Chorus to create a fairer supply chain

Chorus Limited
Level 10, 1 Willis Street
P O Box 632
Wellington
New Zealand

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

12 April 2019


Chorus to work with service companies to create a fairer supply chain

Attached are:

 Chorus Press Release
 MartinJenkins Report
 Chorus & Service Company Response


ENDS


For further information:

Ian Bonnar
GM Corporate Relations
027 215 7564
Ian.bonnar@chorus.co.nz

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PRESS RELEASE

12 April 2019


Chorus to work with service companies to create a fairer supply chain

Chorus, and its service companies Visionstream and UCG, have today 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 commitments are the response to the findings and recommendations of the
independent review undertaken by MartinJenkins on Chorus’ behalf. The review
was commissioned in October last year after the Labour Inspectorate identified a
number of breaches of employment law amongst small businesses sub-
contracted to Visionstream and UCG.

The implementation of many of the changes is 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 has outlined the key findings of the report.

“The report finds that the use of a sub-contracting model to deliver UFB was
appropriate, and that the use of migrant workers was expected and reasonable
given the significant demand for labour and the time-limited and one-off nature
of the work required.

“The success of UFB, and meeting the huge demand for fibre at a time of near
full employment in New Zealand, led to a substantial change in the mix of the
sub-contractors working on our behalf, with more sub-contracted migrants and
small businesses than before,” she said.

“Overall the new workers have 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.

“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. We know
that Chorus is not alone in facing supply chain challenges, so we are also working
to share what we learn with other businesses and government to help inform
wider policy choices,” she said.

INDEPENDENT REVIEW

The MartinJenkins review focused on identifying how issues arose, if systems
were adequate to prevent breaches, and how effectively Chorus managed issues
once they arose.

MartinJenkins also reviewed and researched alternative contracting models to
inform its recommendations.

Chorus’ Board and management fully endorse the findings and recommendations
of the independent report. The report has been released in full and is available
here.

The key findings of the independent review, led by Doug Martin and Sarah
Baddeley, are:
 The adoption of a sub-contracting model for the delivery of UFB was
appropriate given the rapid increase in volume of fibre connect activity
 The use of migrant workers by Visionstream and UCG was expected and
reasonable given the type of work and significant demand for labour in
New Zealand
 As the proportion of migrant workers increased, the model became more
vulnerable to risk - this was not well understood or managed by Chorus,
Visionstream, or UCG and a number of systemic improvements are
required
DESIGN PRINCIPLES FOR A FAIR SUPPLY CHAIN

MartinJenkins has proposed potential responses to its findings, which are based
around four design principles to ensure a fair and appropriate supply chain:
 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. Management
systems must support good practice and clear accountability
 Productivity improvements in the supply chain should strike the
appropriate balance between the needs of the customers and the needs of
the workers
CHORUS, VISIONSTREAM AND UCG ACTIONS

With the aim of delivering those supply chain design principles, Chorus,
Visionstream and UCG have committed to an extensive programme of actions.

These include:

LEAD
 Chorus will publish a Supplier Code of Practice to clearly outline its
expectations of all suppliers
 Chorus will work to inform future policy development by providing reports
and sharing insights with government agencies and industry
GOVERN
 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 implement improvements to its service company contract
management and change management processes, including adopting
processes to ensure that its contracts have been operationalised as
intended and monitoring compliance with contract terms
 Chorus, together with the service companies, will review the risk
governance framework for managing workplace risk to support the
delivery of fibre connections
PLAN
 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
 Chorus, Visionstream and UCG will complete modelling of expected
workforce demand across all Chorus service company delivered work with
a two to five year horizon, to enable better long term planning
 Chorus, Visionstream and UCG will improve data integrity
 Service companies will work to improve their dispatch processes, to
improve fairness and efficiency of allocation of jobs

EDUCATE
 Minimum business standards for sub-contractors will be introduced,
covering their obligations as an employer and assurance that the
appropriate processes and systems are in place for payroll
 Visionstream and UCG will make business support services available to
sub-contractors
 A Code of Practice training programme will be provided
PROTECT
 A Welcome to NZ technician on-boarding programme for immigrant labour
will be introduced
 Publication of and regular reinforcement of worker rights and welfare will
occur
 Assistance with visa transfers if required, including working with
technicians to identify new employers who meet employment standards,
along with collaboration with the Department of Immigration to fast track
visa transfers if appropriate
 A Chorus worker welfare portal that provides information and materials for
sub-contracted workers to help them understand their rights and to
provide resources where these are being infringed, will be established
 Establishment of a trust fund for certain eligible workers who are unable to
secure payments due from their employer
MONITOR
 Statutory declarations of compliance with employment standards will be
required from all sub-contractors
 An ongoing audit programme, which includes a consistent consequence
management framework, will be developed
 Chorus and service company staff will be trained to enable better
identification of issues on an ongoing basis

ENDS


Note for Editors

About MartinJenkins
MartinJenkins specialises in understanding the business, political, financial and
regulatory operating environment. It has unparalleled experience in working
alongside the public sector and commercial entities providing advice and support
for organisational performance improvement and monitoring, strategy,
organisational design, public policy, change and research and evaluation.
Visit www.martinjenkins.co.nz.

About the Reviewers
Doug Martin, co-founder of MartinJenkins, is one of New Zealand’s most
experienced and respected advisers on approaches to improving the performance
of organisations. Recent roles include acting as Crown Negotiator for the Terra
Nova pay equity settlement for care workers and conducting the national inquiry
into the Use of External Security Consultants.

Sarah Baddeley leads part of the Auckland practice for MartinJenkins and draws
on wide sector experience and superior technical and analytical skills to support
organisations undergoing change. Sarah is an experienced advisor to senior
managers, chief executives, board members and government ministers in both
New Zealand and Australia.


For further information contact:

Ian Bonnar
027 215 7564
Ian.bonnar@chorus.co.nz

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INDEPENDENT REVIEW OF
CHORUS' NEXT GENERATION
NETWORK CONNECTION
CONTRACTING MODEL
APRIL 2019
DOUG MARTIN AND SARAH BADDELEY

1 MARTINJENKINS COMMERCIAL IN CONFIDENCE

COMMERCIAL IN CONFIDENCE MARTINJENKINS 2
FIGURES
13
16
17
17
18
22
32
43
Figure 1: The continuum of exploitation
Figure 2: Chorus UFB build timeline
Figure 3: Chorus fibre deployment schedule
Figure 4: Premises connects per year
Figure 5: Chorus’ contract model
Figure 6: Chorus UFB workforce composition
Figure 7: Chorus timeline of response to allegations
Figure 8: Key choices: risks, drivers and opportunities

REVIEW
04
05
09
12
15
23
35
46
47
Foreword
Executive summary
Our approach to the review
What is migrant exploitation?
The Chorus model
Labour exploitation in the Chorus supply chain
Alternative models
Recommendations
References

TA B L E
14
Table 1: Index of precarious employment
APPENDIX
50
51
Appendix 1: Determining an employment relationship
Appendix 2: Tackling migrant exploitation
























CONTENTS

3 MARTINJENKINS COMMERCIAL IN CONFIDENCE
This report has been prepared for Chorus
Ltd by Doug Martin, Sarah Baddeley,
EeMun Chen and Ben Craven from
MartinJenkins (Martin, Jenkins &
Associates Limited).
MartinJenkins advises clients in the public,
private and not-for-profit sectors. We
provide advice and support to clients in the
following areas:

• labour market analysis
• employment relations
• strategy and investment
• evaluation and research
• performance improvement and
monitoring
• business improvement
• organisational improvement
• economic development
• financial and economic analysis.
MartinJenkins is a privately owned New
Zealand limited liability company. We have
offices in Wellington and Auckland. The
company was established in 1993 and is
governed by a Board made up of executive
directors Kevin Jenkins, Michael Mills, Nick
Davis, Allana Coulon and Richard Tait, plus
independent director Sophia Gunn and chair
Hilary Poole.

Disclaimer
This Report has been prepared solely for
the purposes stated herein and should not
be relied upon for any other purpose.
Our analysis has relied on information
provided to us by Chorus Limited and its
contractors. We have not been required, or
sought, to independently verify the accuracy
of information provided to us. Accordingly,
we express no opinion on the reliability,
accuracy, or completeness of the
information provided to us and upon which
we have relied.
To the fullest extent permitted by law, we
accept no duty of care to any third party in
connection with the provision of this
Report. We accept no liability of any kind to
any third party and disclaim all responsibility
for the consequences of any third party
acting or refraining to act in reliance on the
Report.
The statements and opinions expressed
herein have been made in good faith, and
on the basis that all information relied upon
is true and accurate in all material respects,
and not misleading by reason of omission or
otherwise. We reserve the right, but will be
under no obligation, to review or amend this
Report if any additional information, which
was in existence on the date of this Report,
was not brought to our attention, or
subsequently comes to light.


















PREFACE

COMMERCIAL IN CONFIDENCE MARTINJENKINS 4
This report responds to the terms of
reference set for us by the Chorus Board,
on the recommendation of the Chief
Executive, in relation to the concerning
allegations of worker and migrant
exploitation in the Chorus supply chain.
The company asked us to look into how
the issues emerged, how well Chorus
anticipated and responded to labour force
risks, and whether these actions were
adequate. The company also asked us to
advise it on how it could improve its
approach.
When it asked us to do this review, the
company expressed its significant
disappointment that this kind of
exploitation may have occurred. We were
given a clear mandate by the company to
make recommendations on how to better
ensure that workers throughout the
Chorus supply chain are treated fairly.
Our review has been future-focused. We
did not intend to replicate the Labour
Inspectorate’s detailed investigation into
specific regulatory breaches. Instead, we
sought to work with Chorus and its main
service companies to understand how
issues arose, the role played by Chorus
and its service companies, and how they
can work together to better manage these
types of risks in the future.



We were assisted in understanding
emerging trends in employment and
immigration case law by Simon Mount QC
and Alison Mills of Bankside Chambers.
We would like to acknowledge the support
we were given by staff from Chorus led by
Chief Executive Kate McKenzie, as well as
by representatives from each of the
Chorus service companies. We also
acknowledge the input provided by unions,
whistleblowers, and people who spoke on
behalf of the workers themselves. We
have been heartened by the commitment
shown by all parties in the Chorus supply
chain to addressing these issues, and their
acknowledgement that the status quo is
not acceptable.

FOREWORD

5 MARTINJENKINS COMMERCIAL IN CONFIDENCE
In October 2018 the Board of Chorus
New Zealand Ltd, on the
recommendation of the Chief
Executive, engaged MartinJenkins to
review the subcontracting model used
to deliver the significant programme of
work to construct the national next-
generation fibre network often referred
to as Ultra-Fast Broadband (UFB).
The review was commissioned
following receipt of a series of
allegations of breaches of labour
standards and migrant exploitation in
the Chorus supply chain. These
allegations ranged from poor labour
standard practice through to a small
number of serious allegations of
exploitation. All allegations related to
the treatment of migrant workers
engaged at the third tier of
engagement in the subcontracted
workforce. The company was
motivated by a genuine desire to do
the right thing for these workers
further down the supply chain. The
review focused on the following key
questions:
• How did the issues emerge?
• Were there adequate systems to
address this form of exploitation?
• How effectively did Chorus manage
the issues once they arose?

