Some of the health sector's lowest paid workers will share in a $2 billion pay equity settlement over five years.

More than 55,000 workers in aged and disability residential care, and home and community support services across New Zealand are set to benefit from the settlement announced by the government on Tuesday.

The wage boost follows the TerraNova pay equity claim brought by E tū, previously the Service and Food Workers Union, on behalf of care worker Kristine Bartlett.

From July 1, the predominantly female workforce who are mostly on or around the minimum wage of $15.75 per hour will go up to at least $19 per hour – a pay rise of 21 per cent. For a full-time worker, this means they will take home roughly an extra $100 a week, or more than $5000 a year.

This funding boost will also see wages increase from $19 to $27 per hour over five years.

'Home and community support, disability and aged residential care workers are widely seen as amongst the most deserving of recognition as a pay equity case,” says Health Minister Dr Jonathan Coleman.

'It is an historic moment for the government to address this undervaluing with Ms Bartlett and the unions.”

Existing workers will be transitioned to positions on the new pay scale which reflect their skills, and their experience. While new workers employed after July 1 wages will be based on an individual's level of qualifications.

A care and support worker on the minimum wage with three years' experience and no qualifications will receive a 27 per cent increase in their hourly wage rate, moving from $15.75 to $20 per hour from July 1.

That rate would progressively increase to $23 by July 2021 and would rise further if they attain a higher qualification.

The $2 billion settlement over five years will be funded through an increase of $1.9b to Vote Health and $192 million to ACC. ACC levies are set for the coming years, but may possibly increase over the next decade to support this. However, that is not definite.

There may also be an increase in costs for people in aged residential care facilities, whose assets keep them above the subsidy threshold. This will be determined through the annual Aged Residential Care contract negotiations, adds Jonathan

'To ensure the pay rises happen in the agreed manner, I will be introducing legislation to Parliament shortly.”

The Human Rights Commission also describes Tuesday's settlement as ‘historic' and believes it will change the lives of thousands of mainly female, low-paid workers and their families.

Equal Employment Opportunities Commissioner Dr Jackie Blue says the settlement is long-overdue and gives recognition to the hard work and efforts of rest home caregiver Kristine Bartlett and the E tū Union, and the strong advocacy by the Caring Counts Coalition, of which Dr Blue is Chair.

'Kristine Bartlett has been courageous and determined in her journey to see pay equity realised within the aged care sector. It is fantastic to see her efforts recognised and her pay finally reflect the years of service she has provided.

'While the situations of workers in other sectors such as education support still require review, today's settlement is a significant and important step forward in the journey towards pay equity in New Zealand.”