The Ministry of Health says the statutory management of IDEA Services Ltd is a pragmatic solution to ensure there is no disruption to disability support services for a significant portion of the 7,000 people in community residential services.
The Employment Court decision requiring IDEA to backdate and pay the minimum wage to support people for the time they sleepover in residential facilities would make current services unaffordable for IDEA Services Ltd and potentially up to 100 plus other providers.
IDEA Services is appealing the decision and the appointment of a statutory manager means it can continue providing support for these clients until the Court of Appeal determines the substantive matter on 28 October.
The Employment Court ruling has placed IDEA Services in a financially untenable position of significant back pay and interest. The directors of the company have been prudent in suggesting statutory management – the Ministry agrees it is in the best interest of the people they support and their families.
In the 2009 year, the Ministry funded $378 million of community residential disability contracts. Sleepovers are only part of the service yet the cost of this ruling is estimated between $400 and $500m in back pay alone across all providers over the previous five years.
In addition, the ruling would increase the cost of these services by an extra $60 to $70 million per year – an increase of between 16% and 19% which would make most of these services unaffordable in their current form.
This decision has potential ramifications for the wider support sector and the Ministry needs to wait for the Court of Appeal before commenting further. If the court decides sleepovers constitute 'work' in the more formal sense, we will need to work with the providers, unions and the wider health and disability sector to develop a sustainable long-term solution for about 7,000 residents.
The Attorney General has also been granted leave to intervene in the case because of the public policy issues of this case have the potential to extend beyond the parties to the appeal.
The most important thing for now is that this move ensures services to this group of clients and their families are not disrupted.