1 It should be noted that six allegations have been found
subsequently not to have breached legislation.
We also researched and reviewed
alternative models to inform our
recommendations to the Board about
the steps Chorus and its service
companies could take through the
supply chain to better manage this risk
in the future.
It is important at the outset to
emphasise that there are few
examples, either nationally or
internationally, of companies who have
successfully fully mitigated the
exploitation risk in their supply chain,
particularly given the complex and
often hidden nature of migrant
exploitation.
When it asked us to do this review, the
company expressed their significant
disappointment that this type of
exploitation had been alleged.
Exploitation of this type is a long way
from the values the company aspires
to, and is inconsistent with the
standards expected by a major
infrastructure provider in New Zealand.
We were given a clear mandate to
make recommendations on how to
better ensure that workers throughout
the Chorus supply chain are treated
fairly. Our work was fully supported by
Chorus executives and by the
leadership of the key service
companies involved.
The work of the Labour Inspectorate of
the Ministry of Business, Innovation
and Employment (MBIE) and internal
work by Chorus and its key service
companies has confirmed that one part
of the wider Chorus supply chain is
vulnerable to widespread breaches of
labour standards at the third tier of
subcontracting, including migrant
exploitation.
There is evidence that the ‘UFB
Connect’ part of the UFB work
programme is where the model is
exposed to breaches of labour
standards and migrant exploitation.
These problems relate to services
delivered by two of the service
companies, Visionstream and UCG,
through a range of subcontracted
delivery partners.
Our review indicated the majority of
alleged breaches were low level,
however we could not rule out the
vulnerability of the model to more
serious breaches occurring. This meant
that our recommendations are
designed to guard against the potential
for serious migrant exploitation
consistent with the company’s desire
to take the necessary steps to ensure
all workers are treated fairly throughout
the supply chain.
Chorus has not been the recipient of
any improvement or infringement
notices by the Labour Inspectorate.
The issues related to those parties
engaged further down the supply
chain. Of the approximately 900 sub-
contracting parties working on the UFB
work programme, 365 of are engaged
to deliver UFB Connect through two
service companies, Visionstream and
UCG. The Labour Inspectorate has
identified 76 subcontractors with
potential breaches, meaning that more
than one in five sub-contracting
companies involved in UFB Connect
may have breached labour standards.
1

Furthermore, internal work by Chorus
and the service companies
Visionstream and UCG identified an
additional 33 subcontractors with
potential breaches that are being
actively investigated. The total number
of subcontractors with potential
breaches is therefore close to one in
three of the UFB Connect
subcontractors engaged by
Visionstream and UCG. This was
sufficient for us to form a view that
there was potentially a systemic issue
that needed to be addressed.
We considered the original rationale for
the subcontracting model adopted by
Chorus. The large-scale construction
project was a once-in-a-generation
EXECUTIVE SUMMARY

COMMERCIAL IN CONFIDENCE MARTINJENKINS 6
transformation and required a different
delivery model to meet the demanding
timetable. Chorus is now in year 8 of a
12-year build that has been
characterised by much higher levels of
demand for connectivity than originally
anticipated. The original target of 20
percent was achieved in 2016, four
years ahead of schedule.
The peak of the UFB programme also
coincided with tight labour market
conditions across the country. The
Chorus field workforce has nearly
doubled, growing from approximately
2,000 before the UFB programme to
nearly 3,800 in 2018. This period of
work coincided with record growth in
the wider building and construction
industry, stimulated by the Canterbury
rebuild, large-scale infrastructure
investment, and commercial and
residential construction.
We examined the way in which Chorus
worked with Visionstream and UCG to
anticipate strategic workforce risks to
the delivery of the wider UFB work
programme. We found, with the
benefit of hindsight, that Chorus relied
too heavily on a model whereby
workforce risk, including the risk of
migrant exploitation, was managed by
the service companies without
sufficient oversight. The contracts with

2 Such a threat could be based in fact if the worker was working
outside visa conditions or more likely a fear based on
misinformation.
the service companies relied on an
orthodox approach to the risk and
required those companies to meet
legal minimums. This was standard
commercial practice at the time the
contracts were struck. Chorus also
relied heavily on the fact that both
companies were internationally
reputable and experienced in delivering
services of this kind in a sub-
contracted operating model.
The practices put in place by
Visionstream and UCG did not fully
anticipate that the model would evolve
into one that relied on a largely migrant
workforce. Today well over 50 percent
of the UFB Connect workforce
engaged by Visionstream and UCG are
migrants working on temporary
migrant visas, and more than 70
percent of the UFB Connect workforce
has English as a second language.
Within the past two years, both
Visionstream’s and UCG’s workforce
have rapidly grown, predominantly
through an increased use of Indian and
Filipino workers.
Despite this growth, Visionstream’s
and UCG’s practices were not
sophisticated enough to protect
workers in their contracted supply
chain from exploitation. Adequate
protection would have included
3 Primarily costs associated with the purchase of a vehicle and
tools.

addressing migrant workers’ fear that
complaining about labour standards
could threaten their right to work in
New Zealand.
2
We also received some
feedback that a number of delivery
partners (the subcontractors to
Visionstream and UCG who distribute
and deliver the work) faced high capital
costs in being eligible to carry out work
on the network and that the associated
debt limited their ability to exit.
3

Chorus’ consideration of strategic
workforce risks was focussed on the
steps required by its service
companies to drive recruitment to
meet the burgeoning demand for
connections to fibre. Second order
risks such as the composition of that
workforce, particularly the use of
migrants, was not clearly identified as
a key risk to the UFB delivery
programme at a Board or Executive
level within Chorus. The productivity
improvements delivered by the
subcontracted workforce were
prioritised by all parties in the supply
chain as service companies struggled
to keep up with demand while also
ensuring that quality standards and
customer experience remained high.
With the benefit of hindsight, our
review found evidence that should
have been sufficient to raise potential
4 Through use of video-based training materials and plain English
standard setting.
exploitation as a potential corporate
risk in early 2016. This evidence
included reports to the Board of
concerns about quality of work and
feedback from end-user focus groups
following technicians commenting on
poor working conditions.
Chorus, Visionstream and UCG did put
a number of mechanisms in place to
support workers, in order to satisfy the
technical, health and safety and quality
components of delivery of the UFB
Programme. This included training,
technical advice, and quality audits. We
also found that this training was
appropriately adjusted as the
workforce became increasingly
diverse.
4
However, the support
provided did not extend to service
companies clearly setting expectations
of delivery partners in the treatment of
workers. We had indications from a
number of workers and stakeholders
that the capability of service
companies delivery partners to run an
efficient business and be good
employers is relatively poor. This, in
part, is attributed to the fact that many
of the delivery partners are themselves
migrants and may have limited
understanding of minimum legal
obligations, including labour standards.
2.0 EXECUTIVE SUMMARY

7 MARTINJENKINS COMMERCIAL IN CONFIDENCE
A critical component of managing the
risk of this form of labour exploitation
is having a robust view of the
participants in a supply chain. We
found that Chorus had a high-level view
of the participants in their supply chain
and that this was a requirement of
their standard terms and conditions.
We also found that the information
provided by Visionstream and UCG to
Chorus about those participants was
not of a quality we would expect to
satisfy those contract provisions.
Quality of information was a challenge
for all parties through the course of our
review. While Chorus did have systems
in place relating to quality and health
and safety, this data issue was
compounded by the inadequacy of
Chorus’ contract management
systems and processes to adequately
monitor changes throughout the supply
chain.
In light of this our key review findings
are as follows:
a. The adoption of a subcontracting
model for the delivery of the UFB
programme was appropriate given
the challenges of meeting the
volume and productivity
requirements of the build and
connect activity.
b. The use of migrant workers by
Visionstream and UCG to deliver
the UFB programme was both
expected and reasonable given the
significant demand for labour and
the time-limited and one-off nature
of the work required.
c. As the proportion of migrant
workers 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.
d. 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.
e. The subcontracted model has been
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. 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.
f. 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 in the
information we reviewed. 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.
g. The quality of certain 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. This extended to poor
information being provided to
Chorus about the status of different
visa conditions under which
workers were employed.




Recommendations
There are few national or international
examples of where organisations or
projects have fully mitigated the labour
and migrant exploitation risk well. Our
review of these models identified the
following key features.
• Significant upfront investment in
understanding the state of the
supply chain and likely future
concerns or issues, as well as
strategies to avoid or mitigate
them (for example predicted
periods of reduced demand)
• Ensuring the procurement
approach is the ‘best fit’ for the
specific project, rather than just
‘best practice’
• An openness to reviewing the
approach over the life of the
contract – either through creating
new channels (such as help desks)
or tightening the settings (such as
a stronger employment relations
focus later in the contract)
• Strong ongoing engagement with
the main contractors in order to
strengthen interpersonal links. This
relationship results in a better flow
of information, which can help
mitigate and manage issues as
they arise.
• A commitment to focusing on
labour market risk matters,

2.0 EXECUTIVE SUMMARY

COMMERCIAL IN CONFIDENCE MARTINJENKINS 8
including locating a workforce
related function appropriately
within the organisational structure
(for example, with personnel
reporting directly to one or more
senior executive members).
Chorus executives and senior managers
from Visionstream and UCG fully
supported the review process. Each
company is clearly committed to sector-
wide leadership and to introducing
appropriate safeguards for the remainder
of the UFB build in order to ensure that
the end worker can make a decent
living. Further, Chorus’ view is that these
safeguards should extend to all its
supply arrangements, not just to the
UFB Connect work programme.
In the future, a mature approach to
mitigating the risk of breaches of labour
standards and migrant exploitation must
include design principles that address
four core sources of risk through the
Chorus supply chain.
In this context, a mature response
from Chorus and their service
companies must, at the very minimum,
include:
• a clear statement of leadership that
sets expectations for how suppliers
treat workers
• clearer accountability at executive
level in Chorus, and through key
contracting parties to ensure that
labour market risk is jointly
governed more effectively
• adopting a more strategic and
longer term approach to sector-
wide strategic workforce planning,
with a focus on the next two to five
years
• a more mature approach to risk
management, audit and monitoring
that reflects the complex nature of
labour exploitation, particularly
migrant exploitation
• better support for workers,
including improved information,
better reporting systems, and more
investment in lifting the capability
of delivery partners.

2.0 EXECUTIVE SUMMARY
Adapted from European Union Agency for Fundamental Rights 2015

9 MARTINJENKINS COMMERCIAL IN CONFIDENCE
Our Brief
MartinJenkins was asked by Chorus to
review their contracting model after
the Labour Inspectorate indicated its
initial inquiries had revealed a series of
allegations of breaches of labour
standards in the Chorus supply chain.
These allegations ranged from poor
labour standard practice through to a
small number of serious allegations of
exploitation. All allegations related to
the treatment of migrant workers
engaged at the third tier of
engagement in the subcontracted
workforce. The purpose of our review
was to help the company understand:
• How these issues emerged?
• Whether Chorus had appropriately
addressed the risk of labour
exploitation, specifically of migrant
workers?
• How effectively Chorus managed
the issues once they arose?
We were also asked to review
alternative models of supply chain
management in similar sectors and
make recommendations on what
actions Chorus could take throughout
its supply chain to better manage risks
of this type.

5 By ‘service companies’ we mean those contracted to Chorus to
deliver the Ultra-Fast Broadband network. The main service
How we went about this
We carried out this review
collaboratively, with strong
engagement and support from both
Chorus and the service companies
who were its key contractors.
5

We, and Chorus, acknowledged the
importance of the Labour
Inspectorate’s investigations and
enforcement actions against third tier
sub-contractors. We did not seek to
replicate the Inspectorate’s work by
looking in detail at specific cases.
Instead, our emphasis was forward-
looking, directed at preventing future
breaches of this type.
It was apparent early on that the
workforce issues faced by Chorus and
its service companies were the result
of a complex mix of incentives and
challenges. As such, the issues need
to be considered by the supply chain
as a whole, rather than by Chorus or its
service companies in isolation. We
worked collaboratively with all parts of
the supply chain – though in particular,
with Chorus and its main service
companies that connect end users to
the new fibre network.
Our work relied on the information
identified and supplied by both Chorus
and its service companies. However,
companies engaged to deliver the UFB Connect component of the
programme, which was the focus of our review, are the service
the findings and recommendations
presented in this report are our own.


















companies Visionstream NZ Limited and Universal
Communications Group NZ Limited (UCG).
What we looked for
Our review considered three key
dimensions to the question of how
workforce risks were addressed and
managed:
i. Legal compliance
Did Chorus and the service companies
satisfy minimum legal obligations?
ii. Ethical standards
Aside from legal compliance, did
Chorus and the service companies
meet a higher test of corporate social
responsibility consistent with the
standards expected from a major New
Zealand infrastructure provider?
iii. Management of the risk of migrant
exploitation
Was the response from Chorus
sufficient, especially given the
company’s role and the nature of
migrant exploitation?

