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In a recent landmark decision, the Federal Court of Australia emphasized the importance for employers to pay super contributions on time to make sure that workers’ insurance is able to respond in the unfortunate event of a worker’s death or disablement.

Case Overview:

Mr. Payne worked as a security crowd controller from January to October in 2014, and sued his former employer, Secure Melbourne Protective Services, for the loss of insurance because they didn’t pay his super contributions on time, as required under the Security Services Industry Award 2010.

Following a violent attack on Mr Payne by clientele at his work in May 2014, he received a diagnosis of post-traumatic stress disorder and major depressive disorder, causing him to cease employment in November 2014.

When he tried to claim his Total and Permanent Disability insurance of $100,000 through his Super Fund in 2018, his claim was rejected on the grounds that his cover was not in force at the time of his disablement, because his employer had failed to make super payments on time, which were needed to start his insurance coverage.

Court's Decision and Rationale:

The Federal Court clearly agreed that the Fair Work Act 2009 had been breached by the employer, acknowledging Mr. Payne's resultant loss of insurance.

The court awarded compensation of $80,000, which is the estimated amount of a successful insurance claim, had the super contributions been made on time.

This ruling highlights the legal principle that even seemingly technical breaches of employment agreements can yield substantial damages payouts, and employers need to have rigorous compliance with statutory obligations.

The Implications for Workers and their Rights:

This is a precedent-setting case, and serves as a call to action for employers to carefully adhere to superannuation payment timelines. The ramifications of non-compliance extend far beyond regulatory sanctions, potentially depriving employees of critical insurance protections.

New Worker rights under the National Employment Standards (NES):

Effective from 1 January 2024, the employees covered by the NES can take court action under the Fair Work Act to recover unpaid super, unless the ATO has already commenced proceedings in relation to that super.

Prior to this, there was no statutory duty on employers to pay super, although they did face a fine from the ATO for non-payment.

These changes make it easier to pursue employers for the loss of insurance, strengthen employees' rights to timely superannuation payments, and empower them to seek recourse through legal channels in cases of non-compliance.

Key Takeaways:

  1. Legal Imperative: Compliance with superannuation obligations is not just a regulatory requirement but a legal necessity, with substantial financial implications for employers.
  2. Protecting Workers' Rights: Timely superannuation payments are integral to safeguarding workers' entitlements, especially insurance benefits that are crucial in the event of disability or death.
  3. Proactive Compliance: Employers must proactively ensure they adhere to superannuation payment timelines, mitigating the risk of costly legal disputes and reputational damage.
  4. Access to Justice: Recent legislative amendments enhancing superannuation entitlements under the NES bolster workers' access to legal recourse in cases where employers have not paid, or delayed payments.
  5. Legal Assistance: Workers impacted by employers not paying super on time should seek legal advice promptly to understand their rights and pursue appropriate remedies.  Strict time limits apply to take legal action.

Maurice Blackburn Lawyers has experts who specialise in both employment law and superannuation insurance claims. Our experienced team is here to help workers understand their rights and employers accountable to their legal obligations.

The decision is available here: Payne v Secure Melbourne Protective Services Pty Ltd [2023] FCA 1311

Our specialist superannuation lawyers are here to help.

If you're unable to work due to illness or injury, you may be eligible to make a claim on your superannuation insurance. Your injury can be physical or psychological and doesn't need to be work-related. We can help you understand what options are available to you. 

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