Employment / Workplace

Sleepovers - Workers Should Be Paid

Yesterday's Court of Appeal decision upheld an Employment Court ruling, which found that workers doing overnight sleepover shifts should be paid the adult minimum wage for every hour of the shift (currently $12.75 per hour).

After last year's Employment Court decision, the appellant, Idea Services (an IHC subsidiary), was placed in statutory management by the Government with tens of millions of dollars in backdated wages owing. In anticipation of yesterday's ruling, other providers took immediate steps to mitigate their loss by reducing their overheads and changing their remuneration arrangements. At the time, the Health Ministry said the ruling would cost between $400m and $500m to cover five years of back-pay for all providers.

Given the wide-ranging consequences of this decision, the legal issues determined by the Court of Appeal really are a side issue. Not unlike last year's political hot potato involving the Hobbit, this decision divides unions and industry, leaving the Government between a rock and a hard place.

On the one hand, disability workers and their unions say the decision is "a day of victory", asserting the Government has underfunded this industry for years. On the other hand, without additional government funding, the industry providers simply cannot afford to continue to operate if they have to pay workers the minimum wage (and address the not so small issue of backpay).

Likely outcome of this decision?

Idea Services can appeal the decision to the Supreme Court (with a less than 50% prospect of success, we think);

  • The Government can "honour the Court of Appeal decision and fund the wage increase" (as Labour's, Darien Fenton demands), although it seems unlikely that the Government will put up the necessary funding to meet future costs and deal with the issue of backpay;
  • The Government can amend the legislation again (ie do "another Hollywood"), possibly to allow for "averaging" of pay as argued by Idea Services;
  • The Government may meet with unions, disability support providers etc to find a durable solution.

If the Government does not take any action, organisations like Idea Services, will have to cut their costs to comply with the decision. Idea Services has already indicated that without Government funding, cutbacks are likely, with the possible outcome that it will be required to close homes.

Watch this space.

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The contents of this publication are general in nature and are not intended to serve as a substitute for legal advice on a specific matter. In the absence of such advice no responsibility is accepted by Brookfields for reliance on any of the information provided in this publication.


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