A Taranaki dairy farmer who failed to pay the minimum wage or holiday entitlements has been ordered to pay out at least $87,000.

An investigation found Allan Marx of Vintage Farm Trust had seriously breached employment law, the Ministry of Business, Innovation and Employment (MBIE) says.

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A labour inspector first visited the farms in November 2014 as part of a routine audit of dairy farms in the region.

Two couples and a teenager were living and working between the two farms.

The couples were on joint employment agreements being paid between $25,000 and $33,000 each, which meant they were being paid well below minimum wage for the long hours they worked.

Joint employment agreements are illegal New Zealand; every employee must be given a separate written employment agreement.

The investigation revealed Mr Marx failed to correctly pay his employees for working on public holidays, opting to give an extra $50 instead of their minimum entitlements.

The issue had been complicated by Mr Marx's failure to maintain records of his employees' hours or keep copies of employment agreements.

"It is unacceptable for employers to take advantage of employees by failing to meet basic legal requirements like paying the minimum wage or keeping proper records," Labour Inspectorate regional manager Natalie Gardiner said.

The Employment Relations Authority (ERA) has ordered Mr Marx to pay $64,000 in arrears, and a $23,000 penalty.

The arrears paid so far have gone to the five employees who were working on the farm at the time of the inspection, as well as to six former employees. Mr Marx has accepted further arrears are owed as a result of his failure to pay minimum wage or for public holidays, the ministry said.