Legal win paves way for extra retirement super for doctors

16 November 2017

Public hospital workers, including doctors and nurses, could be entitled to extra money when they retire from their super fund, after a recent court decision clarified the definition of salary in relation to on-call and recall payments.

The Court of Appeal has confirmed that, in certain circumstances, payments made to on-call public hospital workers when they were recalled to work should be considered part of their salary when super funds calculate a defined benefit entitlement.

Under a defined benefit super scheme, a member’s retirement lump sum is calculated through a formula that takes into account a member’s salary and years of work.

Maurice Blackburn Lawyers, which represented a super fund member in the legal case against the First State Superannuation Scheme, said the court decision noted there were more than 8000 past and current defined benefits members of the fund.

Kim Shaw, National Practice Leader of Maurice Blackburn’s Superannuation and Insurance team, urged any defined benefit members of First State (formerly known as the Hospital Superannuation Scheme) to carefully review their circumstances.

“This court decision is important because it means that First State can no longer refuse to factor in recall payments into members’ salaries when calculating defined benefit entitlements upon retirement,” Ms Shaw said.

“Any First State members entitled to a defined benefit who thinks they might have been wrongly calculated in connection with their recall payments should seek a review or obtain legal advice.

The Court of Appeal decision relates to a dispute between a specialist anaesthetist who worked at Eastern Health, and the First State super fund.

When the anaesthetist retired from the scheme he expected to receive a benefit of $1.4 million, but the fund calculated the amount owed at $900,000, having excluded his recall payments.

Maurice Blackburn, on behalf of our client, disputed the fund’s calculation, arguing that on-call and recall work were a necessary and required part of his employment at Eastern Health.

The anaesthetist gave evidence that every time he was rostered on-call, he would be “recalled”, as the time was used to get through a back log of urgent patients waiting for after-hours operations.

Maurice Blackburn argued that the recall payments were part of his salary and should therefore have been considered when calculating his retirement benefit from the fund.

The anaesthetist won the case in the Supreme Court, but the fund trustees appealed that decision.

In August, the Court of Appeal dismissed the appeal and upheld the trial judge’s ruling that recall payments were roster related payments and should be included in the definition of salary.

The decision came down to an analysis of the definition of “salary” in the rules of the fund. The rules in this case defined “salary” as including “allowances which are ordinarily payable regularly and periodically (including shift and roster related payments)”.

It was held that the rules should be given a business-like interpretation, with the words given their ordinary and fair meaning.

The judges hearing the appeal said including recall payments in the category of shift and roster related payments was a practical approach to the definition of salary.

Ms Shaw welcomed the court’s decision, and said she hoped First Super would contact all members potentially affected by the outcome.

“While funds usually get member's benefits right, this decision highlights the complexities in super calculations. This is why fund members should carefully scrutinise their pay outs and get appropriate legal advice.”

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