A housing association that runs care homes wants millions of pounds from Barnet Council to cover its losses.

Catalyst, which operates daycare centres and homes for elderly residents, wants an estimated £8 million after making massive losses on its £9m a year contract with the authority.

The housing association took over 11 care homes, four day centres and 300 staff in 2001. It was also supposed to replace existing homes with modern facilities.

The contract allows Catalyst to claim back its losses as long as the claim is timely and it can prove it tried to avoid the losses.

But the council disputes the case, which will be decided by an independent arbitrator at a date to be decided.

Councillor Mike Freer, leader of the council and cabinet member for resources, said: “We’re robustly rebutting the claim. We’ve tried to ensure the contract works.

“The advice we’ve received from lawyers is that we have a very strong case but when you go to arbitration, there’s always an element of risk.”

Catalyst and its partner Fremantle, which provides care in the homes, attempted to mitigate losses by slashing wages, holiday pay and sick pay of care workers transferred from the council in 2001.

Some workers have had to take on second jobs while others signed a waiver allowing them to work a 56-hour week, according to an employee, who wanted to remain anonymous.

“It’s a struggle to cope,” she said. “When Catalyst took over we were fully staffed and a lot of people have left. When they are replaced it’s with inexperienced staff who don’t know anything.

“People are being forced out because they can’t afford to pay the bills. Others are doing two jobs. It’s a concern because the working pattern can affect your health.

“After a 56-hour week you’re knackered and you’re no use to your family. You can’t focus and if you do it for more than one week you can’t give effective care to anyone.”

The exact figure of Catalyst’s claim is being withheld on the grounds of “commercial sensitivity” but council papers last year placed it at £8.672m.

A Catalyst spokesman said: “We still hope to reach a negotiated settlement with Barnet, but are unable to comment further at present.”