3.1.14.40 Suspensions, Demerits & Reconnection

Introduction

For every failure to meet requirements, job seekers will have their income support payment suspended and be given a reconnection requirement, which they must generally meet in order to end the payment suspension. Unless the person is in the Penalty Zone and is subject to a penalty, when their payment suspension ends they receive back-pay for the period that their payment was suspended, subject to other provisions of the social security law.

The reconnection requirement a job seeker must meet to end a payment suspension may vary. Generally, job seekers who have committed a mutual obligation failure will be able to end their payment suspension once they contact their employment services provider and re-engage with their activity or attend an appointment. In addition to payment suspension until re-engagement, every failure by job seekers to meet their requirements in the Green Zone or Warning Zone without valid reason will result in accrual of a demerit.

Act reference: SS(Admin)Act section 42AF Compliance action for mutual obligation failures

Demerits

For most mutual obligation failures committed without valid reason, a job seeker will incur 1 demerit. A record of the job seeker's demerits will be kept on the IT system and the number of demerits accrued will determine when they should undergo a capability interview (3.1.14.20) (after 3 demerits) or capability assessment (3.1.14.20) (after 5 demerits) and ultimately whether they should enter the Penalty Zone and become subject to penalties for future failures, because they can now be considered to have 'persistently committed mutual obligation failures'.

Failures relating to job interviews (failing to attend an interview or act on a referral to a job or acting in a manner that could result in a job offer not being made) result in the job seeker immediately undergoing a capability interview or, if they have already had a capability interview, a capability assessment, regardless of the number of demerits already accrued.

Neither the application of demerits nor the finding, following a capability assessment, that a job seeker is capable of meeting their requirements and should therefore enter the Penalty Zone are decisions under social security law. They are the administrative mechanisms for a decision maker to be satisfied, when considering a mutual obligation failure, that a person has persistently committed mutual obligation failures and should therefore be subject to a penalty for their latest failure. These administrative mechanisms and the following rules pertaining to them are set out in a legislative instrument (Social Security (Administration) (Non-Compliance) Determination 2018 (No. 1)).

Demerits are based on the provider's assessment of the job seeker's reasons for non-compliance in relation to the requirement that they have failed to meet. A demerit is added to a job seeker's record where a failure has occurred but is not confirmed until the provider has spoken to the job seeker about the failure and determined that a valid reason does not exist.

If a job seeker does not agree with the application of a demerit, they should discuss this with their provider in the first instance. If they are still not satisfied, job seekers may contact the Department of Employment, Skills, Small and Family Business' National Customer Service Line.

Active months

The purpose of active months is to reflect a key element of the targeted compliance framework policy, which is that before facing a financial penalty for a mutual obligation failure a person must demonstrate a pattern of repeated non-compliance and undergo multiple assessments to ensure that this behavior is deliberate and not a result of inappropriate requirements. Likewise, where a person has been persistently and deliberately non-compliant, the person must demonstrate their compliance in order to return to the Green Zone. Therefore, 'active months' generally refers to the period a job seeker has mutual obligation requirements and does not include the time a job seeker is exempt from activities or serving a non-payment period due to non-compliance, or the time between a person's referral to Centrelink for a capability assessment and completion of that assessment. This is because during these periods job seekers are not demonstrating compliance. However, any time that a job seeker is not receiving payment (for reasons other than because of a penalty, such as employment) counts towards active months. This is because these job seekers are supporting themselves, and not relying on government assistance.

The calculation of active months is prescribed by the Social Security (Administration) (Non-Compliance) Determination 2018 (No. 1), which directs decision makers when to be satisfied that a job seeker has persistently committed mutual obligation failures and therefore that a penalty should apply for their latest failure.

Three active months (which is the time since their last failure that a person remains in the Penalty Zone (3.1.14.10)) is defined as 91 days. Six active months (the length of time until a demerit expires) is defined as 182 days. For both periods, exemptions, non-payment periods due to non-compliance, and the time between a referral to a capability assessment and its completion do not count towards active months, and may prolong the time it takes for the active months to pass. However, both 3 and 6 active months cannot be longer than 12 calendar months.

Each demerit a job seeker has will expire after 6 active months, and a job seeker will only enter the Penalty Zone once they accrue 5 demerits within 6 active months. Once in the Penalty Zone, if a job seeker meets all their requirements for a period of 3 active months, they may return to the Green Zone with no demerits.

However, because the legislative instrument also provides that a penalty should be applied if the job seeker has committed a mutual obligation failure within the previous 3 active months, this has the effect of restarting the 3 active months each time a job seeker commits a mutual obligation failure in the Penalty Zone, with the 'new' 3 active months being extended by the duration of the previous penalty. For example, this means that if a job seeker enters the Penalty Zone on 1 January and commits a mutual obligation failure on 1 February, this 1-week penalty does not simply postpone the end of the 3 active months by a week from 1 April (91 days after 1 January) to 8 April (91 days and 1 week from 1 January), but effectively extends it to 9 May (91 days and 1 week from 1 February). This is because any failure committed prior to 10 May will have been committed within 3 active months of the failure that was committed on 1 February.

