The Australian Public Service may be forced to pay out hundreds of millions of dollars in unpaid superannuation if upcoming action in the Federal Court goes against it.
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A group of Foreign Affairs Department employees who claim to have been underpaid superannuation for years have launched action against the Commonwealth.
More suits by current and former employees from other departments, primarily the Home Affairs Department, are expected to follow.
The alleged underpayments relate principally to the miscalculation of a rent free allowance for public servants deployed both overseas and domestically. In respect of overseas deployments, most of the allegations relate to DFAT and the Home Affairs Department, but also include AFP, Finance and the ATO. Domestically, allegations include the Bureau of Meteorology.
Prior to 2000, overseas deployed staff paid a rent and utilities contribution which was offset by another allowance so employees weren't out of pocket. Some departments, notably Defence, continue this arrangement.
But a review of conditions for deployed staff, initiated by DFAT, determined to abolish the contribution to avoid transaction costs and save time. A consequence of this was it enlivened a provision in superannuation legislation that rent-free accommodation was to be taken into account when calculating superannuation, which departments allegedly failed to do.
Legal director of employment law and investigations at firm Bradley Allen Love, John Wilson, is representing nine clients at various stages of pursuing Federal Court action.
Mr Wilson said his clients estimated they would have been better off by a five-figure sum annually if their superannuation had been paid correctly.
Despite the Commonwealth being an indivisible entity by law, meaning it should be considered as one body rather than multiple departments, Mr Wilson said the Commonwealth was allowing individual agencies to take different approaches to affected employees.
"The Commonwealth needs to establish a position on this and instruct its agencies what to do," Mr Wilson said.
"Rather than leaving individual agencies to fight their own battles against individual litigants whose pockets are smaller than the Commonwealth.
"Our clients have been agitating this issue for years and have been met with the constant refrain, 'we're looking at it'.
"The only way to sharpen their vision is with court proceedings."
DFAT was approached for comment but a spokesperson said the department could not comment while matters were before the Federal Court.
The Home Affairs department previously advised it was continuing to investigate individual cases and could not comment on cases under review.
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A former public servant, who spoke on the condition of anonymity and is not part of the DFAT group currently in the Federal Court, said he would pursue court action because there were no other avenues for redress.
He spent more than 15 years deployed overseas for the Commonwealth and the better part of two years pursuing his employer for the unpaid superannuation. They have not admitted liability, as is the case in almost all other matters.
"There's a governance black hole around Commonwealth superannuation schemes," the former public servant said.
"This needs to be fixed. You can't have a situation where any Commonwealth employee who has a legitimate gripe about a condition of employment like super has nowhere to go.
"The system governing these super schemes is a system built upon trust, with employing agencies supposed to do the right thing by employees without oversight. Clearly that is just not working".
He hoped a favourable ruling in the Federal Court would "tie the hands" of the Commonwealth by setting precedent and finally see thousands of underpaid employees receive their correct superannuation.
It was not fair or reasonable, he said, for individual employees to have no option but to pursue costly action in the Federal Court, when private sector employees could go to the tax office to have superannuation matters resolved for a fraction of the cost.
"I just find it astonishing that I have to take an employer of nearly 30 years to court to get them to pay me legislated conditions of service," he said.
"I'm disappointed that what is supposed to be one of Australia's model employers is demonstrably diddling their own staff and failing to act."