On 2 May 2023 the Australian Federal Government announced its intention that from 1 July 2026, employers will be required to pay their employees superannuation at the same time as their salary and wages. While employers have some time to prepare for these announced changes, the Federal Court of Australia (“FCA”) has delivered a judgement that serves as a reminder as to why it is important to ensure employees’ superannuation contributions are always made on time.

Background

By way of background:

• the Applicant, Mr P, was employed as a security crowd controller from January 2014 to October 2014;
• Mr P’s employment was covered by the Security Services Industry Award 2010 (the “Award”), which contained a relatively standard clause in modern awards requiring an employer to make superannuation contributions in accordance with superannuation legislation;
• on 12 May 2014, Mr P was violently attacked by patrons at work which resulted in him being diagnosed with post-traumatic stress disorder and major depressive disorder; and
• Mr P ceased working for the Company in November 2014 due to his medical conditions.

On 2 August 2018, Mr P made a claim under his superannuation fund’s insurance policy. However, Mr P’s claim was rejected because the Fund determined that Mr P was not a beneficiary of the Fund as at the time of his medical conditions’ onset on 12 May 2014. The reason Mr P was not a beneficiary was because the Company had failed to make the requisite superannuation contributions by April 2014 in accordance with the Award.

The consequence of not paying superannuation on time

Mr P brought a claim in the FCA alleging that the Company had breached the superannuation provisions of the Award, and therefore the FW Act, by failing to make the superannuation contributions on time. Mr P sought compensation for the lost opportunity to make a successful insurance claim, which would have been worth $100,000 for total and permanent disability.

The FCA accepted that the Company contravened the FW Act and that Mr P suffered loss as a result of the contravention. The FCA awarded Mr P compensation for the loss of opportunity to claim insurance, valuing this loss at $80,000 as the FCA considered there was an 80% likelihood that Mr P’s insurance claim would have succeeded but for the missed superannuation payment.

Learnings for Employers

Employers should ensure they are aware of the current, and proposed changes to, superannuation laws and comply with their obligations. Non-compliance with what may appear to be merely technical Award requirements can result in significant damages.

The team at PCS are happy to assist you with the interpretation of modern awards.