THE LEGAL FRAMEWORK
Labour relations and minimum
employment standards are governed
by six key pieces of legislation:
a. The Employment Relations Act
2000
is the primary legislation
governing employment
OUR APPROACH
TO THE REVIEW

COMMERCIAL IN CONFIDENCE MARTINJENKINS 10
relationships in New Zealand. It
provides a structure for employers
and unions to negotiate and enter
into collective agreements, and for
employers and employees to enter
into individual agreements. The Act
requires all employment
agreements to be in writing and
imposes a number of mandatory
obligations on employers including
keeping written records of
employees’ personal details, time
and wages and other matters. The
Minimum Wage Act 1983, providing
that employers must pay at least
the minimum wage even if an
employee is paid by commission or
by piece rate.
b. Minimum Wage Act 1983 sets the
minimum wage that an employer
must pay an employee, including
those paid by commission or by
piece rate.
c. The Wages Protection Act 1983
sets out how wages must be paid,
and prohibits unlawful deductions
from wages. The fundamental
principle is that employers must
pay workers their entire wage
owed without deductions unless
the deductions are permitted under
the Act.

6 Brett Carrington & Nicolette Carrington v David Easton & Ors
2013 (NZHC).
d. The Holidays Act 2003 provides
minimum holiday entitlements for
all employees, including public
holidays, sick leave and annual
leave and how this must be
calculated
e.
The Health and Safety at Work Act
2015
establishes a framework to
secure the health and safety of
workers and workplaces. It places
the primary duty of care on a
‘Person Conducting a Business or
Undertaking’ (PCBU). This requires
them to ensure, so far as is
‘reasonably practicable’, the health
and safety of their workers and of
other workers who are influenced
or directed by the PBCU.
f.
The Immigration Act 2009 and
associated Regulations are the
primary source of New Zealand
immigration law. They establishes a
system of entry permits and visas
for non-New Zealand citizens to
enter, stay in, or work in New
Zealand. Of particular relevance,
the Act establishes various classes
and conditions of temporary work
visas and longer term residence. It
also creates a number of
employment related offences,
including exploitation of an unlawful
or temporary worker by an
employer who is in serious breach
of minimum employment law
standards.
CONTRACTORS AND
EMPLOYMENT GENERALLY
One of the key issues to consider in
subcontracted supply chains is the
difference between contractors and
employees. Contractors and sub-
contractors are self-employed and earn
income by invoicing the principal for
their services.
Chorus’ contracting model means that
Chorus is not a direct employer of
those working on the front line UFB
programme.
Chorus undertook a rigorous
procurement process and engaged
expert reputable Australasian
companies to partner as head
contractors to deliver services to
customers. These companies had
specific experience in managing a
subcontracted workforce and in dealing
with a volatility in workload similar to
that required by the UFB Connect work
programme.
The Labour Inspector has not alleged
that Chorus or the head contractors
have been in breach of labour
standards. The allegations relate to the
actions of sub-contracted parties at the
third tier of the supply chain.
In general, contractors are not covered
by most employment-related laws. This
means they are not entitled to
minimum provisions under the
Holidays Act such as sick or annual
leave, the Minimum Wage Act does
not apply to contractors, and they
cannot bring personal grievances to
enforce their rights under the
Employment Relations Act. Contractors
are required to pay their own tax, and
businesses do not have to hold
contractor records. General civil law
determines most of their rights and
responsibilities.
A head contractor is engaged by the
principal and is responsible for the
overall control and management of a
project, including monitoring health
and safety issues onsite and ensuring
that the health and safety policy is
followed. While the head contractor
will usually be responsible for ensuring
that the relevant industry codes,
regulations and project requirements
are complied with
6
, the orthodox view
is that the head contractor is not
responsible for the employment
practices of any subcontractors, other
than ensuring they comply with health
3.0 OUR APPROACH TO THE REVIEW

11 MARTINJENKINS COMMERCIAL IN CONFIDENCE
and safety requirements. Any dispute
with a subcontractor is resolved
through ordinary contract law and the
civil court process.
However, in certain situations when a
written agreement that purports to
establish a contractor relationship, the
Courts will determine that the
contractor was in fact an ‘employee’
7, 8
The Employment Court has sole
jurisdiction to determine whether an
employment relationship existed.
9

When such a determination is reached,
the party deemed to be an ‘employer’
can also be held liable for breaches of
employment law. The tests considered
by the Courts in determining this are
set out in Appendix 1.
It is noted in this regard that the
Labour Inspectorate’s investigations
were in respect of employees in the
conventional sense.
ETHICAL STANDARDS
– BEING A GOOD EMPLOYER
The nature of the allegations have
raised the company’s concern in terms
of wider ethnical tests and the high
standards it holds itself to. Chorus and
the service companies have received

7 Employment Relations Act 2000. Section 161(1)( c) and sections
6(5) – (6).
criticism from customers, the media,
unions, and other stakeholders.
Treatment of workers throughout the
Chorus supply chain and the potential
for exploitative practices in the manner
that has been alleged is contrary to
Chorus’ employment and contracting
values. Chorus prides itself on being a
preferred employer. It has been
recognised over the last six years in
the Aon Hewitt Best Employer Awards,
including being accredited Aon Hewitt
Best Employer in Australasia 2012–
2017 and Aon Hewitt Best of the Best
Employers in Australasia 2015. Its
reputation as an ethical employer and
good corporate citizen is important to
the company.
MANAGING THE RISK OF
MIGRANT EXPLOITATION
Migrant exploitation, as a particular
form of labour exploitation, is
particularly complex and difficult to
detect. It has a range of mixed
incentives and risk factors along the
different parts of the supply chain, and
therefore it is challenging risk for large
organisations to consider and plan for.
Notwithstanding the challenge of
managing this risk, we took the view
8 Bryson v Three Foot Six Ltd (2005) 2 34 (NZSC). An action
seeking determination of this matter can be brought by the
individual concerned or the Labour Inspector.
9 Employment Relations Act. Section 161(1)( c)
that Chorus should have a mature
approach to considering the potential
risks posed by the model of service
delivery it has in place because:
a. Chorus itself is a large employer by
New Zealand standards, directly
employing approximately 800 staff,
and with a supply chain with a
subcontracted field workforce
approaching 4,000. Chorus has high
standards, mature processes, and
well-resourced human resources
and corporate functions.
b. Chorus is a major infrastructure
provider, with a sophisticated
understanding of the industry, and
the capability to plan and deliver a
significant investment in new
infrastructure for New Zealand and
to consider the ongoing
sustainability of its workforce.
Given these factors, we undertook the
review with a focus on examining the
company’s contracting practices, the
quality of information and oversight of
its head contractors (the service
companies) responsible for more
directly managing workforce risk, the
maturity of understanding its supply
chain, the overall composition of its
supply chain workforce, and the
sustainability of that workforce in the
short, medium, and long term.















3.0 OUR APPROACH TO THE REVIEW

COMMERCIAL IN CONFIDENCE MARTINJENKINS 12
The employment of migrant workers is
a legitimate and much-used employer
response to labour and skills
shortages.
10
The labour and skills
shortages in the construction and
infrastructure sectors have been widely
reported on in New Zealand and
internationally.
11
Employers do not
usually set out to recruit migrants, but
it is an option when other strategies
are not viable – such as changing
production processes, relocating to
where labour costs are lower, or
upskilling the local workforce or those
not in employment, education or
training.
12

However, abuse of migrant workers is
an emerging business risk locally and
an established risk internationally. For
example a recent Australian
Government Report of the Migrant
Workers’ Taskforce identified that the
underpayment and exploitation of
temporary visa holders is a significant
problem that has adverse effects on
individuals, law-abiding employers and
the community in general.
13
Risk and
harm is also suffered by legitimate
businesses that are undercut by
exploitative employers and exploited
vulnerable migrants.
14
For many

10 Bridget Anderson and Martin Ruhs, ‘Reliance on Migrant
Labour: Inevitability or Policy Choice?’ (2012) 20 Journal of
Poverty and Social Justice 23; EM Chen and R Ward, ‘Employers’
Role and Influence in Migration: A Literature Review’ (Ministry of
Business, Innovation & Employment 2013); S Yuan, T Cain and
Paul Spoonley, ‘Temporary Migrants as Vulnerable Workers: A
companies, it is the lack of mapping
beyond suppliers at the first tier that
leads to a hidden part of their supply
chain where companies are vulnerable
to human rights abuses and migrant
exploitation.
Under the UN Guiding Principles on
Business and Human Rights,
companies are expected to carry out
due diligence on their supply chains
including having a clear view of who
the workers are engaged in a
company’s supply chain.
There are also shifting consumer
expectations – that companies should
have an ethical duty of care extending
beyond their direct employees.
Internationally, this ethical expectation
has become particularly important for
retail-orientated products, as
consumers begin to express a
preference for ethical supply chains.
There has also been some evidence of
this trend emerging locally
15
.
Locally, regulatory efforts to support
the enforcement of labour standards
and the protection of vulnerable
migrant workers have also grown. The
Labour Inspectorate and Immigration
Literature Review’ (Ministry of Business, Innovation and
Employment 2014).
11 M Farmer, ‘The Farmer Review of the UK Construction Labour
Model’ (Construction Leadership Council (CLC) 2016);
Immigration New Zealand, ‘INZ to Establish Construction and
Infrastructure Skill Shortage List’ (News centre, 12 December
New Zealand (both business units of
the Ministry of Business, Innovation
and Employment) are taking a joint,
multi-regulatory enforcement approach
to migrant exploitation. An overview of
their key activities is included in
Appendix 2.
This multi-regulatory approach is
consistent with the findings of the
Australian Taskforce report which
identifies that migrant worker
exploitation is a complex and multi-
faceted issue where employment,
migration, corporations, taxation and
other laws intersect. That report
identifies that employers that underpay
overseas workers may also engage in
other undesirable practices such as
avoidance of tax obligations, sham
contracting, or phoenixing to avoid
employee entitlement obligations.




2018) <https://www.immigration.govt.nz/about-us/media-
centre/news-notifications/inz-to-establish-construction-and-
infrastructure-skill-shortage-list>.
12 Chen and Ward (n 9).
13
Report of the Migrant Workers Taskforce, March 2019
14 Fudge (n 12).
15
https://www.tearfund.org.nz/getattachment/Get-
Involved/Ethical-Fashion-
Guide/FashionReport_2018_with-TF-
Logo_FINAL_compressed.pdf.aspx
EXPLOITATION?
WHAT IS MIGRANT

13 MARTINJENKINS COMMERCIAL IN CONFIDENCE
What can migrant exploitation look like?
There are many different terms used in
relation to migrant exploitation,
including ‘precarious employment’,
‘forced labour’, ‘ modern slavery’,
‘trafficking’, and ‘volunteerism’.
In New Zealand, exploitation of
unlawful employees and temporary
workers is a crime under the
Immigration Act. There is a continuum
of exploitation that ranges from
underpaying wages, to forced labour
and people trafficking. There are a
range of structural factors that can
contribute to the vulnerability and
exploitation of migrant workers, such
as language, age and economic
vulnerability (Figure 1).
This diagram is illustrative of the range
of possible migrant exploitation, it is
not intended to represent the
allegations made towards Chorus’
subcontractors.







16 UNSW Human Rights Clinic, ‘Temporary Migrant Workers in
Australia’ (UNSW Human Rights Clinic 2015) Issues Paper.
Figure 1. The continuum of exploitation
and the factors that can contribute to
exploitation
Source: Adapted from information from
the UNSW Human Rights Clinic
16
and
Dearing & Hamilton (2016)
17



17 A Dearing and A Hamilton, ‘Severe Labour Exploitation:
Workers Moving within or into the European Union – the SELEX-
Project’ (European Union Agency for Fundamental Rights, 2 June
2015).
4.0 WHAT IS MIGRANT EXPLOITATION?

