The Health Minister is dismissing calls for the Government to pay an estimated $500 million wage bill after disability support staff won a court victory.
The Court of Appeal has ruled that disability support staff are working when they do sleepover shifts and must be paid the minimum wage for every hour spent at care homes.
The decision follows a legal challenge by IHC to an earlier Employment Court ruling.
IHC has about 800 care homes throughout New Zealand, each with about five intellectually disabled residents. It says the ruling is devastating and the organisation's future is bleak unless it gets financial help.
IHC and children's support service Barnardos on Thursday asked the Government for financial assistance to help them meet the costs.
Health Minister Tony Ryall says advice from his ministry suggests that back-pay would cost up to $350 million and an increase in wages of over $50 million per year.
"So you're looking at a $500 million price tag over the next three years in health alone."
Mr Ryall says Court of Appeal ruling is very significant for the health budget and the Government will take some weeks to consider the best way to respond.
However, he told Checkpoint the Government is not financially responsible for the costs.
"The liability does not rest with us and we are not going to shell out $500 million. What we want to do is try and find a way that is affordable for everybody."
Service cuts threatened
Disability care organisations say they will have to cut back services unless the Government amends the law or puts up more money for overnight sleepover rates.
Idea Services is the service arm of IHC and says the additional wage bill to the organisation is unknown for now.
Northern region general manager Sean Stowers told Nine to Noon that cutbacks are possible unless more funding is generated to meet its bill.
Ms Stowers says the worst outcome would be the closure of homes, but the immediate impact is uncertainty for people with disabilities.
Barnardos says its unable to cover new wage costs the court ruling has directed it to pay. Chief executive Murray Edridge says the added wage burden he now faces totals $250,000 a year, not including back-pay.
Public Service Association national secretary Richard Wagstaff says it is up to the Government to give adequate funding to IHC and other care providers.
Hundreds of workers have lodged similar court action against their employers, supported by their unions.
Vincent Harding, who works for care provider Spectrum, says the Court of Appeal ruling has given him hope, but he is worried IHC will appeal against the decision.