By Nikki Mandow
The government is cracking down on backpacker hostels routinely using foreign tourists as free labour, in what unions say is in blatant disregard for the law.
In exchange for accommodation foreign "volunteers" vacuum, clean, make up beds, and work in reception.
Unite union national secretary Gerard Hehir said there were no employment contracts, noone paid tax nor ACC, and the practice penalised other accommodation providers employing people legally.
"You can have two businesses side by side, and if one has "volunteers" doing the cleaning, and they are not paying tax, their costs will be substantially lower. The hostel next door, trying to do the right thing, maybe even trying to pay a living wage, is under extreme pressure because their costs are much higher."
Mr Hehir said some foreign backpackers were exploited, working for up to 32 hours a week. And if they had an accident there was no protection, he said.
"If they are seriously injured, they can lose tens of thousands, even hundreds of thousands of dollars in compensation."
The problem is likely to increase when the minimum wage increases in April, as hostels try to cut costs, he said.
Labour Inspectorate regional manager David Milne said the law is clear. If a business is making an economic gain from the work being done, and the worker's hours are controlled, the person is an employee, not a volunteer.
"We take this issue seriously as these practices put workers out of pocket and undermine others in the industry who do meet all their obligations.
"It also damages the prospects of people seeking employment in the industry and takes advantage of the good nature of travellers who may not know what their employment rights are."
The Labour Inspectorate went out at the beginning of last year and found a number of hostels "disguising employees as volunteers".
Initially, hostels were given a grace period to move volunteers to employment, and the inspectorate has also been working with industry bodies on an information campaign.
But this year they are beefing up their operations, with a plan to conduct sting operations in around the country over the next six months, Mr Milne said.
Still, action is hampered by a shortage of inspectors. At the moment, there are 60 inspectors, with the numbers due to rise to 110 by 2020.
Meanwhile, Mr Hehir said dodgy practices weren't restricted to hostels. The Willing Workers on Organic Farms scheme has also seen foreign tourists used as slave labour in some cases.
"The co-called 'willing workers' become very unwilling. And even if they are willing, there's always someone who's going to take an extra step and exploit them further and further."
And there have been cases where school students on unpaid "job experience" have found themselves cooking chips in a cafe one day a week for months on end.