The Federal Court will begin hearings today into claims the Commonwealth failed to pay superannuation owed to three employees, in a case the federal government says could lead to a "fiscal risk".
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Foreign Affairs Department staff Brendan Peace, Peter Fennell and Timothy Vistarini have argued the Commonwealth did not pay them superannuation owed for a rent-free accommodation allowance they received on overseas postings.
Budget papers released last week identified the court proceedings.
"Depending on the outcome of the case, there may be broader implications that represent a fiscal risk to the budget," the budget papers said.
The Federal Court in Canberra has listed two days of hearings into the case, beginning today.
In their statement of claim filed in February 2020, lawyers for Mr Peace, Mr Fennell and Mr Vistarini said the Commonwealth did not pay an amount for the value of their rent-free accommodations while posted overseas when paying their superannuation contributions.
It also did not include the amounts of their hardship allowances, or location allowances, as part of their basic salaries, in paying their superannuation.
The failures put the Commonwealth in breach of enterprise agreements and federal workplace laws, and have reduced the value of the public servants' superannuation entitlement, according to the statement of claim.
However, lawyers for the federal government and the Foreign Affairs Department submitted a defence claiming the three public servants were not entitled to any relief.
The rent-free accommodation was not an allowance as defined in superannuation regulations, because it did not involve the payment of a sum of money for expenses, the defence said.
It also claimed that the hardship allowance did not form part of the employees' salary for superannuation purposes.
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Commonwealth government lawyers have also claimed increasing the amount of the employees' salary for superannuation purposes would result in a shortfall in their contributions payable to the Public Sector Superannuation Scheme.
The shortfall would be payable as a debt by each of the public servants to the Commonwealth Superannuation Corporation, which oversees the scheme, according to the government's defence.