Labour Inspectorate: Bay of Islands the first to see 5 day sweep

Published 17 April 2025 | 2 min read

Compliance isn’t optional—but for many small business owners, it’s a challenge to stay on top of every detail. And last week, dozens of businesses in the Bay of Islands learned that the Labour Inspectorate isn’t waiting around.

Operation Orzo saw Inspectors conduct a five-day sweep through Kerikeri, Paihia, Russell and surrounding suburbs, walking through the doors of 58 retail and hospitality employers, no warning, no exceptions.

If you’re running a café, pub, liquor store or backpackers, this visit might’ve been to your business or a neighbour’s. These visits weren’t just to observe.

Inspectors were checking for concrete breaches of New Zealand employment law, with a particular eye on compliance with the Holidays Act, Minimum Wage Act and Wages Protection Act.

How this played out for local businesses

Labour Inspectors interviewed close to 100 workers about their pay and conditions. They walked into hospitality hotspots and retail stores, asked questions, requested records, and looked for signs of non-compliance, some intentional, others not.

While the full results of Operation Orzo haven’t been released yet, the message is already clear: employers in high-risk sectors should expect scrutiny.

Some businesses may get off with education and guidance. Others could face enforcement action once the data is reviewed.

The Inspectorate has made it clear that education is a starting point—but not an excuse for ongoing breaches.

Where things get complicated

The tricky part for many employers is that breaches don’t always come from bad intent. A miscalculation of holiday pay.

A recordkeeping system that’s behind on updates. Or even just not realising that topping up a visa worker’s pay with accommodation can breach the Wages Protection Act.

On the surface, these may seem like minor admin errors. But from a legal standpoint, they’re breaches that can cost you financially and reputationally.

Businesses who are “doing their best” may still fall short of what’s legally required, especially in industries where casual hours and high turnover make payroll complex.

The key lessons from Operation Orzo

• Don’t rely on informal practices - Customary approaches to pay and leave don’t always meet legal standards.
• Recordkeeping is non-negotiable – Incomplete or inaccurate wage and time records raise red flags fast.
• Hospitality is high-risk – Cafés, bars, and backpacker accommodations are being prioritised for inspection.
• Unannounced visits are the new norm – Expect Inspectors to arrive without warning and ask tough questions.
• Intent doesn’t erase responsibility – Even accidental breaches can lead to enforcement if they’re not fixed.

These insights are a wake-up call for all employers, not just those in the Far North. Labour Inspectors are planning more operations around the country in 2025.

This isn’t a one-off, it’s part of a larger push to lift standards nationwide.

What NZ employers should do now

Operation Orzo proves that the Labour Inspectorate is serious about boots-on-the-ground enforcement. If your business is in a high-risk sector or relies on casual or migrant labour, it’s time to tighten up your compliance practices.

Review your payroll systems, make sure your holiday pay is calculated properly, and update your employment agreements to reflect the law. Find NZ employee's rights and responsibilities here.

Seek advice if you’re unsure, the team at EQ Consultants can provide some recommendations.

Inspectors may educate, but ignorance won’t protect you from penalties. Staying ahead of these changes shows your team, and the public, that you’re committed to doing things right.

It also helps protect your reputation and avoid the cost of corrective action later on.