. We have done so on a number of occasions and recovered tens of thousands of dollars.”

However, migrant advocate May Moncur said it was difficult for individual workers to make employers personally liable and employment law should be tightened up.

It was not uncommon for so-called “phoenix companies” to be liquidated and set up under new names to avoid paying workers who won personal grievance cases in the ERA or Employment Court .

“This loophole is too easy to exploit by dodgy employers.

“The authority is quite toothless as far as enforcement is concerned. Personal liability is almost non-existent.”

Moncur, who regularly acts for Chinese and Indian migrant workers, said those ripping them off were often from the same migrant communities and knew how to apply social pressure to intimidate them into silence.

One method being used in the Chinese community was to blacklist workers who complained, posting their personal details on a We Chat page for Chinese employers, and the threat of this happening was enough to make some workers back off.

Workplace Relations Minister Iain Lees-Galloway recently announced New Zealand would ratify the International Labour Organisation’s protocol on forced labour, which includes a commitment to prevent the exploitation of migrant workers through threats and intimidation.

The binding agreement requires that victims are fairly treated and and provided with protection, support and access to justice.

Lees-Galloway said New Zealand already exceeded the organisation’s benchmark of one inspector per 10,000 workers for enforcement of both health and safety and employment standards.

Labour’s election manifesto promised to double inspector numbers to 110 by 2020, and last year the Government provided an extra $8.8 million over four years for more inspectors and support staff, and $4.3m for frontline services.

There were 71 labour inspectors and Lumsden said the inspectorate intended to bid for more funds in next year’s Budget to further increase staff.

But E tū union industry co-ordinator Joe Gallagher said the Labour Inspectorate was under resourced and took too long to hold errant employers to account.

“It’s like a booze bus [for drink driver detection], they might catch one or two of them,” Gallagher said.

“The system is slow and clunky which is one of the reasons why migrants are so reluctant to come forward because it’s such a hell of a process to go through.”

MBIE employment services receive 97,400 calls and emails a year about employment related issues.

About a quarter were resolved by giving workers advice on how to sort out issues with their employer, and about 4500 went to mediation.

Of the 676 complaints deemed serious enough to warrant investigation by labour inspectors last year, just over half involved migrant workers, and Lumsden said performance targets were to have 90 per cent of them settled within six months.

“We’re not necessarily hitting that target, we’re a bit lower than that, but that’s because cases have gone on and have become more complicated.”

Last year the inspectorate issued 67 infringement notices carrying total penalties of $125,000, a marked reduction on the previous year when there were 117 infringement notices issued and $284,000 in penalties levied.

Lumsden said the drop was the result of word getting out among employers about the more active policing of labour laws, and those penalised by the inspectorate, the Employment Relations Authority, or the Employment Court were unable to recruit migrant workers for up to a year.

The inspectorate was trying to get industries to take more responsibility for preventing worker exploitation, and there had been big improvements in the dairy sector where a national body helped weed out bad employers.

But the construction industry was proving a lot more problematic because of the multiple layers involved, said Lumsden.

“You can talk to electrical, gas, plumbing, vertical and horizontal construction, residential build and commercial build. There’s not one overriding industry body so we have to work with each of these.

“We just have to identify what particular parts of the construction industry where we think there’s an issue, and deal with it.”

By way of example, he said a multi-agency operation late last year had targeted gangs of migrant workers working on Auckland residential subdivisions through the night to deliberately avoid immigration and health and safety inspectors.

He warned that using labour hire companies did not absolve employers from their responsibilities.

“If we can show that the client has said ‘I want these workers and I only want to pay this much,’ then we can prove they are a person involved.

“We have had that throughout the horticulture and viticulture industry where they have been using picking or packing gangs where we have found them to not meeting minimum standards, or basically not being paid at all.

“We bring it back to the parent company that’s gaining the profit … and say it’s your brand, and if you’re not going to take proper control of your supply chain, we will have no issue with advertising that your brand is tainted,” Lumsden said.


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