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Two companies that care for disabled people have been put under statutory management because they don't think they can meet a court-ordered requirement to pay workers for the time they are asleep at their care houses.
Commerce Minister Simon Power said the Government had put Idea Services and Timata Hou, wholly-owned subsidiaries of IHC New Zealand, into statutory management.
The companies, registered charities funded by the health and social development ministries, sought the move over concerns they could not afford to pay carers engaged in sleep-over duties.
Last July a benchmark Employment Court ruling found against IHC on paying for sleep-over hours.
Under the ruling, staff staying overnight at the IHC's houses are entitled to get at least $12.50 per hour for their 10-hour shifts. Staff currently receive a shift allowance of $34 per night. IHC has about 250,000 of the sleep-over shifts per year. NZPA understands companies could face millions in back pay claims.
Mr Power said IHC itself was not affected and there was no suggestion of wrongdoing.
"Rather, statutory management is simply intended to preserve the provision of services by the companies pending the resolution of the litigation and subsequent negotiations."
An appeal will be heard later this month.
In the interim the statutory management would prevent the companies from folding suddenly and leaving those in its care homeless.
"The Securities Commission recommended this course of action in the public interest to preserve the continuity of services provided by the companies and to enable the affairs of the companies to be dealt with in a more orderly and expeditious way.
"The Securities Commission advised that it was satisfied the companies had considered all alternatives to statutory management and that there is no other way of protecting the public interest in providing services to a vulnerable section of the community, and preserving the interests of the carers and the companies' creditors."
Sir John Anderson was appointed statutory manager along with a committee to advise him made up of: the chief executive of IHC and the two companies, Ralph Jones, IHC national president and a director of Idea Services, Donald Thompson, and IHC National Vice-President and a director of Idea Services, Shelley Payne.