One in four farm workers do not have a written employment contract and farmers have been told to get their paperwork in order.
Thousands of farmers could face fines of thousands of dollars each, if they were caught.
The information was revealed in a Federated Farmers/Rabobank farm employee remuneration report, the Southland Times reported.
Waitaki MP Jacqui Dean called on the farm employers who did not have written employment agreements with their workers to "do the right thing and get (your) paperwork in order".
Federated Farmers president Don Nicolson said it was a worry to see so many farm businesses so exposed by not having written employment contracts.
"While good to see 9 percent more farm businesses becoming compliant over the past year, there's still this huge hole."
Fault lay on both sides, with a responsibility on the farmers to ensure the agreements were in place and on the workers to ask for them, he said.
Invercargill employment law expert Sarah McKenzie said it was illegal to hire a worker without a written agreement, with companies facing fines of up to $10,000 and individual bosses facing fines of up to $5000 for doing so.