COMMERCIAL IN CONFIDENCE MARTINJENKINS 14
Precarious employment
Employment can be defined as being precarious
or non-precarious as set out in Table 1.
Table 1. Index of precarious employment



















18 A Stewart and R Owens, ‘Experience or Exploitation? The
Nature, Prevalence and Regulation of Unpaid Work Experience,





















Internships and Trial Periods in Australia’ (University of Adelaide
2013) Report for the Fair Work Ombudsman
PARTICULAR RISKS FOR
MIGRANT WORKFORCES
Migrant workers face a particular set of
risk factors that make them vulnerable
to labour exploitation.
Furthermore companies with
subcontracted workforces are
particularly vulnerable to the risk of
labour and migrant exploitation in their
supply chains.
18






4.0 WHAT IS MIGRANT EXPLOITATION?
Source: Yuan, Cain and Spoonley (2014) adapted from Goldring and Landolt (2012)

15 MARTINJENKINS COMMERCIAL IN CONFIDENCE
The next-generation fibre
network programme
In 2011, the government entered into a
ground-breaking agreement with the
then-Telecom, awarding a significant
component of the construction of a
national next generation fibre network
(often referred to as ‘Ultra-Fast
Broadband’ or ‘UFB’) that would
reshape the telecommunications
industry and market (
Figure 2). The
objective of the investment was to
enable 75 percent of New Zealanders
to connect to an ultra-fast broadband
network by the end of 2019. The
government of the day considered
access to ultra-fast broadband to be
essential infrastructure for a productive
and growing economy.
19
Once the full
UFB programme is complete, New
Zealand should be in the top five
countries in the OECD for the
proportion of the population that can
access fibre.
Telecom submitted a bid for the largest
share of the network build, ultimately
entering into a contract to build
approximately 70 percent of the
network, across 24 towns and cities.
This contract required significant

19 Communications and Information Technology Minister, ‘Ultra-
Fast Broadband Investment Proposal Finalised’ Beehive media
release (Wellington, 16 September 2009)
<https://www.beehive.govt.nz/release/ultra-fast-broadband-
investment-proposal-finalised>.
changes to how Telecom delivered
services, most notably the structural
separation of Telecom’s existing retail
and infrastructure arms. Telecom de-
merged (supported by legislation) into
two separate companies: the retail-
focused Spark New Zealand (which
took all existing customer relationships
with end users), and the regulated
infrastructure company, Chorus, which
was responsible for building,
maintaining, and providing access to
Telecom’s existing copper-based
network and the future fibre network.
20

Chorus entered into a contract with
Crown Fibre Holdings (CFH), a Crown-
owned company, to deliver its part of
the UFB build by the end of 2019.
21

BUILDING AND CONNECTING TO
THE NETWORK ARE DIFFERENT
TASKS
Constructing the network includes two
key tasks – the physical
building of the
network
(running the fibre down the
street), and
connecting end users to
that fibre.
The two activities are quite different:
i. Building the network
20 Crown Fibre Holdings, ‘Fact Sheet: Agreement with Chorus’
(Crown Fibre Holdings Ltd 2011)
<https://www.crowninfrastructure.govt.nz/wp-
content/uploads/2018/07/fact-sheet-agreement-with-chorus.pdf>.
Chorus was awarded 69.4% of the build. For the purposes of the
‘Build’ mostly involves installing new
fibre optic cable, which may require
significant civil works (digging up the
sidewalk, laying the cable, and
reinstating the sidewalk, for example).
This is work that can be planned in
advance and that operates to a
defined and agreed schedule.
ii. Connecting to the network
‘Connect’ is demand- and consumer-
driven. Connections are of varying
complexity depending on the
individual property and where the fibre
connection point is located. Common
examples include aerial connections
from a street-side pole to a
household, or blowing a fibre
connection through an existing duct.
More complicated installations include
digging trenches down driveways.
Work is therefore reactive, responding
to individual demand and
circumstances.
Our focus has been on the ‘connect’
work programme and service
companies, as this was where the
issues related to labour and migrant
exploitation were identified.

UFB initiative, ‘ultra fast broadband’ was defined as 100 megabits
per second downstream, and 50 megabits per second upstream.
21 Office of the Auditor-General, ‘Annual Review Briefing to the
Commerce Committee: Crown Fibre Holdings Ltd’ (Office of the
Auditor-General 2015) <https://www.parliament.nz/resource/en-
nz/51SCCO_ADV_00DBSCH_ANR_66089_1_A455362/88f5be82
dfadbcb36bceb058f58c6b6ccc9cd334>.
THE CHORUS MODEL

COMMERCIAL IN CONFIDENCE MARTINJENKINS 16
Figure 2. Chorus UFB build timeline
Source: adapted from Chorus documents






















5.0 THE CHORUS MODEL

17 MARTINJENKINS COMMERCIAL IN CONFIDENCE
A ONCE IN A GENERATION
PROJECT DELIVERED AT SCALE
AND PACE
Figure 3. Chorus fibre deployment schedule
22

















Source: Adapted from Chorus document

22 Chorus, ‘Subcontractor Management – Contract Background’
(Chorus New Zealand Limited 2018).
23 Chorus, ‘Annual Report – 2017’ (Chorus New Zealand Limited
2017). UFB2 includes an additional $291 million split between
25% debt and 65% equity.
Both the network build and the end
user connections have been delivered
at significant scale and pace.
The programme was twice extended in
2017 (UFB2 in April, and UFB2+ in
August), extending the programme’s
total reach to 87 percent of all New
Zealanders. Chorus is responsible for
building the network to up to a million
properties. This has resulted in a once-
in-a-generation build happening across
the country over 12 years.
23

Chorus is now in year 8 of the 12-year
programme. Connections to the fibre
network are customer-driven and
significant but unpredictable volumes
of fibre connection activity will
continue following completion of the
communal build in December 2020. In
the long run Chorus expects
connection volumes to return to a long-
term predictable trend and its focus
will be on ongoing maintenance and
the operation of the network.
With surging demand for connections
Connections to the network got off to
a slow start: in the first four months
only 200 homes were connected out
of the 42,000 that had fibre past the
property.
24
Following this, Chorus
24 ‘Chorus Boss Confirms Ultraslow Fibre Uptake’ The National
Business Review (Auckland, 27 August 2012)
<https://www.nbr.co.nz/article/chorus-boss-confirms-ultraslow-
fibre-uptake-ck-126904>.
experienced considerable year-on-year
growth in uptake, far more than the
original expectations or targets. This
high demand has been driven by
increasing consumer demand for high-
speed internet – probably in response
to the availability and mass uptake of
online data-intensive media streaming
services such as Netflix, and the
increasing development of plans and
marketing by retail service providers.
Figure 4. Premises connected per year














25 Chorus, ‘Chorus Submission on Review of Essential Skills in
Demand Lists’ (Chorus New Zealand Limited 2016).
Source: Adapted from Chorus document

Original targets for 20 percent to be
connected by 2020 have been
considerably overshot – the numbers
reached 21 percent in 2016 and more
than 50 percent by January 2019. As
shown in
Figure 4, in the year to June
2016, Chorus more than doubled the
number of connections to its network:
it added more than 90,000 connections
in a single year, compared to 72,000
connected since the build began.
25


5.0 THE CHORUS MODEL

COMMERCIAL IN CONFIDENCE MARTINJENKINS 18
Delivering through
a contracted model
Chorus contracts with five
service companies to both
maintain the existing copper
network and deliver the various
phases of building and
connecting to the UFB
network. These arrangements
are set out in
Figure 5.


















5.0 THE CHORUS MODEL

NOTES:
Broadspectrum was formerly Transfield.
Broadspectrum is the principal UFB2 build contractor and
Visionstream is the principal UFB2+ build contractor.
ElectroNet is the contractor for both UFB2 and UFB2+ on
the West Coast.
While UFB1 Build closely follows FSA boundaries, the
UFB1 Build contract included exceptions that didn’t follow
the FSA patches.

Figure 5. Chorus’ contract model
Source: adapted from Chorus document

19 MARTINJENKINS COMMERCIAL IN CONFIDENCE
These service companies have
contracts to deliver various
components of the work around the
country. All draw on varying
proportions of directly employed and
subcontracted workforces.
i. Visionstream
A subsidiary of Australian company
Ventia Pty Ltd, Visionstream
entered the market in the 2000s,
with Telecom aiming to introduce a
new service model into the market
and decrease its reliance on a
perceived duopoly of providers.
Visionstream brought a model that
relied on a high proportion of
contractors and that promised
significant overhead savings.
ii. Universal Communications Group
(UCG):
Also Australian-based, UCG
contracted with Chorus to provide
specific expertise on connecting
complicated multi-dwelling units
(MDUs) to the UFB network. UCG
entered the market in 2014, and
picked up additional contracts both
in building the network and in
connecting premises in 2016
through UFB2 and UFB2+. UCG
operates a subcontracted workforce
model that is similar to
Visionstream.

26 ElectroNet, MartinJenkins Chorus Review: One on one
interview, 13 December 2018
iii. Downer
An Australian owned infrastructure
company, Downer designs and builds
infrastructure and provides integrated
services in both Australia and New
Zealand. Its workforce model is based
mainly on direct employees; it uses
subcontractors for specialist skills or
to manage capacity when needed.
iv. Broadspectrum
Broadspectrum, formerly known as
Transfield Services Ltd (TSE), is a
corporation operating in Australia but
owned by Spanish company Ferrovial
since June 2016. Broadspectrum
delivers UFB and UFB2 Build
services, as well as copper
maintenance and connection. The
majority of its workforce is directly
employed.
v. ElectroNet Services
ElectroNet is mainly an electrical
contractor, owned by Westpower. It
has a modest telecommunications
division that holds a hybrid build and
connect contract for UFB2 and
UFB2+, providing all the services in
the UFB Connect, UFB2 Build, and
UFB2+ Build for the West Coast of
the South Island. ElectroNet has a
directly employed workforce, and is
typically able to manage variations in
27 Chorus contracts for outcomes and does not specify an
employment model to be used.
demand by drawing on its electricity
lines workforce.
26

A SHIFT TO A SUB-CONTRACTED
WORKFORCE
Each of Chorus’ service companies
operates its own employment and
contractor model. All use a mix of
employees and subcontractors.
27

The shift to a contracted workforce
occurred before the structural
separation of the then-Telecom. In
2009, Chorus (as a business unit of
Telecom) awarded a contract for
network maintenance and operations
to Visionstream. Before this, Chorus’
main contractors had been Downer
and Transfield (now Broadspectrum);
Chorus was seeking to inject additional
competition into the market and
improve productivity, quality and
customer experience.
Visionstream differed from Downer
and Broadspectrum in that it operated
a mainly subcontracted workforce
model, where the majority of its
workforce were independent
subcontractors. Rather than directly
hiring technicians, Visionstream
contracted with ‘delivery partners’,
which consisted of crews of typically
two people – a skilled ‘lead’ worker,
and a ‘crew’ member who works
under supervision. Typically, the lead
worker will be an owner-operator, and
responsible for buying their own van
and tools (with specific requirements
set out in contracts) and for and
covering all operating expenses.
Over time, Chorus’ workforce has
become increasingly reliant on
subcontractors, as Visionstream and
UCG, who operate mainly with
subcontracted ‘owner-operators’, have
picked up more of the work. Since
2016, Visionstream and UCG have
been the main service companies for
connecting end users to the new
network across the country, apart from
the West Coast of the South Island.
While Downer and Broadspectrum
were previously involved in the
connect work, they exited these
contracts because of difficulties
meeting volume and productivity
requirements.

5.0 THE CHORUS MODEL

COMMERCIAL IN CONFIDENCE MARTINJENKINS 20





















28 C Guers, C Martin and JL Wybo, ‘The Impact of the Use of
Subcontracting on Organizational Reliability and Safety’ (Taylor
2014) <https://hal-mines-paristech.archives-ouvertes.fr/hal-
01063681/document>.
The contracted workforce model
allows Chorus to better be able to
scale up and down as required with
the volume of the build. Through the
review process we were informed that
the subcontracted workforce have
delivered higher productivity in
response to the high demand for next
generation connections.
A CONTRACTED WORKFORCE
IS NOT A PROBLEM IN ITSELF
Typically, large infrastructure projects
are procured from main contractors (or
‘tier 1’ contractors), who are then
responsible for managing contracts at
the sub-contractor level and below.
Contracts are often for fixed amounts,
which means that responsibility and
risk are managed at the main
contractor level. This also means that
the legal requirement to meet labour
standards is managed by the main
contractors downwards.
Subcontracting usually comes in two
forms:
28

a. Capacity contracting – where the
procurer may carry out the same or
similar activities but needs
29 IS Piri, Y Chang-Richards and S Wilkinson, ‘Skills Shortages in
the Christchurch Subcontracting Sector’, ANDROID Residential
Doctoral School Proceeding (University of Newcastle, the School
of Architecture and Built Environment 2015)
additional capacity to respond to
short-term fluctuations in demand
b. Specialty contracting – where the
procurer does not undertake the
activities in house, and is
contracting an external provider to
deliver specialist skills the procurer
does not hold.
We heard through our review that
Chorus sought, through competitive
tender processes, the expertise that
internationally experienced main
contractors could provide. Chorus'
motivation was increased competition,
capability, and sustainability leading to
improved productivity and customer
experience.
The use of this type of subcontractor
model is not new in New Zealand. The
wider New Zealand construction sector
has long used subcontracted supply
chains to manage project risk and
fluctuating demand. In New Zealand,
sub-contracting arrangements do shift
resourcing risk away from principals,
particularly where the risk results from
an underlying demand or volume that
is difficult to predict.
29

The subcontractor model brings
benefits to the procurer, reducing the
risks posed by volatility in demand and
<https://www.resorgs.org.nz/wp-
content/uploads/2017/07/Skills_Shortage_Christchurch_Subcontra
cting_Sector_Piri_2015.pdf>.
enabling the procurer to more easily
scale their workforce up or down to
meet immediate needs. The model
also provides the subcontractor with
more flexibility than direct
employment, as the subcontractors
can work across multiple parties within
relevant industries, spreading their risk
and taking as little or as much work as
they choose.
We found Chorus’ use of a
subcontractor-led model to be
appropriate given:
a. the significant volatility in demand
for connections, which stems from
the one-off nature of the work, the
uncertain demand at the outset
coupled with unforeseen significant
demand, and the reactive rather
than planned nature of the work.
b. the need to develop and refine
methods of connecting properties
to the new Fibre network. Chorus
sought to draw on expert multi-
national infrastructure companies
that could develop and refine their
approaches to the connection work,
and review and refine their costs
throughout.

