1.1.U.30 Unemployed (JSP)

Overview

There are 2 ways in which a person can be regarded as unemployed for JSP purposes:

• the person is unemployed as that term applies for the purposes of JSP (see 'Unemployed - general usage' below), OR
• the person is not unemployed but the delegate has decided to treat them as unemployed under section 595 (see 'Unemployed - section 595' below).

Unemployed - general usage

For the purposes of JSP, an unemployed person is, in broad terms, someone who does not have paid work but wants to have paid work. An essential requirement is that the person has a present intention and some capacity to be part of the labour market. It is not sufficient that the person is simply without work and wants to work.

A person without work who wants to work but is fully committed to an activity that is incompatible with labour market attachment would also not be regarded as unemployed in the general sense. For example, a person with full-time caring commitments may not be able to look for or undertake paid work despite wishing to do so. However, in some cases, people undertaking activities that would prevent them being regarded as unemployed in the general sense can still be treated as unemployed (see 'Unemployed - section 595' below).

A person who has had paid work during a period may also not be generally regarded as unemployed throughout that period, regardless of the hours worked or the amount paid. However, in some circumstances such a person may be treated as unemployed (see 'Unemployed - section 595' below).

The extent of a person's compliance with mutual obligation requirements can be useful in determining whether a person is genuinely committed to engagement with the labour market (see 'Relationship between mutual obligation requirements compliance and unemployed status' below).

Unemployed - section 595

Section 595 gives the Secretary the discretion to treat a person as unemployed where the person would not be regarded as unemployed in the general sense. Use of the discretion supports the objective of increasing or maintaining a person's engagement in the labour market.

The most common use of the discretion is to enable a person who undertakes paid work to continue to be regarded as unemployed and therefore qualified for payment. A person on JSP is generally required to look for and undertake suitable work. The JSP income test is intended to support this by ensuring that people benefit financially by taking up paid work. This objective would be undermined if a person in paid employment could not be regarded as unemployed, since the person would not qualify for JSP even if they had an entitlement to part-rate JSP under the income test. The discretion to treat an employed person as unemployed for JSP purposes should therefore be exercised in such a way as to further the objective of increased workforce participation, rather than providing a disincentive for people to increase their hours of work.

Although employment is actively encouraged for JSP recipients, the section 595 discretion is not always exercised to disregard employment. For example, a person who is working less than the number of hours required to satisfy their mutual obligation requirements, and who is not willing to look for or undertake alternative work, may not be considered unemployed. As a general rule, however, where the person has employment and also satisfies mutual obligation requirements, they will be considered unemployed under social security law.

Section 595 is also used to continue to treat as unemployed a person who is undertaking an activity the Secretary considers appropriate.

Relationship between mutual obligation requirements compliance & unemployed status

While mutual obligation requirements are not directly related to the issue of whether a person is unemployed, compliance with requirements will be an indicator of whether the person's intended or actual engagement with the labour market is genuine and sufficient.

When determining if a person is unemployed, the following factors may be considered:

• whether the person is undertaking sufficient work to fully satisfy their mutual obligation requirements, i.e.
  • undertaking suitable work to their assessed capacity, whether full-time or part-time (person with a partial capacity to work (1.1.P.65), or principal carer (1.1.P.412), and job seekers 55 years of age and older), and
  • earning sufficient income from that work
• whether the person is prepared to fully satisfy their mutual obligation requirements by actively seeking and being willing to undertake suitable work and/or undertaking other approved activities to improve their chances of getting work
• what activities the person is currently pursuing, and whether these are consistent with the person being able to look for and undertake suitable paid work
• whether the amount of the person's income, including earnings, precludes payment under the income test.

Leave from employment (including stand downs without pay)

A person who is on unpaid leave can be considered to be unemployed if they are not able to resume their employment (e.g. the employer refuses to re-engage them before the expiry of the leave) and they are willing to look for suitable work or meet other participation requirements during the period of leave.

Employees, including apprentices, who are stood down without pay, are regarded as unemployed for the duration of the stand down. As a result, they may be paid JSP, provided the other qualification requirements are met.

Employed by parents

A person who works full-time or part-time for or with their parents will NOT be regarded as unemployed unless the work satisfies the sufficient work test (see 1.1.S.403 on the sufficient work test).

If the work does not meet the sufficient work test, the person may qualify for JSP if they are clearly taking reasonable steps to obtain other suitable work (i.e. they are meeting their mutual obligation requirements).