Budget lists case on sleepovers as fiscal risk for the Crown

While millions of dollars of claims relating to sleepover pay have yet to be determined, the Government has listed the issue as an unquantified risk in this year's Budget.

In the Budget section on fiscal risks, the Government notes that while the Employment Court decisions on this are being appealed, "an unsuccessful result would require consideration of the repercussions for the Crown".

So far, the Ministry of Health has not been involved in the court proceedings, something the opposing parties in the case, Idea Services and the Service and Food Workers Union, have both criticised.

Estimates of the potential cost to the Government suggest it could be more than $200 million in back pay and extra tens of millions of dollars annually to a variety of organisations in the community health and disability sector.

The latest step in the case of community house worker Phillip William Dickson was the dismissal last month by the Employment Court of an application by his employer, Idea Services (an IHC service), for a stay of proceedings until the appeal process was finished.

This action followed two Employment Court rulings last year.

One was that sleepover shifts performed by Mr Dickson for $34 should be determined as work and therefore subject to the payment of the minimum wage.

The other related to whether averaging of wages over a pay period could meet the requirements of the Minimum Wage Act.

The court ruled against the idea of averaging wages over a pay period to meet the minimum wage requirements, accepting the union argument that each hour needed to be paid at the minimum rate.

The rejection of a stay of proceedings is expected to result in a flood of applications to the Employment Relations Authority from sleepover workers.

Service and Food Workers Union national secretary John Ryall said Mr Dickson and between 1600 and 1700 members were ready to lodge claims for up to six years' wages arrears.

While the amount of these claims would not be quantified at the time of filing, it is estimated they could amount to more than $100 million.

In its interlocutory judgement last month, the full Employment Court said employees, whose possible claims for arrears of wages would have to be reduced to the maximum six years allowed, had a vital interest in making their claims promptly "and ought not to be dissuaded from doing so".

However, it also urged the ERA to delay any final determination of claims based on its previous judgements on the issue until the end of the court action.

If that did not occur, a stay might be properly sought in those cases.

The court said both of its previous decisions were "potentially of such general importance and wide application that they may well be finally decided in the Supreme Court".

The court accepted the sums of money involved were "very large indeed" and beyond the present means of the mainly state-funded Idea Services.

The court said the parties had overlooked the fact that while the key issues of principle had been decided and it appeared very likely Mr Dickson would be entitled to some arrears of wages, that had not yet been decided and the amount of any arrears had not been fixed.

As a result, no judgement had been entered or other order made which could be executed.

Last month, Idea Services applied to the Court of Appeal for leave to appeal the two earlier Employment Court rulings.

The court has reserved its decision.

- elspeth.mclean@odt.co.nz


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