Home and community support services (HCSS) providers are struggling under the weight of increased costs associated with the pay equity settlement agreement. The realisation that providers will be more than $4.2 million out of pocket for staff annual leave entitlements alone has shocked the sector.

It is only now, following the completion of the annual leave liability assessment tool that the limits of the government contribution to annual leave entitlements have become clear.

A survey of Home and Community Health Association (HCHA) members showed that all providers who responded reported a funding gap on annual leave liability alone. The cumulated shortfall was in excess of $4.2 million.

HCHA chief executive Julie Haggie says the total will be even higher than this when taking into account the situations of those who did not respond to the survey.

Haggie says that the narrow definitions in the assessment tool mean that providers are receiving less than originally indicated by the government, due to narrow assumptions in the tool.

“The tool does not recognise many service elements that affect leave in our sector, such as wide variation in hours, ‘in lieu’ days, travel time and sleepovers. It also doesn’t recognise the increasing cost of historic annual leave over time.  The outcome has shocked us all.”

“Home support is provided one to one, hour by hour,” explains Haggie. “When a support worker takes leave, every hour with each of their clients needs to be replaced, with carers who are matched to them, at the right time and in the right place. There is more variability than there is regularity.  The only way to radically reduce outstanding leave in a short period of time would be to stop services to clients, and that is not acceptable.”

Home support providers have welcomed the increase in support workers’ wages and the government’s funding of this increase, but there has been great uncertainty about the amount they are expected to contribute to meet other pay equity costs.

Unlike the residential aged care sector, which opted to base their pay equity funding on an averaging formula, the HCSS sector chose to be funded on the basis of providers’ actual wage costs.

“It is fairer in a sense,” says Haggie, of the funding mechanism, “But we don’t know about the impacts of things like training costs and annual leave entitlements until they’re revealed.”

When it comes to the funding of training costs, Haggie says the gaps are head to measure.

“Until we know how many support workers may want to progress to Level 3 or 4, we’re not going to know by how much the funding will fall short,” she says.

E Tu’s John Ryall says that under the Care and Support Workers (Pay Equity) Settlement Act, which came into play on 1 July, every worker must be supported by their employer to get to a Level 4 qualification.

“There is no way around this and the union will support any care worker whose employer is refusing to support them to access level 4,” he says.

Haggie says the problem with this is that the HCSS sector doesn’t actually require a large number of support workers with a Level 4 qualification. Only a small percentage of the work carried out by the sector is highly specialised in nature.

Yet, owing to the new legislation, many support workers are understandably eager to jump straight to Level 4 as fast as possible to reach the highest pay bracket.

On the flip side, Haggie says there are support workers who find themselves in the Level 4 pay band due to their length of service or qualification equivalency, yet are unwilling to do the training. Therefore, their level of training does not align with their pay, leaving providers with expensive, but relatively untrained staff.

The pay equity deal has also revealed some relativity issues, which is creating tension within organisations. In the past, support workers would often progress to home support co-ordinator roles. As co-ordinators are not included in the pay equity settlement, many are now paid less than support workers, a job they once did. Nurses working in the HCSS sector are now also paid only fractionally more than Level 4 support workers.

Jim Magee, the chief executive of provider Nurse Maude, says some “really bizarre decisions” have been made around qualification steps and progression that would have benefited from provider input. He says providers were sidelined during the pay equity settlement agreement process.

Haggie says there is strong likelihood that home support services will be cut and jobs lost if the pay equity funding shortfall is not met by Government.

“Those organisations that survive will only be able to do so on the basis of reducing quality, choice and responsiveness and turning down the lowest paying contracts or services for clients with high needs.”

The pay equity settlement agreement has certainly taken its toll on an already beleaguered sector.

The HCSS sector received a paltry funding increase this year of 0.6 per cent, while the residential aged care sector received an increase of 1.8 per cent. Haggie says providers have made a “supreme effort” to put in place travel time, guaranteed hours and now pay equity over the last two years. “Those initiatives, whilst good, have exhausted our human and financial capital.  We urgently need a focus on the sustainability of our services.”


  1. From what I understand aged residential care did not ‘opt’ to base pay equity funding on an averaging formula, the Ministry of Health decided that would be the way it was funded. I do not believe that the funding mechanism was negotiable. As a provider of services, I would have much preferred to have the funding based on our actual wage costs.

  2. Good point, Chris – ‘opting in’ is probably not really a good reflection on how the process played out, although the MOH do say the decision about the funding formula for the residential aged care sector was made alongside representatives from the NZACA, CANZ and DHBs. Interestingly, the NZACA made this comment in their submission to the Select Committee: “NZACA assisted with the collection of data to enable the MOH to arrive at these figures. NZACA participated in this exercise in good faith and with the objective of assisting officials to arrive at a workable and practical mechanism, however, we would not have anticipated the application of this daily average.” This suggests the formula was largely determined by the MOH. I tackle this issue in my next article – watch this space! Jude (Editor)


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