The Government has acted to maintain vital services that keep 6000 people with disabilities safe overnight - but a union is labelling the move a failure.
Two wholly-owned subsidiaries of IHC New Zealand have been placed into statutory management while IHC appeals landmark rulings by the Employment Court.
The argument is over what 3000 staff working for Idea Services and Timata Hou should be paid for what is known as sleep-over nights in order to look after about people with intellectual and other disabilities.
In rulings last year, the Employment Court agreed with workers that they should receive an hourly rate rather than an allowance of $34 for being on the premises between 10pm and 7am.
But IHC chief executive Ralph Jones says it cannot afford the costs resulting from the rulings, saying it would leave IHC with a liability of $176 million in back pay and $33 million each year in additional wage costs.
IHC says putting the subsidiaries, which are funded by the Ministry of Health and the Ministry of Social Development, in statutory management is the best option.
Wider issue, says minister
Health Minister Tony Ryall says the issue is far wider than Idea Services and Timata Hou, with another 100 providers offering the services throughout New Zealand.
Mr Ryall says the court rulings - if they stand following the appeal later in October -could affect a wide range of groups, including schools, aged care, hostels and businesses employing "sleep-over" staff.
The Health Ministry says the services cost $378 million a year and that could rise by an extra $70 million a year, not including back pay.
The ministry's acting head, Andrew Bridgman, says statutory management ensures that services will continue unaffected while legal matters are resolved.
Sir John Anderson, the statutory manager of the IHC firms, could not be reached by Radio New Zealand on Tuesday.
More funding needed, says union
The Service and Food Workers' Union says the decision to put the IHC firms into statutory management is a failure and the Government needs to fund the sector properly.
Union national secretary John Ryall says the Government needs to acknowledge that disability support workers have been ripped off for 20 years.
The chief executive of Spectrum Care Trust, whose organisation houses about 1000 people with intellectual disabilities, says the IHC decision has huge implications for the whole sector.
Chris Harris says funding has failed to keep pace with inflation over several years, and the Government has a responsibility to step in.
The chair of the Parent and Family Resource Centre, Colleen Brown, says carers must be paid properly if people with disabilities are to be safe in their homes.
Ms Brown told Checkpoint on Tuesday there is a cavalier attitude by those in authority toward the people who work as carers.
The Labour Party says the Government should bail out the IHC by increasing its funding, so it can pay its overnight staff more. Mr Goff says if Labour was in power, it would increase funding for sleepover duties, and so should the National Government.