The Albanese government has "bolted the doors to the stadium" against three Foreign Affairs Department staff who claimed they were owed missing superannuation, a lawyer representing the public servants has told the Federal Court.
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In the first hearing since Labor changed laws in an effort to block a potential liability from unpaid super owed to the public servants, Justice Scott Goodman admitted the situation was "quite unusual" as lawyers responded to the unexpected turn of events.
Legal counsel for the three Department of Foreign Affairs and Trade staff, Lachlan Edwards, told the court on Thursday morning the government's decision to change superannuation laws and shut down the claim was "extraordinary".
The federal government had done more than shift the goalposts for his clients, he said.
"They've bolted the doors to the stadium," Mr Edwards said.
"They didn't like the rules, so they changed them."
The extraordinary laws, which passed Parliament with support from the Coalition in August, retrospectively changed public service superannuation legislation before the Federal Court decided on claims that three DFAT employees were owed unpaid super on rent-free housing.
DFAT staff Brendan Peace, Peter Fennell and Timothy Vistarini argued the Commonwealth did not pay them superannuation owed for a rent-free accommodation allowance they received on overseas postings and a hardship allowance as part of their salary on overseas postings.
If the court ruled in favour of the DFAT staff, it could mean the Commonwealth would owe thousands more public servants unpaid superannuation on rent-free accommodation during their overseas postings.
Labor claimed the government could have owed $8-11 billion in unpaid superannuation, although a government document explaining the new legislation said the size of any financial impacts was unquantified and "very difficult to quantify".
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Mr Edwards urged Justice Goodman to consider sending the matter to mediation, particularly to discuss the Commonwealth's contribution to his clients' costs, saying the case would likely be resolved through "genuine engagement" in that forum.
"I have clients who are at the end of their tether about all this," he said.
Australian government solicitor Paul Vermeesch told the court that the new laws stopped the DFAT staff claiming unpaid superannuation on their rent-free allowance.
However the legislation did not affect their claims that unpaid super was owed on their hardship allowances for overseas postings, and that aspect of the case was still to be resolved, he said.
Justice Goodman ordered that lawyers for both the DFAT staff and the Foreign Affairs Department file submissions about the effect of the new laws on the case, and their proposed new pleadings.
He adjourned the case to December 6 for hearing, and said he would consider sending it to mediation on that date.