3.2.2.20 Current Working Arrangements

Introduction

This topic outlines the following subjects that relate to whether a person is considered to be unemployed for NSA purposes:

  • paid work but unemployed,
  • sufficient work,
  • nature and duration of work,
  • income from employment,
  • contract employment,
  • leave without pay (including stand downs),
  • co-operatives,
  • rationed employment and job sharing,
  • employed by parents,
  • temporary and short-term employment,
  • self-employment,
  • ceasing self-employment,
  • sportspeople,
  • performers,
  • apprentices and trainees, and
  • voluntary work.

Paid work BUT unemployed

The Secretary has discretion to deem a person to be unemployed for a period of time EVEN THOUGH they are undertaking paid work. The delegate should take into account the following:

  • a person's assessed capacity to work,
  • the fortnightly hours they are working,
  • amount of income received,
  • the nature of the work (part-time, casual, waged or self-employment),
  • the duration of the work (a few days, a week, a specified time frame), and
  • whether a rate would be payable under the relevant income test.

Sufficient work

A person can be considered to be unemployed for NSA purposes even if they are doing sufficient work (1.1.S.403) to fully meet their participation requirement and consequently have no job search requirement.

The majority of NSA recipients whose work would be considered sufficient to fully meet their participation requirements would be people with a part-time requirement. However, in some circumstances full-time work might also be considered sufficient and the person remain qualified for payment. The most common examples of full-time workers who might qualify for NSA without further activity requirements are:

  • an NSA recipient/claimant with a pensioner partner (the income test for these couples results in a cut-out point for NSA which is considerably higher than applies to individuals in couples where both receive a social security benefit such as NSA),
  • long-term single NSA recipients aged 60 or more who receive RA (the cut-out point for such cases can also exceed full-time minimum wages).

The decision that a person is doing sufficient work would generally be restricted to cases where a person can demonstrate a stable pattern of employment and earnings (e.g. permanent part-time work). Where there is significant variation in hours worked and earnings from fortnight to fortnight, the issue of whether a person's work fully meets their participation requirements will have to be determined on a fortnightly basis.

Policy reference: SS Guide 3.2.8 Mutual Obligation Requirements for NSA/YA Job Seekers

Nature & duration of work

Where a job seeker spends a significant amount of time in paid work during a fortnight, this work will contribute to them satisfying the activity test. It is common for job seekers to obtain casual or part-time employment as a stepping stone to full-time employment. In recognition of the benefits of this work the job seeker is still considered unemployed but their income from that employment is used to assess their rate of payment. In some cases the rate of payment may be nil for limited periods.

Income from employment

A job seeker who takes up work and continues to notify on a fortnightly basis a level of income that reduces their payment to nil, may continue to be considered unemployed (and so qualified for NSA even though the payment is not payable) for 6 paydays (fortnights) after the end of the entitlement period in which their first nil rate day occurs. After this nil rate period (1.1.N.75) they are no longer regarded as unemployed and payment is cancelled as they are no longer qualified for NSA.

Contract employment

A person will generally be regarded as employed for a period covered by a contract, even though there may be times within a contract period when a person is not working. However, it may be appropriate to treat such a person as unemployed where other factors in this instruction apply to the case (e.g. the income does not preclude payment and the person is clearly meeting any requirements under the activity test).

Example: A teacher on a full year contract would not generally be regarded as unemployed during paid school holidays (unless the work already met the definition of sufficient work and a part-rate of NSA was payable). In the latter case, the person would continue to be regarded as fully meeting their participation requirements during the period of leave, as they are being paid as if they were working.

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.

Example: A teacher granted leave for 3 terms to travel overseas returns to Australia after one term but, as the school principal has signed a contract with a replacement teacher for the 3 terms, the school cannot re-engage the teacher until the period of approved leave expires. The teacher can be granted NSA providing he/she is willing to look for alternative suitable work until such time as he/she resumes employment.

Employees, including apprentices, who are stood down without pay, are regarded as unemployed (1.1.U.30) for the duration of the stand down. As a result, they may be paid NSA, provided the other qualification requirements are met.

Example: Sometimes a business closes down temporarily for:

  • a seasonal or holiday period, OR
  • a short term lack of work.

Co-operatives

A person who is substantially engaged in the operations of a co-operative is in a similar position to a person who is self-employed. It is irrelevant whether or not the co-operative is profitable. However, it is possible for a person to participate in the development of a co-operative and remain qualified for NSA, if it is part of an EPP.

Rationed employment & job sharing

A person involved in rationed employment may be regarded as unemployed provided:

  • the hours worked and the earnings received satisfy the sufficient work test, or
  • the person satisfies any applicable activity test requirements.

Example: Rationed work may involve sharing available work among employees on a one week on, one week off basis.

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.

If the work does not meet the sufficient work test, the person may qualify for NSA if they are clearly taking reasonable steps to obtain other suitable work (i.e. they satisfy the activity test).

