IHC, SFWU and Ministry of Health sleepover deal

Date Added: 1st September 2011 from Employers' Chamber of Commerce Central


Below is the full text of yesterday’s government announcement:

Press Release by New Zealand Government at  3:01 pm, 12 Sep 2011 
The Government will contribute $90 million towards phasing in the minimum wage for disability support workers on overnight sleepover shifts.  Health Minister Tony Ryall says "Cabinet this morning agreed to provide $90 million towards phasing in minimum wage rates by July 2013, and $27.5 million towards the back pay liabilities of the providers." IHC and other providers are also putting in money. 
"People with disabilities and their families can be assured that providing quality support remains a priority for this Government," says Mr Ryall.
The Health Minister says the sleepover agreement is a fair one.
The employers, the union and the Crown have agreed to seek to discontinue litigation currently in front of the Supreme Court. 
The government will also introduce legislation to Parliament before it rises to secure the agreement. 
The Agreement:
The Government will fund employers to pay 50% of the current minimum hourly wage to workers for sleepovers from 1 July 2011, and then 75% from 1 July 2012, then 100% from 1 July 2013.
The Government will also contribute $27.5 million for back pay which will be paid at 50% of the appropriate minimum wage for the period 1 July 2005 - 30 June 2011 to past and present employees in respect of all claims lodged to 2 September 2011.
ECCC Advice – Wait and See
The deal, brokered by the Ministry of Health, cannot be put in effect without enabling legislation – otherwise any payouts by IHC which are less than the applicable minimum wage at the time worked, will still be in breach of the Minimum Wage Act1983.  

For this reason we do not recommend that our members recommence their own negotiations with individual claimants at this stage. 

Although the Idea Services v Dickson case has been adjourned, it is still technically before the Supreme Court. Currently, the numerous sleepover cases lodged with the Employment Relations Authority are and remain stayed. We will let you know if the Authority’s position changes and the cases are reactivated. 

As the law stands, in the light of the Court of Appeal decision in Idea Services v Dickson in February this year, sleepovers are ‘work’ for the purposes of the Minimum Wage Act and the workers doing sleepovers are entitled to be paid at least the minimum wage for every hour of sleepover work. 
Subject to enabling legislation, any other deals which do not reflect the above and the particular circumstances of individual cases will still be unlawful.
   
Through our sister organisation, Business New Zealand, we have been lobbying for a more holistic approach to the problem, either looking at averaging pay/hours worked, or looking at recognising sleepovers as work but excluding this type of work (and potentially other similar situations) from coverage under the Minimum Wage Act 1983. 

The government may “do a Hobbit” and pass amending legislation very quickly to cover the specific IHC circumstances or as they have indicated, enlarge it to “the disability sector”, whatever that may mean legally. 

Until the draft legislation is available, it is difficult to comment on the likely scope of the intended changes to this legislation which are planned to be passed through Parliament before it rises in October this year.  
Once the legislation is drafted, we will be in a better position to assess whether to continue to defend legal challenges or seek other ways to resolve these claims.
 
In the meantime, employers in the disability sector should now be able to calculate their liabilities with greater certainty. For employers in other sectors there is no clarity. 

So, for the moment, our advice remains to wait and see. 

For specific advice contact your usual ECCC advisor or  
Susan-Jane Davies, Managing Solicitor at EMA legal, a division of ECCC 

DDI 04 470 9923  sjdavies@emalegal.org.nz