KiwiRail is being taken to court after the government ruled foreign engineers who worked on new trains were probably not covered by New Zealand's labour laws.
The Rail Maritime Transport Union is taking the court action on behalf of 26 Chinese contractors who worked in KiwiRail's Wellington workshops last year, employed by the Chinese companies that made the locomotives.
The action comes after an investigation by the Ministry of Business, Innovation and Employment failed to find evidence of breaches of employment laws or identify welfare issues relating to the workers.
But the union said it was unclear whether the men were covered by New Zealand law and it was seeking clarification from the Employment Relations Authority.