Super fund sued over customers’ unpaid penalties in ‘unique’ case

The Labor government pressured funds to improve their service or face tougher regulation last year, and the prudential and corporate watchdogs have warned they are taking a tough approach to super fund trustees meeting their legal duties to customers.

Gordon Legal associate Ana Hughes, who is running the case, said super funds, as trustees, had an obligation to members to ensure they were getting their full entitlements.

While unpaid super is typically blamed on employers, she said this was “a unique case” as it was based on fiduciary duties owed by the fund to beneficiaries, and could “quite possibly” be a test case for similar claims.

Suing super funds rather than individual employers in class actions would let law firms build a bigger claimant group, as they could include staff from several workplaces and may enable higher damages as large funds typically have more money.

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Ms Hughes said the ESSSuper transport members involved in the case had been working 30 to 40 years, and only realised as they approached retirement that their various employers had not paid super on penalty rates.

“These are people who have sacrificed their early mornings and evenings so our community can get on transport and get to work and about their lives … and they’ve been remunerated for that, but because of ESSS’ failure to act, they are now out of pocket,” she said.

ESSSuper, also known as Emergency and State Services Super, is a default fund for emergency services workers and Victorian government employees. It has 127,000 members and more than $36 billion under management.

The super balance of the lead claimant, Elwyn Gonsalvez, was $90,000 below what it would have been had the entitlements been paid, and some discrepancies reached $300,000, Ms Hughes said, with the alleged misconduct going back to 1993.

“These are not insignificant amounts, so if there’s further scrutiny on the sector to make sure they’re upholding and acting on their duties as beneficiaries to make sure workers aren’t out of pocket, that’s a good thing,” she said.

“And given the fact there have been [other] class actions launched [against super funds], it does look to be a trend. As these issues get agitated more in the media and the courts, people may get more aware of the duties their super funds owe them.”

Ms Hughes said ESSSuper’s alleged misconduct was ongoing, despite members and the Rail Tram and Bus Union first raising concerns more than 10 years ago.

Gordon Legal is seeking full reimbursement of the unpaid super amounts to all members of the class action and a declaration from ESSSuper’s board that super entitlements were being calculated correctly going forward, including penalty rates.

ESSSuper CEO Robbie Campo said the fund had been in touch with the union on Friday morning.

“We are hopeful this matter can be resolved through discussions with the union and engagement with Metro Trains – the employer of most of these members,” she said.