“A man and a van”








The Chorus vans have become a
common sight across the country as
they connect end users to the network.
Many of these workers are individual
owner-operators subcontracting from
Visionstream and UCG.
Our focus is mainly on this
subcontracted workforce model as
operated by Visionstream and UCG.
Visionstream sums this up as:
“Our model is simple. We
contract with owner operators
with skills, experience, and a
customer service focus, supported
by Visionstream’s systems and
work management experts; so
that we can all perform at our
best and be successful together.”

5.0 THE CHORUS MODEL

21 MARTINJENKINS COMMERCIAL IN CONFIDENCE
Delivery in a period of skill
and labour shortages
A significant workforce was needed to
both build and connect this
infrastructure. Chorus’ field workforce
nearly doubled, growing from
approximately 2,000 before the UFB
programme to 3,800 in 2018.
30
Chorus
and its service companies needed to
scale up rapidly to meet demand, both
to support the build and, more
pressingly, to provide adequate service
times and experiences for customers
wanting to connect to the new
network.
Throughout this period of workforce
growth, Chorus was competing in a
tight labour market that was recovering
from the global financial crisis.
Unemployment was trending down,
and it was becoming increasingly
difficult for firms to find the skills and
labour that they needed. More
specifically, Chorus was competing for
labour with other major developments,
including:
• Significant demand for civil and
construction workers to support the
Canterbury rebuild, where the

30 Chorus, ‘Subcontractor Management – Contract Background’
(n 32). NB – differing estimates in different papers. Dated 17
October 2018 suggests ~5,000, up from ~2,000 pre UFB.
31 Stats NZ, ‘Canterbury: The Rebuild by the Numbers’ (Statistics
New Zealand 2018) <https://www.stats.govt.nz/reports/canterbury-
the-rebuild-by-the-numbers>.
number of construction workers
increased by 13,700 between
September 2012 and September
2017 (up 46%).
31

• Increasing demand for workers to
support major infrastructure and
construction projects (including
houses) in Auckland. In 2013, the
value of construction activity in
Auckland was forecast to increase
by 44% by 2018, driven by strong
residential growth as well as a large
number of civil projects including
roading, electricity, and water.
32

MBIE is continuing to project
significant demand for
construction-related occupations,
with an additional 56,000 workers
needed between 2016 and 2022.
33

• The development of the National
Broadband Network (‘nbn’) in
Australia, which was seeking to
increase its workforce by more
than 4,500 and competing for
similarly skilled telecommunications
technicians.
34

Feedback from Chorus and its service
companies suggests that their
workforce, while having specialised
telecommunications skills, has some
overlap in skills with general civil
32 Construction and Infrastructure Sponsor Group, ‘Workforce
Skills Roadmap for Auckland Construction Sector (2013-2018)’
(Auckland Construction Sector 2014)
<https://www.bifnz.co.nz/documents/Workforce%20Roadmap%20
Summary.pdf>.
construction workers. In the building of
the network, 60 to 70 percent of the
deployment costs have related to civil
construction work.
35

USING MIGRANT WORKERS TO
ADDRESS SHORT-TERM SKILL
AND LABOUR SHORTAGES
The use of a migrant workforce
in these circumstances is both
reasonable and unsurprising.
Industry often turns to migrant labour
to resource significant one-off projects
when local labour and skills are hard to
find.
The use of a largely migrant workforce
to connect the UFB network is both
unsurprising and reasonable given the
time-limited and one-off nature of the
work, and given the significant demand
for labour in a period of tightening
labour markets across a number of
comparable industries.
There are New Zealand precedents for
drawing on migrant labour to support
33 Ministry of Business, Innovation and Employment and Market
Economics, ‘Future Demand for Construction Workers: Projections
from the National Construction Occupations Model’ (Ministry of
Business, Innovation & Employment 2017) 2nd edition
<https://www.mbie.govt.nz/assets/e80cc701a0/future-demand-for-
construction-workers-2017.pdf>.
one-off skills and labour needs – for
example:
• The Canterbury rebuild, which
required significant numbers of
construction workers within a short
time.
• Seasonal labour shortages in
sectors such as horticultural and
viticulture harvesting, where
significant numbers of workers are
required for a short time.


34 Chorus employee, ‘Chorus Submission to MBIE Review of
Essential Skills in Demand Lists’ (Chorus NZ Limited 2016) Memo.
35 Chorus, ‘Annual Report 2012’ (Chorus New Zealand Limited
2012).
5.0 THE CHORUS MODEL

COMMERCIAL IN CONFIDENCE MARTINJENKINS 22
Figure 6. Chorus UFB Workforce composition






















Source: adapted from Chorus, UCG and Visionstream
documents (subject to change)














































5.0 THE CHORUS MODEL

23 MARTINJENKINS COMMERCIAL IN CONFIDENCE
The current investigation
by the Labour Inspectorate
In mid-to late 2017, a smaller number of
allegations began to emerge of poor
labour practices involving migrants
employed by subcontractors engaged
by Visionstream and UCG. Initially,
allegations focused on the use of
unpaid volunteers in Nelson, where
workers undertake unpaid work or
training in the hope of securing long-
term employment. Chorus initially
thought these were isolated cases of
poor practice.
Chorus was then contacted by MBIE’s
integrated intelligence unit in late 2017
to support its investigation into the
allegations. Chorus sought to provide
support and information to support
MBIE in its investigation, and
encouraged its main contractors to do
the same. This included Chorus hosting
MBIE’s investigators to give them an
overview of the fibre work programme,
and how it is undertaken.
After investigating throughout 2018,
MBIE announced in October 2018 that
its Labour Inspectorate had found
issues with the employment practices
of 73 subcontractors investigated. That
number has since increased to 76. All

36 Chorus, ‘Internal Analysis on Labour Inspectorate Investigation
for Board Update’ (Chorus New Zealand Limited 2019)
Unsubmitted background paper. This includes 249 subcontractors
have been working in the ‘connect’
side of the business.








By this stage the number of cases
being considered began to indicate
that the labour practice issues may be
systemic. It was at this point that this
independent review was
commissioned.
Of the roughly 900 subcontracting
companies working on UFB, around
365 are working in UFB Connect,
36
and
so the Labour Inspectorate’s findings
suggest that more than one in five
companies working in UFB Connect
may have breached labour standards.
Since that time, Chorus and its service
companies have proactively identified
an additional 30 possible breaches,
which they are currently investigating
internally and sharing this information
with Visionstream, and 152 subcontractors with UCG.
Approximately 60 of these companies work for both. Numbers are
changing at any given point.
with the Labour Inspectorate. If these
investigations confirm the allegations,
this would bring the total number of
subcontractors that have potentially
breached labour standards to 109.
Many of the allegations that have
emerged remain unproven, and the full
extent of exploitation (rather than poor
practice or a misunderstanding of the
law) is uncertain. However, nearly one
in three subcontractors working in the
UFB Connect programme face
allegations of breaches of labour
standards. Our view is that this is a
clear indication that the third tier of
Chorus’ supply chain is systemically
vulnerable to poor employment
practice and this may include breaches
of labour standards and/or likely other
forms of migrant exploitation.
Nature of the allegations
The range of allegations includes
varying levels of seriousness. The
original issue to come to light related
to issues raised by technicians who
alleged they were expected to
effectively work for free, either during a
training period, or in hopes of gaining a
full-time position. Other allegations
range from poor labour standard
practice through to a very small
number of serious allegations of
exploitation. All allegations related to
the treatment of migrant workers
engaged at the third tier in the
subcontracted workforce.
The list of issues at the lower end of
exploitative labour practice included:
• Poor record keeping – Employers
failing to maintain employment
records or provide employment
agreements.
•
Underpayment – where workers
have not been paid for the hours
completed, have been paid below
minimum wage, or have not been
paid holiday entitlements.
There have also been a very small
number of allegations related to more
serious forms of exploitation including:
• Volunteerism - where workers are
expected to effectively work for
free, either during a training period,
or in hopes of gaining a full-time
position.
•
‘Cash back’ requirements – where
workers are required to hand
money back to their employer, thus
keeping records clear. Similar
practices can also happen through
non-cash means, for example
workers being required to buy
goods or services, or being
LABOUR EXPLOITATION
ALLEGATIONS IN THE
CHORUS SUPPLY CHAIN
Labour Inspectorate allegations
by Service Company
Visionstream only 43
UCG only 8
Both 25

COMMERCIAL IN CONFIDENCE MARTINJENKINS 24
beholden to provide ‘favours’ to
their employer.
•
Bribery – a worker making
payments to their employers in
exchange for a sponsored work
visa, so that the worker can remain
in the country.
37

• Conflicts of interest – Allegations of
conflicts of interest within the
supply chain, including of how work
is allocated to different delivery
partners
Feedback from the service companies
emphasised challenges around
management capability for small
companies (particularly the ‘man and a
van’ model, or where the employers
are migrants themselves).
Incidents unlikely to be isolated
The literature on migrant exploitation
suggests that exploitation tends to be
under-reported, with the true number
likely to be unknown.
38
There are a
number of reasons for this, which
include:
a. Exploitation can be hidden and ‘off
book’, not showing up in standard
audit and examination processes.
b. Detecting exploitation often
requires the workers themselves to

37 Chorus and UCG, ‘FW: Serious Fraud (Bribery and Black
Money) at Chorus New Zealand’ (October 2018).
speak up – but they often lack
incentives to do so, either because
losing the current job is a worse
outcome, or because they fear
other reprisals.
c. Incentives are tied to immigration
settings, with temporary migrant
work visas linked to specific
employers, so that those
employers have significant leverage
over their temporary migrant staff.
While the majority of alleged breaches
have been relatively low level there
have been a small number of more
serious allegations. We have been
unable to rule out the vulnerability of
the model to these more serious
breaches.




