IHC facing ruin after multi-million pay order

Health Minister Tony Ryall says the extra cost to the public health system could be up to $40 million a year. Photo / Mark Mitchell

The IHC is seeking a lifeline from the Government as it grapples with the implications of an Employment Court case which could bankrupt it by forcing it to pay $80 million in backpay and an extra $20 million a year in wages.

The IHC is seeking leave to appeal against the ruling, and the Government is considering joining the appeal.

The case involves employees who are required to sleep on their employers' premises and be on call.

"We have to appeal," said IHC communications manager Philippa Sellens. "We have no money to pay what it would cost us to cover this."

The IHC was looking to the Ministry of Health, its primary funder, for a solution.

The case may have implications for other employees, such as those who look after the elderly.

The Service and Food Workers Union, which took the case to the court, said it had some sympathy for the IHC and it was time for the Government to get involved.

The case, taken on behalf of Levin care worker Phillip Dickson, was about the pay rates for employees who have to sleep over at houses with IHC clients, and how their pay is calculated.

The Employment Court has found that such employees should be paid the minimum wage - now $12.50 an hour.

Mr Dickson and others are paid $34 a night for eight to 10 hours, so payment can be as low as $3.40 an hour.

Workers have the right to claim up to six years' backpay.

Figures supplied to the Employment Court showed it would cost about $80 million in backpay and about $20 million a year extra.

Mr Dickson is one of about 6500 carers working for the IHC's Idea Services, which handles about 3500 clients receiving community-based care.

The case is divided into two main issues. The court found this year that the minimum pay rate should apply to employees sleeping over.

The more recent issue was whether employers were able to calculate a fortnightly pay based on an average of not less than $12.50 an hour for the total number of hours worked in the pay fortnight.

That would have meant the $3.40-an-hour rate at night could have been offset by a higher rate of $17.66 earned for shift work, thereby avoiding the minimum pay entitlement.

The court last week found that "averaging" was not acceptable under the Minimum Wage Act.

Health Minister Tony Ryall said the extra cost to the public health system could be up to $40 million a year.

"It's enormous. It's an incredible potential cost to the health service and to other providers.

"It's a big-ticket item potentially when there is not a lot of money to throw around anywhere."

There were also flow-on effects for private care providers.

Mr Ryall said Crown Law was considering whether his ministry should join the IHC in seeking leave to take the decision to the Court of Appeal.

Asked if the Government was considering legislating against the decision, he said nothing had been given full consideration.

Service and Food Workers Union secretary John Ryall said "a whole lot of chickens are coming home to roost".

"This is a case that has been sitting around for some time which the union has picked up and taken," he said.

"But it is essentially an issue that needs to be sheeted back to the Government."

CASE STUDY

Service and Food Workers Union national secretary John Ryall said a worker owed six years of backpay could expect to get up to $100,000.

One such worker is Kingi Martin, 41, who has been working as an overnight carer for six years.

He said a back-payment would be welcomed, but it would not have had to be this way had IHC set fair pay for carers.

"The overall argument is to be up to fair standards. Other [overnight carers] get paid $45 - some organisations get $52 - but we get $34," Mr Martin said.

"Of course it's not fair. That's why we went out for as high as we could get."

Mr Martin said the job - helping others who could not help themselves - was empowering and encouraging.

But it was at many times a difficult and hard job: "We have to be up at the drop of a dime - you're running from house to flat - to make sure they [IHC residents] are all right, all hours of the night."