The Robodebt Class Action appears to have been settled.

Gordon Legal, the firm behind the case, has announced today a settlement subject to the approval of the Federal Court of Australia.

If approved by the Court, the settlement will see more than $1.2 billion in financial benefit provided to approximately 400,000 group members.

In settling the class action, the Commonwealth has not admitted that it was legally liable.

The case centred around the government’s use of ‘Robodebts’ - a type of Centrelink debt that the class action argued were unlawful.

The key element of a Robodebt is the evidence used by Centrelink to calculate the overpayment and establish that a debt is owed.

Robodebts are calculated by Centrelink applying averaged ATO PAYG income data across either part or all of the fortnights in which the recipient received payments and by treating those averaged amounts as the recipient’s actual earnings in the relevant debt period.

Therefore, the Robodebt system often ignored what the person actually earned at the relevant time.

The applicants argued that Robodebts were invalid because the amount of social security payments a person is entitled to is based on how much the person actually earned when receiving payments – not the averaged ATO amounts.

Because of this flaw, it was argued that Centrelink has no lawful basis for raising Robodebt calculated on this basis.

The total financial outcome achieved is made up as follows:

  • The Commonwealth has agreed to pay $112 million in compensation to approximately 400,000 eligible individual Group Members, including legal costs
  • The Commonwealth is repaying more than $720 million in debts collected from Group Members invalidly and will continue to provide refunds
  • The Commonwealth has agreed to drop claims for approximately $398 million in debts it had invalidly asserted against group members of the class action
  • Subject to Court Approval, a Settlement Distribution Scheme will provide that eligible individual Group Members’ entitlements will be assessed and all amounts due to them be paid in 2021