Example: A family member who is fully occupied on the family farm following drought or flood to help bring the farm back to production and who is unpaid is not regarded as unemployed. However the person may qualify for SpB.

Temporary & short-term employment

A person who is working in a short-term or temporary job may continue to be regarded as unemployed provided a rate is payable under the income test. The person may also be regarded as fully satisfying job search activity requirements if the work meets the sufficient work test.

Where the person's income results in a nil rate, they may continue to be regarded as unemployed and qualified for NSA until the end of the nil rate period (i.e. until their gross income, including employment income derived from that work, has precluded payment for 6 consecutive fortnights following the end of the entitlement period in which their working credit balance was reduced to zero).

Act reference: SSAct section 593 Qualification for NSA, section 595 Persons may be treated as unemployed

Self-employment

A person with a part-time or full-time participation requirement may be able to satisfy their participation requirement by undertaking self-employment if the work satisfies the sufficient work test.

For self-employment to be regarded as sufficient work, the person must be able to show that their assessable income from their business (i.e. net business income) meets the relevant remuneration criterion in the sufficient work test. Proof of hours worked is not required, since these would be difficult to verify in any case.

  • for a principal carer parent or person assessed as having a partial capacity to work, self-employment will be sufficient to satisfy the activity test if net business income is at least equivalent to 30 hours a fortnight at the National Minimum Wage. Where the business income fluctuates significantly, an average should be taken over a period of 26 weeks (13 fortnights).
  • for a person who would normally be expected to seek full-time work, self-employment will not be regarded as sufficient unless it provides net business income of at least the full-time National Minimum Wage.

Where the sufficient work test is not met, a decision must be made as to whether the person is fully committed to continuing with the business (not unemployed) or genuinely willing to seek, and available to take up, alternative work (unemployed). As a general guide, a person engaged in business may be regarded as unemployed for NSA purposes if:

  • the business is on a small scale and designed as a supplement rather than as an alternative to wages, OR
  • the person invests capital in the business, but not time and effort, OR
  • the business is a contracting or sub-contracting enterprise.

In these cases, the person needs to meet normal activity test (1.1.M.160) requirements and they must be willing and able to undertake any suitable work (1.1.S.410), although spending a certain amount of time on odd jobs associated with their business would not preclude qualification for NSA.

Example: The time without work cannot be devoted to the overhaul of machinery or other activities related to self-employment.

It is not always easy to distinguish between a person who is an employee and a person who is self-employed, and each employment situation should be looked at on its merits. The following table provides guidelines that can be used when determining if a person is self-employed:

If the person is… Then this suggests they are…
working under a CONTRACT OF SERVICE (i.e. for labour) in an employee/employer relationship.
  • working under a CONTRACT FOR SERVICES (that is, to produce a result), AND
  • able to choose when, where, how and for whom they work,

self-employed.

Ceasing self-employment

A person who has ceased self-employment needs to provide proof that the employment has ceased.

Example 1: Letters from accountants or solicitors verifying the date self-employment ceased.

Example 2: In the case of sub-contractors, the last contract showing a cessation date.

A self-employed person can be considered unemployed without being required to remove all prospect of returning to their own business at a later stage.

Example: It is not necessary to surrender licences, tools or equipment.

Act reference: SSAct section 593 Qualification for NSA

Sportspeople

In deciding whether or not a person who is making a substantial commitment of time to sport can be regarded as unemployed, the delegate should consider whether the sporting activity is paid and whether it would meet the sufficient work test.

Where the sufficient work test is not satisfied, the delegate should consider whether:

  • the person's primary commitment is to seeking work, AND
  • the time involved in training, practice and competition is compatible with suitable work or effective job search, AND
  • there are any conditions attached to financial or in-kind assistance received by the person that would lead them to not being regarded as unemployed.

Example: Sponsorship activities or community work.

Performers

Actors and musicians (performers) who do not have work can be regarded as unemployed, subject to their meeting normal activity test requirements and being willing and able to undertake any suitable work. Where they are working, they may be regarded as fully meeting their applicable activity requirement (either partial or full-time), and be regarded as unemployed, if the work satisfies the sufficient work test.

Act reference: SSAct section 595 Persons may be treated as unemployed, section 601(2) A person cannot be taken to satisfy the activity test…

Apprentices & trainees

An out of trade apprentice or Australian Trainee System trainee or an apprentice who still has a contract to work but is suspended as a result of an economic downturn, can be considered unemployed, subject to their meeting normal activity test requirements and being willing and able to undertake any suitable work, while looking for a new employer in their trade or apprenticeship.

Apprentices suspended for short periods due to illness or travel are not considered to be unemployed.

Act reference: SSAct section 593 Qualification for NSA

Voluntary work

A person may be treated as unemployed if they are aged 55 or over and undertaking suitable voluntary work as specified in their EPP.

Act reference: SSAct section 595(1A) Persons may be treated as unemployed

Last reviewed: 3 January 2017