38 C Stringer, ‘Worker Exploitation in New Zealand: A Troubling
Landscape’ (University of Auckland Business School 2016) for the
Human Trafficking Research Coalition.
Setting expectations with
its contractors
THE RESPONSIBILITY OF
THE SERVICE COMPANIES
Chorus has contracts with the service
companies that set clear expectations
and requirements for subcontracting
and expectations on training and
capability of the workforce. Through
these contracts, Chorus has
outsourced its field workforce to be
managed by its service companies.
Based on these contractual
arrangements, Chorus saw
employment and employment relations
as squarely an issue for its service
companies.
The contracts set expectations around
compliance, such as:
a. Extensive health and safety
requirements, ranging from
defining roles and responsibilities,
to setting out key procedures, in
line with the Health and Safety at
Work Act.
b. Extensive training and competency
requirements to ensure the safety
of technicians, protect the integrity
of Chorus’ network, and increase
productivity and quality.
The contracts include a general clause
specifying that the service companies
must ensure that their personnel,
subcontractors and technicians comply
with all laws “relevant to the services
being performed”. While not specifically
set out, this would include immigration
and employment relations law.
100. It is not extraordinary that the
contracts do not explicitly refer to
labour relations, employment or
immigration law, as the current labour
relations frameworks in New Zealand
do not extend through the supply
chain in the same way that the health
and safety legislation does. Legally,
employment relations issues are
between an employee and an
employer – a relationship that Chorus
is not party to. However, Chorus sees
employment issues as covered by the
blanket requirement to comply with
all legislative requirements, meaning
that a breach of employment or
immigration law would be a breach of
the service company’s contract with
Chorus.
6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN

25 MARTINJENKINS COMMERCIAL IN CONFIDENCE
Supporting the broader supply chain
101. Chorus’ contracts with service
companies establish a number of
mechanisms which would enable it to
monitor the ongoing health and
capability of its broader workforce
supply chain, including:
39

a. A requirement for the service
companies to develop a register
of subcontractors and technicians
– a ‘complete and accurate
database ... of the Subcontractors
and Technicians it uses to provide
and perform services’, including
the employer, the roles and scope
of contract, tenure and
experience, and training
information (cl 15.1).
b. The right to approve any person,
and a requirement that each
subcontractor or technician must
agree to provide relevant
information to Chorus (cl 15.2).
c. A requirement that service
companies ensure their
subcontractors do not further
subcontract without Chorus’ prior
written consent (cl 15.8).
d. Training and competency
requirements that promote

39 Chorus, ‘Chorus New Zealand Limited and Visionstream Pty
Limited UFB Connection and Work Management Services
Agreement’ (Chorus NZ Limited 2016).
40 Interview with Chorus employees (n 38).
continuous improvement for the
workforce (cl 16).
e. Decoupling Chorus’ payment
relationship with its service
companies, and its service
companies’ relationships with
their subcontractors, specifying
that the service companies must
pay their subcontractors (cl 24.10).
Dealing with issues that arise
102. Chorus has extensive auditing rights,
specifically for health and safety, as
well as service company
management of its personnel,
subcontractors and technicians. This
right also flows up to Crown Fibre
Holdings (now Crown Infrastructure
Partners), which may initiate an
external audit of service company
performance, or direct a service
company to carry out a self-audit.
THE IMPLEMENTATION OF
THESE CONTRACTS NEEDS
TO IMPROVE
103. While Chorus sets expectations for its
service companies about its
workforce, these expectations were
not matched by an underpinning
41 Chorus, ‘RE: Subcontractor Model Review - Additional
Information Requested’ (14 February 2019).
investment in systems and
processes. Through interviews with
Chorus staff we established that this
likely resulted from the greater priority
being given to delivering the work
programme because of the higher
than expected levels of demand.
Understanding the supply chain
104. Despite the provisions in its contracts,
the arms-length approach that Chorus
has taken has meant that Chorus and
its service companies do not have a
shared understanding of the supply
chain, the particular risks it involves,
and needs for the future. This
manifests in a variety of ways:
UNDERSTANDING THE EXTENT OF
SUBCONTRACTING WITHIN THE SUPPLY CHAIN
105. Our review established that Chorus
expected contractual compliance but
did not put in place systems and
processes of a sufficient robustness
to achieve compliance.
106. Chorus has not implemented the
systems and processes provided for
by the contracts that would enable it
to better map its supply chain and
understand the extent of
subcontracting within it. Although the
contracts required approval of
subcontractors, we received feedback
that this was done in an ad hoc,
unsystematic way, and that no central
register was maintained.
40

107. The service companies, Visionstream
and UCG, noted that they had
provisions in their contracts with
delivery partners (their
subcontractors) requiring approval for
subcontracting, and were not aware
of a significant use of further
subcontracting.
41

PROVIDING A SUSTAINABLE REVENUE STREAM
FOR TECHNICIANS
108. The ability for subcontractors and
technicians to make a decent living
from working in the UFB Connect
work programme is informed by three
key drivers:
a. The rates – or ‘codes’ – at which
connections are paid
b. How the codes flow through the
system to the end workers
c. The efficiency with which coded
jobs are allocated.
109. These factors are independent of the
individual technician productivity
6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN

COMMERCIAL IN CONFIDENCE MARTINJENKINS 26
which can impact income but was not
analysed in our review.
Are the Codes fair?
110. Chorus’ contracting model uses a
code-based approach to paying for
completed jobs. Different jobs are
assigned a ‘code’ with a set price
depending on the complexity of the
job. For example, when customers
are connected to the fibre network
there is a different code for an aerial
connection compared to the fibre
being blown through ducting.
111. Following an extensive time and
materials based estimation process,
the codes were agreed with the
service companies in 2014/15. Chorus
also took some steps to satisfy itself
that an efficient and skilled crew
would be able to make a decent living
under the agreed model, with the
potential to earn more than if they had
been directly employed. Financial
modelling underpinning this assertion
had apparently been carried out, but
unfortunately is no longer available.
42

112. Chorus also completed high-level
modelling of the revenue that
individual crews would receive
(assuming an average of one install a
day, completed for an average price

42 ibid.
43 Visionstream –Report on the Feasibility of the Owner Operator
Contractor Model 30 June 2016
per job and an assumed service
company overhead).
113. We were also provided with analysis
(undertaken by a third party) that was
commissioned by Visionstream, in
2016, to satisfy the service company
that technicians could make a
comfortable living reflective of the
salary of a skilled tradesperson.
43

Visionstream is in the process of
updating that analysis as the result of
the review
44
UCG has also
commissioned applied financial
analysis through the course of our
review that is not yet finalised. We
consider that the steps taken to
review and update this financial
analysis by both service companies is
appropriate.
114. The original Visionstream modelling
was based on an assumption of ‘man
and a van’ model. It also excluded the
potential for delivery partners to earn
revenue from other Visionstream
contracts. Visionstream’s recent
analysis indicates that up to 39% of
their delivery partners earn revenue
outside of the original Connect
contracts.

44 Visionstream: UFB Connect Contractor Earnings Analysis
March 2019
115. Also relevant to our review was the
preliminary analysis undertaken by
Visionstream that there did not appear
to be a correlation between size of a
delivery partner company and those
companies alleged to have had poor
labour practices or more serious
forms of migrant exploitation. This
warrants further analysis.
116. Representatives of both Visionstream
and UCG contended that the original
model as developed a number of
years ago was viable, being based on
the original design of a number of
two-person crews (a ‘lead’ worker and
a ‘crew’ member), where
subcontractors are doing the work
and also directly employing an
assistant. The model does not provide
for overheads for larger
subcontractors, although a number of
larger subcontractors did enter the
supply chain during the effort to meet
increased demand.
How the codes system flows through
the supply chain
117. Chorus emphasised that the codes
were designed to be an efficient
mechanism for managing its contracts
with its service companies. The
design included a minimum number
of codes to maximise efficiency in
45 ibid; Chorus employee to MartinJenkins, ‘Re: Modelling’ (8
March 2019).
contract management, while also
acknowledging that there would be
volatility driven by volume and
efficiency within the bounds of risk
that large experienced contractors
would be able to manage. However,
Chorus expressed some concern that
Visionstream and UCG had passed
those codes through to the end
technician in a way that the original
model had not envisaged. The passing
of this volatility risk to delivery
partners by service companies may
have contributed to the end worker
managing a greater proportion of
volume-based risk than was ever
envisaged. The cases of breaches of
the Minimum Wage Act highlighted by
the Labour Inspectorate are potential
examples of the consequences of this
poor practice.
45

118. This evolution at the third tier of the
contracting approach may have
contributed to an inefficient allocation
of risk between Chorus, its service
companies, delivery partner
subcontractors and the end workers.
The efficiency with which coded jobs
are allocated
119. Given the importance of work
allocation for the technicians, we
worked with Chorus to model the
6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN

27 MARTINJENKINS COMMERCIAL IN CONFIDENCE
process from the perspective of a
‘ticket’ – that is, the connection
request from the time it is made by
the end user/customer to a retail
service provider
46
, until the
connection is completed. This
identified a number of potential pain
points for technicians, including:
a. A reactive demand for work
outside of the control of Chorus,
service companies and delivery
partners.
b. A reliance on the service
companies with expertise in
dispatching and managing
workloads efficiently.
c. Limited control over the type of
work done – technicians are
required to be masters of all
connection types so that they can
tackle any problem. This limits
opportunities to specialise, and
also ties productivity and
profitability to the mix of jobs they
are allocated.
d. Complex billing relationships
between delivery partners,
service companies and Chorus,
though theoretically decoupled in
the contracts.

46 Retail service providers are telecommunication companies who
use Chorus’ optical fibre network to create retail UFB-based
services which are sold to residents, businesses, schools and
e. Delivery partners do not receive
payment for jobs until they are
completed, that is, when the
connection occurs and the
customer can use the service.
f. Significant impacts on technician
costs and time when customers
or retail service providers
reschedule or cancel. This has
been a key area of focus for
Chorus and its service companies
over a number of years (although
the shift to a ‘fibre in a day’
service has reportedly increased
this number).
120. We received feedback from some
service companies that Chorus can
make process and service changes
without adequately considering the
impact on its workforce.
47
We also
received feedback from Chorus that
the service company value
proposition was that this risk is
managed at the contractor level. This
tension in incentives was evident.
There was limited evidence of either
party having the kinds of information
available that would enable them to
arrive at a shared view of the potential
workforce implications of changes to
standard operating practice and the
potential flow-on to the technicians.
health premises. Examples are Spark, Vodafone, Slingshot,
2Degrees, Flip and Trust Power
121. Ultimately we formed the view that
the subcontracted model has evolved
in such a way that risks associated
with volatile demand may have been
borne disproportionately by the end
technician. Chorus and both 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.







47 This was challenged by Chorus, which pointed to examples of
testing new products (such as fibre in a day) with a small number
of crews from both service companies.
How well were the risks to
its workforce anticipated?
RESPONSE TO INCREASED
DEMAND DID NOT ANTICIPATE
WIDER LABOUR MARKET RISKS
122. Although it was clear early on that
growth in demand for connections to
the network was significant, Chorus
and the service companies approach
to managing labour-related risk to
delivery throughout the supply chain
was lacking – specifically, risks that
may come from an increased use of
migrant labour.
123. The higher than anticipated demand
for connections created difficulties for
both Chorus and service companies.
Although from a high-level viewpoint
demand grew solidly over the period,
we heard from the service companies
that demand was volatile and
dispersed, so that it was not always
where it was expected to be.
Demand was initially concentrated in
smaller towns and regions rather than
Auckland, where it had been
expected. For example, we heard
from one service company that a
relatively small town with three
6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN

COMMERCIAL IN CONFIDENCE MARTINJENKINS 28
technicians received 120 connection
requests in one week.
48

124. Chorus attempted to proactively
manage the sustained high levels of
demand for connection. This included
the following steps:
• In 2014, Chorus began modelling
the financial impact if the
connection rate were to reach 50
percent by 2019.
49
This analysis
did not appear to cover workforce
impacts.
• Chorus worked with service
companies with a significant focus
on increasing the recruitment and
retention of technicians expanding
capacity throughout 2015 and
2016.
50
Chorus’ management
reported regularly to its Board on
the service companies’
recruitment progress, and their
ability to bring in additional
workers. Chorus also invested in
local training and apprenticeship
programmes,
51
and worked with
local employers to support the
employment of workers facing
redundancy.
52

• In support of an application led by
Visionstream, Chorus worked with

48 Interview with Service companies, ‘MartinJenkins Review: One-
on-One Interviews’ (December 2018).
49 Chorus, ‘Infrastructure Group July Monthly Update to the
Board’ (Chorus NZ Limited 2014) Board paper.
50 Chorus, ‘Monthly Executive Update NGA’ (Chorus NZ Limited
2016) Board paper. noting increasing demand and a lack of
Immigration New Zealand to add
Telecommunications Technician
and Telecommunications Cabler to
the Skills Shortage lists, as part of
the Essential Skills in Demand
review in 2016. This made it easier
for employers in the Chorus
supply chain to bring in overseas
workers.
53

