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Two staff at Paremoremo prison have been fired and one has resigned for their role in getting inmates to work on prison employees' homes.
The action comes as the spotlight dims on the prison's Corrections Inmate Employment scheme, which has been the subject of several corruption allegations.
Two other investigations into whether the scheme was exploited by staff for private gain have found no evidence of improper conduct.
The Corrections Department admitted yesterday it was impossible to ensure that all staff were honest.
"Between May and August last year, two low-security prisoners were escorted on four occasions to undertake work on one property, that of an employee," said the scheme's manager, Brent Maughan.
"It was clear that some employees of Corrections were benefiting personally from prisoner labour, which is a direct contravention of the code of conduct.
"Of the four people investigated, one was exonerated, one resigned and two were dismissed."
The prisoners are understood to have helped build a porch at the back of a staff member's house.
One of the four staff scrutinised is understood to be a senior manager of the scheme who was also investigated for having work done on his boat at the prison workshop.
"Incidents such as these are taken extremely seriously and, when proven, staff will lose their jobs, as happened in this case," Mr Maughan said.
The department has dismissed as baseless other allegations.
A former inmate had alleged that staff members gave food and other benefits to inmates working at the prison garage in exchange for work done on their cars.
It was also alleged that the prison workshop was used to refit a staff member's boat, but Corrections Minister Damien O'Connor has said the craft was a plywood dinghy being prepared for the Sea Scouts.