It is important to note that only penalties for mutual obligation failures restart the 3 active months in the Penalty Zone. Although no penalty period for any failure type counts towards active months, the 4-week preclusion period for a work refusal failure or unemployment failure does not restart the 3 active months in the Penalty Zone, as a mutual obligation failure does. This means that, if a job seeker commits a work refusal failure 2 months after entering the Penalty Zone, then returns to payment immediately after their 4-week preclusion period and commits no more failures, they would leave the Penalty Zone 4 weeks after returning to payment. In the same circumstances, if the job seeker had committed a third mutual obligation failure, they would leave the Penalty Zone 3 months after returning to payment. This difference reflects the fact that work refusal and unemployment failures can be incurred in any zone and are conceptually independent of the Zone process that is used to determine whether a person has persistently committed mutual obligation failures.

Example: Annika commits 5 mutual obligation failures within 6 active months, and on 19 September 2018, moves into the Penalty Zone for 3 active months. If she commits no further mutual obligation failures, she will be in the Penalty Zone for 3 active months (until 19 December 2018 - 91 days plus any additional period not counted towards an active month), and will return to the Green Zone with no demerits.

Annika is undertaking an NWEP placement with a local business as part of her mutual obligation requirements. On 1 October 2018, Annika fails to show up to her placement as required, without a reasonable excuse. As the failure was committed within the 3 active months in the Penalty Zone, Annika is subject to a financial penalty worth half of her fortnightly payment. Her time in the Penalty Zone is also adjusted. Annika will stay in the Penalty Zone for 3 active months from the date of her last failure (from 1 October 2018 she will stay in the Penalty Zone for 91 days plus an additional week for incurring a reduction equal to half of her instalment. This extends Annika's time in the Penalty Zone until 7 January 2019, plus any additional period not counted towards an active month).

On 15 November 2018, Annika fails to satisfy her job search requirements and is subject to another financial penalty. As this is her second failure in the Penalty Zone, Annika is subject to a financial penalty worth her whole fortnightly payment. Annika's time in the Penalty Zone is also adjusted. Annika will stay in the Penalty Zone for 3 active months from the date of her job search requirement failure (from 15 November 2018, she will stay in the Penalty Zone for 91 days plus 2 weeks due to the reduction of the whole amount of her payment instalment. This extends Annika's time in the Penalty Zone until 28 February 2019, plus any additional period not counted towards an active month).

On 28 February 2019 Annika leaves the Penalty Zone, having served 3 active months in the Penalty Zone since her last failure (91 days plus 2 weeks due to the reduction of the whole amount of her payment instalment). Annika is returned to the Green Zone with her demerits reset to zero.

Payment suspension

Generally, it is the job seeker's responsibility to record that they attend or complete any requirement that is in their Job Plan. However, in some cases, they may ask their provider to record their attendance. Where a job seeker has not recorded their attendance, or their provider records that:

  • they did not attend a requirement,
  • their job search has been inadequate, or
  • they have behaved inappropriately during an appointment or activity,

the job seeker's participation payment becomes immediately non-payable and this will trigger suspension of the job seeker's payment and the recording of a demerit. Any payment due to the job seeker for the payment suspension period is withheld.

The payment suspension period begins at the start of the instalment period in which the person commits the mutual obligation failure (unless the decision maker determines that a different instalment period is more appropriate, for example, because the failure is reported after the job seeker has been paid for the instalment period in which it occurred).

Employment services providers will notify job seekers of their mutual obligation failure and the reconnection requirement they must meet to restart their payment. Once a job seeker satisfies their reconnection requirement, their payment suspension will be lifted and if they are found to have a valid reason for committing the failure, their demerit will be removed. The last day of the suspension period will be the day immediately before the day the person complies with the reconnection requirement (unless the decision maker determines that an earlier day is more appropriate, for example, because the job seeker has been granted an exemption and is no longer required to meet their reconnection requirement).

The reconnection requirement will depend on the nature of the job seeker's failure:

  • For non-attendance or misconduct at an employment services provider appointment, third party appointment, or job interview, or if a job seeker does not satisfactorily act on a job referral, their reconnection requirement will generally be to attend a provider appointment and discuss their reason for failure.
  • For non-attendance or misconduct at an activity (such as WFD, approved training or study, or voluntary work etc.), a job seeker would generally be required to satisfactorily participate in that activity as a reconnection requirement (assuming the activity is ongoing).
  • Job seekers would need to agree to a Job Plan if they have failed to agree to one.
  • Job seekers would be required to satisfactorily undertake job search as their reconnection requirement, if they fail to meet their job search requirement.

If a job seeker fails to comply with the reconnection requirement within 4 weeks after it is notified, the job seeker's payment is cancelled.

Example: Ben does not attend a scheduled WFD activity, and his NSA payment is suspended and a demerit is added to his record. Ben receives an SMS telling him to contact his provider, which he does. Ben explains he was in a car crash on the way to his activity. His provider finds that he had a valid reason for not attending his appointment and removes his demerit, Ben's payment suspension is also ended.

Example: Jenny does not attend a scheduled provider appointment, her YA is suspended and a demerit is added to her record. Jenny contacts her provider and tells them she slept in. Jenny's provider finds that she did not have a valid reason for missing her appointment and re-books the appointment - Jenny's payment remains suspended until she attends that appointment. Jenny has now also accrued a demerit.

Act reference: SS(Admin)Act section 42AF Compliance action for mutual obligation failures, section 42AL Payment suspension periods for mutual obligation failures and work refusal failures, section 42AM Reconnection requirements for mutual obligation failures and work refusal failures

Last reviewed: 2 July 2018