Some rest homes have had their fears confirmed with the introduction of pay equity at the beginning of this month and are finding themselves out of pocket thanks to a shortfall in the Government funding intended to cover the increased wage bill.

The Ministry of Health has advised rest home providers to raise concerns with their DHBs in the event of such a shortfall.

“If a smaller rest home believes that they are so severely disadvantaged by the negotiated bed-day rate that their viability is threatened then they should raise those concerns with their DHB,” Deputy Director of Service Commissioning Keriana Brooking told INsite.

However, one rest home that attempted to rectify matters with their DHB has not had success.

Glenbrook Rest Home’s owner Peter Mathyssen sent an invoice to Counties Manakau District Health Board  for $263.41, to cover the total shortfall for the two pay rounds since 1 July. The DHB responded that the invoice would not be paid by the DHB as they would be covered by the advance payment process. The advance payments are designed to give providers an opportunity to review their current models to accommodate the increased expenses generated by the pay equity implementation.

Mathyssen argues that the advance payment will be clawed back over the next three months.

Longer term, the Ministry of Health says it intends to address any shortfall in funding through the upcoming residential aged care funding model review.

“This [funding] decision explicitly recognised that a uniform price increase would result in ‘overs and unders’. As a result, the parties have agreed that there will be a funding review to look at ways in which this problem can be addressed,” says Brooking.

Some rest homes don’t have the luxury of time to wait until a longer term solution is sorted out. Kimihia Rest Home and Hospital in Huntly is reportedly already considering selling off some of its village units as a result of the impact of the pay equity settlement.

“Some of the decisions we have to make is we have to pay for wages so maintenance may fall by the wayside… training may fall by the wayside, it’s those sorts of decisions that affect the provision of care,” manager Fiona Morgan told Stuff.

On the other side of the pay equity coin, caregivers are naturally delighted with their increased pay this month. However there are fears among workers that employers will reduce their hours and spread care provision too thinly. (See INsite’s article featuring support worker Tamara Baddeley).

Meanwhile, the Pay Equity Bill was introduced to Parliament today.


Workplace Relations and Safety Minister Michael Woodhouse says the Bill aims to address one of the material barriers to achieving pay equity, and provides a practical and fair process for employees to follow if they feel they are not being paid what their job is worth.

“It will also make it easier for employees to file pay equity claims directly with their employers rather than having to go through the courts,” says Woodhouse.

“The Government is committed to achieving pay equity in New Zealand and the introduction of this Bill is a significant step toward ensuring female dominated jobs are paid fairly and closing the gender pay gap.”

The Bill will repeal and replace the Equal Pay Act 1972 and the Government Service Equal Pay Act 1960, and amend the Employment Relations Act 2000.


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