Twenty-eight female guards were unfairly dismissed by a security company because the client‚ Metrora.
The Department of Social Development is taking over the responsibility of transforming the racist Pieter Wessels Old Age Home in Nigel.
"We fund the institution and we have a duty to make sure that it is transformed," the department's spokesman, Fred Mokoko, said yesterday.
"The latest reports are a clear indication that we cannot rely on the management of the home to transform the place."
He said the department would not hesitate to intervene because racism hampered the quality of service delivery.
"We have entered into a service level agreement with all institutions we fund and we have a mandate to intervene when standards are not adhered to," said Mokoko.
The Human Rights Commission (HRC) has threatened to haul the home before court should they continue to subject black residents to inferior conditions. In its report the HRC said the "the situation needs urgent intervention".
Blacks at the home are not allowed to share facilities with white residents. During a Sowetan investigation last month, blacks were not allowed to use the same toilets, dining hall or sleeping quarters.
The 51 black residents were only given porridge and fish, while their white counterparts could select from various dishes. Tables in the black residents' dining hall had no tablecloths and they were given plastic spoons, but tables in the dining hall for whites had decorated tablecloths and they used stainless steel cutlery.