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The Department of Labour says the case of 22 Kiribati workers living in one house while working in Marlborough vineyards was the worst overcrowding it has come across.
The workers were among 70 Pacific Islands workers who arrived in New Zealand under the Recognised Seasonal Employer (RSE) scheme in May to work on vineyards, but they were sent home early when the work finished - leaving them out of pocket.
Ten of the Kiribati group have absconded and the department is urging them to turn themselves in before they are found by authorities and deported.
A department spokesman told NZPA the 22 people were living in cramped conditions in a three-bedroomed house.
He said the department inspected the house before the workers arrived and deemed it suitable for about six or eight people.
It had no idea more than 20 workers would be squashed into it, he said.
"It's clearly not acceptable.
"It's certainly the worst case of over-crowding we came across."
The department served a notice on the employer, Blenheim company Fore-Vintage Contracting, owned by Garry Maxwell-Smith, to sort out the accommodation.
An investigation into that situation is ongoing, the department said.
Its spokesman said the relationship between Mr Maxwell-Smith and his employees had broken down by the time the department inspector arrived, but they were able to find other work in the area for two months before returning home with empty pockets.
He said none of the workers had asked the department for money and in any case it was not the department's role to pay compensation.
"Our job is to ensure they are paid what they are entitled to, and that the working conditions are right."
He said the Blenheim case appeared to be an isolated one under the scheme, which was launched April 2007 and allows up to 5000 seasonal workers to be employed each year to plant, maintain, harvest and pack crops here.
Some employers had complained of the workers being unskilled in the work and he said in the future the department would be working with the Kiribati government to ensure workers were properly trained before arriving here.
There would also be an end of year review of the scheme and some employers would be audited as a routine matter, he said.
The Australian government is considering a similar scheme for Pacific Island workers, but has said it would ensure it did not make the same mistakes as the New Zealand Government.
- NZPA
* This story replaces an earlier incorrect version
