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The ministry's Labour Inspectorate visited two Otago dairy farms and 10 in Southland between December and early April during the second phase of its national dairy strategy.
Seven of the farms - one in Otago and six in Southland - were in breach of employment law.
About 70% of the 44 farms visited in New Zealand were breaching employment law.
Labour Inspectorate central region manager Kris Metcalf said all seven breaches in Otago and Southland were because of inadequate recording of employees' hours.
''The problem with poor time records is that it opens up the possibility of workers being underpaid,'' he said.
''This is why it's one of the issues the Labour Inspectorate cracks down on.''
''Enforceable undertakings'' were issued as a result of the breaches, which required farmers to take steps to address the issue within 28 days, he said.
''Farmers need to lift their game in complying with minimum employment rights and can expect a strong enforcement response from the next phase [of the national dairy strategy],'' Mr Metcalf said.
''There are financial penalties for not complying with employment laws, of up to $10,000 for individuals and $20,000 for companies.''
Federated Farmers' Otago president Stephen Korteweg said it was ''always disappointing'' to hear of breaches, but the first step to solving the problem should be education.
It was ''heartening'' to hear enforceable undertakings were issued as a first step rather than financial penalties, he said.
Most farmers would have breached the law ''more through ignorance as opposed to blatantly not adhering''.
''There needs to be a little bit of common sense,'' Mr Korteweg said.
''I don't condone people over-working workers on a common basis but there needs to be a little bit of space for overs and unders ... with farming not being a nine-to-five job, there's going to be unders and overs.''
However, the inspections should serve as a wake-up call for those flouting the law, he said.
Federated Farmers employment spokeswoman Katie Milne said the organisation could help farmers comply with their obligations as employers.
The Labour Party's labour spokesman, Andrew Little, said it was ''disappointing that one of the sectors in our economy held up as hugely successful should be so lax at observing the basics''.
''Having a written employment agreement is not hard and observing it should be seen not as a grudging chore but as showing respect for your farm workers,'' he said.
Mr Metcalf said 13 inspectors carried out inspections from Kaitaia to Invercargill and found 31 farms breached employment law.
In one case, an Auckland farmer was required to pay a worker $6000 in arrears.
More than 20 enforceable undertakings and one improvement notice were issued nationwide, he said.
The next phase in the national dairy strategy would focus on farms employing migrant workers.