125. This rapid response to increased
demand resulted in a near doubling of
the workforce over the period of the
work programme. The pressure on
Chorus, through its service
companies, to bring in new workers
resulted in a shift away from the ‘man
and a van’ model that had been the
underpinning feature of UCG and
Visionstream’s subcontracted
workforce approach.
Responding to reputational risks
126. As demand continued to exceed
expectations, Chorus was criticised
for delays in connecting end users to
the network. The median time for
connections of differing types (SDUs,
MDUs, or right of ways) were
regularly reported to the Board, and in
some cases were also discussed in
the media. Chorus also faced service
supply. Reporting on increase in crew numbers and the need to
work with Service Companies to augment their capacity in line with
demand
51 Chorus employee (n 45).
52 Chorus, ‘Chorus Submission on Review of Essential Skills in
Demand Lists’ (n 34). Chorus worked with Fisher and Paykel to
level agreement penalties with its
retail service providers and with
Crown Fibre Holdings.
127. The clear focus for Chorus was on
how to improve these delivery times
and meet increasing demand. This
included a focus on improving the
productivity of the workforce, through
increased training, emphasis on
quality, and recruitment drives.
54

128. This focus appears to have resulted in
Chorus overlooking early indicators of
poor worker conditions including:
a. End users, through focus groups,
told Chorus that technicians’
remuneration had been a
recurring theme when
technicians spoke to customers
during connection work. Chorus
reported this issue to the Board,
noting that it was a complex area,
with income depending on a
number of variables.
55

b. Public perceptions, as a result of
their interactions with the
technicians, were often that the
technicians were overworked and
rushed, and that they delivered
poor quality, with little support
help find placements for redundant staff following the closure of
their East Tāmaki manufacturing plant.
53 Chorus employee (n 45); Chorus, ‘Chorus Submission on
Review of Essential Skills in Demand Lists’ (n 34).
54 Chorus, ‘Chorus Looking for 250 More Technicians and
Support Staff by End of 2016’ (Media release, 22 July 2016)
from Chorus. Chorus considered
that those perceptions also
significantly shaped the public’s
perception of Chorus itself.
56

129. In response to these issues, Chorus
considered designing a proactive
campaign to improve the technician
experience, largely focused on
improving technician engagement and
public perceptions.
SIGNIFICANT RISKS ARISE
FROM A SHIFT TO A MIGRANT
WORKFORCE
130. Our review of management and Board
papers from this period did not reveal
evidence of analysis of the additional
risks that arise through the use of a
migrant workforce.
131. The composition of the workforce
shifted significantly from 2016 to
2018. Based on Chorus’ survey of
technicians over these years, the
workforce both grew rapidly, and
became increasingly dominated by
migrant workers. Note that the
following statistics are likely to under-
report the situation, as response rates
<https://company.chorus.co.nz/chorus-looking-250-more-
technicians-and-support-staff-end-2016>.

55 Chorus, ‘Monthly Executive Update NGA’ (Chorus NZ Limited
2016) Board paper.
56 Chorus, ‘Monthly Executive Update NGA’ (Chorus NZ Limited
2016) Board paper.
6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN

29 MARTINJENKINS COMMERCIAL IN CONFIDENCE
to the survey in those years range
from 39 to 50 percent:
a. Workers subcontracted to
Visionstream increased from 256
to 574, within which the
proportion of:
i. those of New Zealand descent
decreased from 22% in 2016 to
9% in 2018
ii. Indian ethnicity increased from
16% to 55%
iii. workers with English as a second
language grew from 54% to
72%.
b. Workers subcontracted to UCG
increased from 82 to 320, within
which the proportion of
i. those of New Zealand descent
decreased from 20% in 2016 to
8% in 2018
ii. Indian ethnicity increased from
17% to 54%
iii. workers with English as a second
language grew from 55% to
71%.
132. Our interviews with Chorus and
employees from Visionstream and
UCG, as well as comments received

57 PA Taran and E Geronimi, ‘Globalization, Labour and
Migration: Protection Is Paramount’ (International Labour Office
2013) Perspectives on Labour Migration 11.
58 S Kilgallon and D Fonseka, ‘The Big Scam: The Tip of an
Immigration Scam Iceberg’ Stuff.co.nz (Auckland, 21 September
via the TechEx survey of technicians,
suggest these other risk factors:
a. Language – English is not a first
language of most technicians (in
2018, 60 percent of the industry
had English as a second
language – 71 percent of UCG
technicians and 72 percent of
Visionstream technicians)
b. Age – the majority of technicians
are aged 20–29 (in 2018, 55 percent
of Visionstream technicians were in
this age group, and 59 percent of
UCG’s)
c. Visa status – on the best available
data provided to us, only 11.6
percent of UCG technicians and
29.7 percent of Visionstream
technicians had New Zealand
citizenship or permanent residence
d. Lack of usual family and community
support.
Majority of techs are immigrants so
we are not live with our families.


2018) <https://www.stuff.co.nz/national/crime/107073384/the-big-
scam-the-tip -of-an-immigration-scam-iceberg>; M Ram, P
Edwards and T Jones, ‘Employers and Illegal Migrant Workers in
the Clothing and Restaurant Sectors’ (DTI Central Unit Research
2002); W Searle, K McLeod and N Ellen-Eliza, ‘Vulnerable
Compounded risks through the high use
of migrant labour in a subcontracted
supply chain
133. Chorus and the service companies did
not adequately anticipate the impacts
of shifting to a heavily migrant
workforce and put appropriate
safeguards in place. The relevant risks
are compounded in a subcontracted
supply chain.
DELIVERY PARTNER CAPABILITY – AWARENESS
OF OBLIGATIONS AND RESPONSIBILITIES
134. We heard feedback that delivery
partners contracted to the service
companies may lack management
capability, including knowledge of
minimum labour standards and how
to implement them. In some cases,
delivery partners were unaware of
legal minimum standards and
obligations, particularly related to
record keeping (including timesheets,
payroll, and employment contracts).
DIFFERING CULTURAL NORMS
135. The cultural and other norms in
migrants’ countries of origin present a
more complex risk. As Taran and
Geronimi have noted, major
incentives for exploitation of migrants
Temporary Migrant Workers: Canterbury Construction Industry’
(Ministry of Business, Innovation & Employment 2015).
59 C Stringer, ‘Worker Exploitation in New Zealand: A Troubling
Landscape’ (University of Auckland Business School 2016) for the
Human Trafficking Research Coalition.
include lower labour standards and
minimum protections in their
countries of origin.
57

136. The literature, media reports, the
Chorus experience, and our own
experience show that there is often a
co-ethnic dimension to exploitation,
where migrant workers tend to be
exploited by employers within their
own ethnic community.
58
We
understand that this is related to a
complex interaction of factors,
including class/caste structure, power,
accepted practice, and employers
having been exploited in the past
themselves.
59

INSTITUTIONAL SETTINGS THAT TIE MIGRANT
VISAS TO PARTICULAR EMPLOYERS
137. An employment relationship is
considered precarious when the
worker has little or no control over
their employment conditions, such as
wages; certainty of employment;
hours of employment; their place of
work; and the regulatory protection
available for the particular
employment sector.
138. A number these elements are directly
linked to national policies and laws. In
some cases, government policy has
“
”
6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN
– Comment from TechEx 2018 survey

COMMERCIAL IN CONFIDENCE MARTINJENKINS 30
contributed to the creation and
maintenance of precarious
employment relationships. Work visas
come in various forms and may either
permit unrestricted employment
commonly known as an “open” visa or
specifically restrict employment to an
identified position, employer and
location. Workers on ‘essential skills
work visas’ are restricted to a specific
occupation, employer and location.
60

139. The linking of a visa to a specific
employer creates a situation where
workers experiencing exploitation
may believe they have limited choices.
This linkage reduces their bargaining
power against employers who may
feel a sense of proprietorship over
their workers. While the New Zealand
immigration system does allow
migrant workers to apply to change
the conditions of their visa, including
their employer, workers are often not
informed of this and may also be
concerned that doing this may place
their visa status at risk.
61
As long as
employer sponsorship is the dominant
entry pathway to New Zealand in both
the temporary and permanent
migration programmes, visa holders
will be more likely to remain in

60 It is understood that a number of the Chorus technicians were
on the “essential skills visa”.
61 For example if a worker is aware that the original job offer was
on false or overstated pretence or they may have family members
or friends who are in precarious situations. In addition, some
employment relationships marked by
pronounced dependency.
Opportunity to address risk with the
winding down of build activity
140. As the UFB build begins to wind
down over the next few years, Chorus
and the service companies face even
greater risks around migrant
exploitation, particularly if workers are
bound to specific employers by their
visa.
141. To mitigate those risks around migrant
worker exploitation as connection
volumes decline, Chorus and the
service companies should conduct
more detail analysis and longer term
planning to:
a. The size of the workforce that will
be needed.
b. How to transition declining
volumes through the supply chain,
given how closely technician
profitability is linked to high levels
of utilisation.
c. Support that may be needed to
support workers seeking to
change employers or move into
exploited migrants may be threatened about the consequences of
moving employers.
62 Chorus to Crown Infrastructure Partners, ‘Re: Chorus Sub-
Contractor Pay and Training Issues’ (7 December 2017).
other related areas facing skill
shortages.
142. There is a risk that any scaling down
of the workforce will increase the
precariousness of an already
vulnerable workforce, as temporary
migrants seek opportunities to remain
in the country, and subcontractors
compete for a reducing amount of
work.















Responding to the specific
allegations
AN E A R LY ARMS-LENGTH
APPROACH
143. When detailed allegations began to
arise in 2017 and then into 2017/18,
Chorus focused mainly on ensuring
that the relevant service companies,
Visionstream and UCG, were taking
what it considered to be appropriate
steps to manage the issue. Chorus’
response largely consisted of seeking
and receiving assurances from the
service companies that they were
meeting the terms of their contract
with Chorus and that their
subcontractors were complying with
the law.
144. In its communications about these
issues with MBIE and Crown
Infrastructure Partners Ltd (CIP – the
former Crown Fibre Holdings), Chorus
was responsive, but continued to
emphasise that the issues were
mainly ones for its service companies
or their contractors.
62
Ultimately,
Chorus’ view was that it had
contracted with major international
6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN

31 MARTINJENKINS COMMERCIAL IN CONFIDENCE
companies that should have been
able to manage these issues.
63

145. In response to queries from CIP,
Chorus passed on its services
companies’ initial high-level
responses without appearing to
critically test those responses in
detail. This prompted CIP to ask for
further clarification about the
allegations.
64

AN EMPHASIS ON ISOLATED
ALLEGATIONS
146. Chorus and its service companies’
initial reactions to the early allegations
show that they did not initially see the
issues as likely to be systemic or
widespread. In responding to queries
from CIP and MBIE, Chorus pointed
to the strength of their contracts with
service companies, including their
focus on both supporting technicians
and ensuring compliance.
147. Chorus, Visionstream and UCG
continued to respond reactively
throughout 2018, looking into
allegations as they arose. Allegations
were made directly to Chorus by
informants (usually anonymous
emails) or through complaints to

63 This theme was made explicit in Chorus employee to Chorus
employees, ‘Re: MBIE Investigation – Volunteer Labour Issue –
Update’ (9 March 2018); Interview with Chorus employees (n 38).
64 Chorus to Crown Infrastructure Partners (n 78).
field representatives of Chorus or the
services companies. Although Chorus
attempted to seek certifications from
its service companies on compliance
by all subcontractors within its supply
chain, it did not consistently get the
detailed responses it sought from its
service companies, leading to a case-
by-case reaction.
6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN

COMMERCIAL IN CONFIDENCE MARTINJENKINS 32

6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN
Figure 7. Chorus timeline of response to allegations

33 MARTINJENKINS COMMERCIAL IN CONFIDENCE
VARIABLE QUALITY OF
ASSURANCES
148. Chorus made contact with MBIE’s
integrated investigation team at the
suggestion of Crown Infrastructure
Partners in December 2017. Following
this initial contact, Chorus sought
detailed assurances from
Visionstream and UCG that all their
subcontractors were complying with
the law. This was intended to
demonstrate to MBIE that Chorus had
taken ‘reasonable steps’ to ensure
there were no breaches of labour
laws.
65

149. It should be noted that Chorus
emphasised the importance of co-
operating fully with MBIE to address
any issues. Visionstream, UCG and
Chorus all engaged with MBIE and
Chorus received feedback that MBIE
were satisfied with the information
they had been given.
66

150. However, the quality of responses
that Chorus received from its service
companies varied. For example,
Chorus’ management wrote to
Visionstream expressing their concern

