Rest homes seek legal advice as pay equity settlement causes funding squeeze

Dozens of rest home owners are seeking legal advice around redundancies and potential closures as a consequence of a recent landmark pay equity settlement.

In April the Government announced a landmark deal to bump up the wages of low-paid health care workers.

But the deal which landed 55,000 health care workers a pay rise now has many rest homes struggling to scrape together the bigger pay packages.

Victoria Brown runs a small rest home in the Auckland suburb of Devonport, looking after patients with dementia.

While she's happy the Government's boosted the wages of her care workers, Ms Brown says the settlement isn't music to everyone's ears.

She says the funding formula is based on rest homes' bed day rate, so smaller facilities receive less money.

"If you've got your beds full then you get paid for every bed that’s full. But if you've dropped down to about 80 percent then those beds aren't being paid for."

"But you still have to have the staff on and you still have to pay out the same amount of money."

"You've got some people that up gone straight up from $15 or $16 up to $21.50."

She says the increase often isn't covered by the Government's bed day rate.

Many others in the industry are facing the same situation, and today held a meeting discussing their concerns.

An employment lawyer provided legal advice at the meeting for owners and managers looking to restructure, or with concerns about potential closure.

Long stay residential care hospital manager Barbara Spence says her facility has a large number highly trained staff who are now on the highest pay parity - at $23.50 per hour,

"We’re not actually being funded for the number of staff that we have at level four."

She says they may have to reduce the number of experienced staff, or cut their hours to keep their doors open.

Rest home manager Sharon Jordan also says she’s heard of other facilities that have had to make workers redundant, or let staff go.

The Ministry of Health is now looking at the impact of the settlement on care workers and their employers.

Director of Service Commissioning Jill Lane says if problems arise, the Ministry will work in partnership with providers, DHBs and Ministers to resolve them.