65 Chorus to UCG and Visionstream, ‘Re: MBIE Labour
Inspection. Detailed Response’ (28 February 2018).
66 Chorus employee to Chorus employees (n 79).
67 Chorus to Visionstream, ‘Subcontractor Issues’ (2 March 2017).
68 Visionstream and Chorus, ‘RE: Subcontractor Issues’ (16
March 2017); UCG and Chorus, ‘Proposal Re Ongoing
Management of UCG Delivery Partners’ (13 March 2017).
at its slow response to requests for
information. Chorus sought a
commitment from Visionstream to
work with Chorus on media issues,
and to certify that the company and
its contractors complied with the
contract with Chorus.
67

151. Both UCG and Visionstream provided
assurances that their contracts with
subcontractors required the
subcontractors to comply with the
law. For example, UCG specified that
the contracts explicitly prohibited
subcontractors from employing illegal
workers, and required them to provide
employees with wages and conditions
that meet legal requirements, and
required them to obtain approval to
sub-contract further.
68
Visionstream
asked all its subcontractors to confirm
and declare that they were adhering
to their obligations under the
contracts.
69,70

152. Despite these internal audits and
requests for certification, Chorus,
UCG and Visionstream identified far
fewer than the 74 cases identified by
the Labour Inspectorate. Only 18
subcontractors were identified to
have cases of alleged poor labour
69 Visionstream and Chorus (n 86).
70 Chorus sought detailed assurances from UCG again in June
2018, including declarations from all UCG subcontractors that they
complied with employment, immigration, and health and safety
law. UCG provided a relatively high-level response, pointing to
‘robust contractual arrangements in place with Subcontractors and
the policies and procedures in place to address Chorus’ concerns’.
practices across UCG and
Visionstream before the Labour
Inspectorate’s announcement.
153. The majority of these cases were
identified by informants rather than
through the internal process. While
we accept that detection of serious
migrant exploitation is challenging,
the majority of the allegations
uncovered by the Inspectorate’s
investigation relate to lower level
breaches of labour standard including
poor record keeping which is
somewhat easier to detect.
RESPONSES THAT FOLLOW
TRADITIONAL EMPLOYMENT
PRACTICES
154. Each time it was made aware of an
allegation, Chorus sought assurances
from the service company that
everything was in hand, and asked
them whether they had identified any
issue.
155. The service companies’ actions
typically included:
Email from Chorus to UCG, 7 June 2018; Letter from UCG to
Chorus 26 June 2018.
71 For example, requesting employment contracts and payroll and
time sheet records for the last 12 months, examining 12 random
weeks for 7 random persons. Email from UCG to Chorus, 31 May
2018.
a. Obtaining verbal and/or written
assurances from subcontractors.
b. An audit of payroll and workforce
records (selecting particular
weeks at random), carried out
internally by service company
staff.
71

c. Speaking to specific workers who
were alleged to have been
underpaid or exploited.
156. Where evidence of a breach of labour
standards (or use of volunteerism
following the ban) was identified,
subcontractors were stood down or
‘blacklisted’ from working on the
Chorus network.
157. However, in at least one instance, a
subcontractor was audited and
cleared, and later had similar
allegations made against them.
72
This
suggests that the assurance process
was not robust to the complex nature
of migrant exploitation. In our
experience, dealing with allegations of
labour and migrant exploitation is not
as simple as asking delivery partners,
or individual technicians, whether the
alleged behaviour occurred. It is
72 UCG to Chorus, ‘Re: Contacts with Whom You Can Know More
about Companies S**t’ (2 July 2018). “Given the earlier
anonymous complaint ... we reopened our investigations into (x).
Prior to that, we had audited their payroll for a 14 day period in
April which showed no irregularity”. The allegations were both
historical and recent. Neither Visionstream nor UCG identified
recent breaches, but did find evidence of volunteerism from 2016.
6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN

COMMERCIAL IN CONFIDENCE MARTINJENKINS 34
unlikely that assurances can be taken
at face value.
158. The assurance process undertaken by
service companies and passed on to
Chorus for further scrutiny was not
sufficient to uncover the complex and
often hidden nature of migrant
exploitation and the mixed incentives
involved. In our view, the process
could have benefited from:
a. Less reliance on self-declarations
as a means to convey legal
compliance.
b. Improving processes that
anticipate or allow for the lack of
incentive for exploited workers to
speak up or admit to exploitation,
because of a possible fear of
reprisal or loss of employment
(and therefore loss of their visa),
or because they do not see
themselves as exploited.
c. Improved ability to triangulate
data from payroll records,
employment contracts and other
sources of personnel related
data.

73 UCG to all Delivery Partners, ‘IMPORTANT: Unpaid Labour at
UCG’ (15 November 2017). Chorus also emphasise that
volunteerism was not previously acceptable on their network.
74 Interview with Chorus, Visionstream and UCG (n 37) 2.
AN IMPROVING APPROACH
TO AWARENESS
159. As issues continued to arise, Chorus
and the service companies took a
number of steps throughout 2018 to
improve processes and arrangements
in order to minimise the risk of
migrant exploitation. These are
particularly key given the extensive
use of migrant small businesses, with
the majority of subcontractor
businesses consisting of one to three
technicians. The service companies
expressed concerns about
subcontractors’ management
capability and the potential for
mistakes because of a lack of
familiarity with local laws.
160. The steps taken through the period
from original allegation through to the
commissioning of our review
included:
a. A clear ban on volunteerism,
informing all subcontractors that
the use of volunteers was not
acceptable on Chorus’ network.
73

b. Standing down any
subcontractors with identified
75 UCG, ‘UCG Delivery Partner – Employee Rights (Wages and
Legal Right to Work)’ (UCG 2018).
76 UCG, ‘Delivery Partner Wage Complaints and Audit Policy, 27
June 2018.’ (Universal Communications Group Ltd 2018) Policy.
breaches of employment
standards or migration settings.
c. Working with Immigration New
Zealand to support exploited
migrant workers to come forward
without penalty, and to allow
them to quickly change their visa
and shift to other employers.
74

d. An increased focus on ensuring
workers and employers are aware
of relevant rights and legislation,
as well as how to raise issues
using whistleblower policies
through a series of ‘toolbox talks’
with their workforces in mid-2018
and a review of induction
policies.
75

e. Developing improved audit
policies, including rolling annual
audit of delivery partners and a
requirement for delivery partners
to declare each time they submit
an invoice that all remuneration
and payments to its employees
and subcontractors meet legal
and contractual requirements.
76

f. Chorus seeking detailed
assurance from tenderers (while
retendering its Field Services
Agreement, which covers
maintenance of the existing
Note that this policy, while a useful first step, suffers from similar
shortcomings as highlighted in the previous section.
77 Chorus to MartinJenkins, ‘Re: Doug Martin Independent
Review of Contracting Model’ (28 November 2018).
copper network) about the
processes and systems they
would put in place to ensure their
workforce complied with
employment law.
77


6.0 LABOUR EXPLOITATION IN THE CHORUS SUPPLY CHAIN

35 MARTINJENKINS COMMERCIAL IN CONFIDENCE
161. Our review, and particularly our
interview with the researcher
currently heading the Government’s
research into migrant exploitation,
confirmed that there are few
examples, either nationally or
internationally, of companies who
have successfully fully mitigated the
exploitation risk.
78
The risk is complex
and hard to deal with.
162. For example a recent Australian
Government Report of the Migrant
Workers’ Taskforce acknowledged
that there can be difficulties in
detecting, proving and quantifying
workplace exploitation of workers
generally. In Australia, the Fair Work
Ombudsman has also undertaken a
number of formal inquiries and
investigations into the treatment of
visa holders in Australian workplaces.
For example in 2 017–18, they audited
over 4,500 workplaces using
intelligence-led targeted campaigns to
examine specific industries, regions
and businesses across Australia.
Migrant workers and temporary visa
holders continue to be one of the
Australia’s most vulnerable worker
cohorts, and are continually over-
represented in disputes as well as
compliance and enforcement
outcomes.
79


78 Interview with Stringer (n 75).
163. However, we reviewed a number of
projects similar to Chorus’ work
programme that sought to address
and mitigate labour exploitation. We
identified the following key features:
a. Significant upfront investment in
understanding the state of the
supply chain and likely future
concerns, as well as strategies to
avoid or mitigate them (for
example predicted periods of
reduced demand).
b. Ensuring the procurement
approach is the ‘best fit’ for the
specific project, rather than just
‘best practice’ given the
complexity of some of the labour
market issues identified through
our review.
c. An openness to reviewing the
approach over the life of the
contract – either through creating
new channels (such as help
desks) or tightening the settings
(such as a stronger employment
relations focus later in the
contract).
d. Strong ongoing engagement with
the main contractors in order to
strengthen interpersonal links.
This relationship results in a better
flow of information, which can
79
Report of the Migrant Workers Taskforce, March 2019
help mitigate and manage issues
as they arise.
e. A commitment to focusing on
labour market issues, including
locating the workforce related
function appropriately within the
organisational structure (for
example, with personnel reporting
directly to one or more senior
executive members).
164. One useful and practical example is
Crossrail’s approach to employment
relations in the UK (Example 1). While
it is an example of a response to
managing labour exploitation risk
within a large construction project,
the scale of the construction and
resources available to mitigate risks
are not completely analogous to New
Zealand or the specific challenges in
the Chorus supply chain.



ALTERNATIVE
MODELS

COMMERCIAL IN CONFIDENCE MARTINJENKINS 36
































Source: Case study: Employment relations on a major
construction project.
80


80 A Eldred, ‘Crossrail Learning Legacy: Employment Relations
on a Major Construction Project’ (Crossrail Limited 2018) Case
study.
7.0 ALTERNATIVE MODELS
What is Crossrail?
Crossrail Limited is the company set up to
build the new railway that will become
known as the ‘Elizabeth line’ when it opens
through central London. It is a wholly owned
subsidiary of Transport for London (TfL) and
is jointly sponsored by TfL and the
Department of Transport.
The new railway is to be high frequency and
high capacity, linking 41 stations over 100
kilometres from Reading and Heathrow in
the west, through central London, to
Shenfield and Abbey Wood in the east. The
project required 42 kilometres of new
tunnels, 10 new stations, over 50 kilometres
of new track, integration of three signalling
systems, and upgrades across existing
infrastructure.
Crossrail is a multi-billion pound budget
project, with high levels of public and media
interest. There are multiple main contractors
and subcontractors on one project.

# Measure Crossrail
1 Code of Practice • Code developed at later stages of the project, by agreement and covered procedural requirements only.
• No Tier 1 contractual obligation.
2 Procurement • Crossrail Head of ER interviewed preferred bidders.
• Tier 1 contractors encouraged to check prospective subcontractor’s ER resources and understanding of procurement.
3 Reporting Tier 1 monthly ER reports submitted every eight weeks.
4 Information and
coordination meetings
Monthly meeting, chaired by client and attended by all Tier 1 ER leads.
5 Performance reviews Regular contract-level meetings, attended by client and Tier 1 project managers, as well as respective ER personnel. Held as part of a more
formalised ER performance assurance framework process.
6 Payroll audits • Regular audits of Tier 1 and subcontractor employers’ compliance with minimum employment standards.
• Responsibility for subcontractor audits assigned to Tier 1s from the outset, although coverage, quality and outcomes of Tier 1 audits
checked as part of performance assurance process.
• Occasional direct audits of Tier 2 labour suppliers by client cost verification team, especially during tunnelling phase of project.
7 Helpline Confidential workforce complaints received via client’s public helpline, rather than dedicated concerns service. Cases referred on to relevant
Tier 1 for investigation and report back.
8 Risk management • Client kept main ER risks under review as part of its own formal risk management process.
• Performance assurance process used to encourage Tier 1s to manage ER risks more systematically as well.
9 Executive level
involvement
ER matters one of the topics covered in regular exchanges between client and Tier 1 executives. Specific performance concerns escalated to
client Programme Director and/or Construction Director where necessary.
10 Intermediate level
involvement
Regular contact (both formal and informal) between ER specialists, project managers and other relevant functions (e.g., health and safety,
security, employment and skills, legal, procurement and commercial).
11 Trade union liaison Thrice yearly information sharing meetings. Client represented by Delivery Director, Talent and Resources Director and Head of ER. London-
based local officials represented all three (subsequently two) remaining construction trade unions.
12 Demonstrations and
disputes
Off-site demonstrations managed at contract-level by Tier 1 contractor(s) affected. Notification procedure operated by client to advise site
teams and external stakeholders (e.g., Transport for London) about any anticipated demonstrations.


What did the strategy involve?
Example 1. Employment relations in the Crossrail project