3.11.13.40 Suspensions, demerits & reconnection

Introduction

For a failure to meet requirements, generally 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, payment suspensions are lifted once the job seeker who has committed a mutual obligation failure contacts their employment services provider - or the digital contact centre as appropriate - and re-engages with their activity or attends 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.

Demerits

For most mutual obligation failures committed without valid reason, a job seeker will incur one demerit. A record of the job seeker's demerits is kept on the IT system and the number of demerits accrued determines when they should undergo a capability interview (3.11.13.20) (generally after 3 demerits) or capability assessment (3.11.13.20) (generally after 5 demerits). Demerits also ultimately determine whether the job seeker should enter the Penalty Zone and become subject to penalties for future failures, because they can at that point be considered to have 'persistently committed mutual obligation failures'.

When the job seeker commits a failure 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), they will immediately undergo either 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 that a job seeker is capable of meeting their requirements (and, if this is determined as a result of a capability assessment, that the job seeker should therefore enter the Penalty Zone) are decisions under social security law. They are the administrative mechanisms to satisfy a decision maker, 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)).

The accrual of demerits is based on the decision maker'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 the demerit is not confirmed until the decision maker 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 or the digital services contact centre in the first instance. If they are still not satisfied, job seekers may contact the Department of Employment and Workplace Relations' 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 behaviour 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 requirements or is 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 when the job seeker is in 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 (3.11.13.10)) 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 one-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 one week from 1 January), but effectively extends it to 9 May (91 days and one 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.

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 or the digital services contact centre to record their attendance. Where a job seeker has not recorded their attendance, or their provider or the digital services contact centre records that:

• they did not meet their points requirement
• 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 may become non-payable. From October 2024, if the job seeker does not have a valid reason they will accrue a demerit, and their payment may be suspended if they do not re-engage with their requirements within 5 business days 'resolution time' (this is an increase from the former 2 business days 'resolution time'). Any payment due to the job seeker for the payment suspension period is withheld.

While there is discretion in legislation for the secretary or delegate to not to suspend payment following a mutual obligation failure, this discretion was introduced to reflect that sometimes there is no practical effect of suspending payment to encourage re-engagement. For example in cases where:

• the participant provides a valid reason for not meeting a requirement before their payment is suspended
• the participant has already met their re-engagement requirement before their payment is suspended
• it becomes apparent that the re-engagement requirement is unable to be met by the participant, for example because the person has a valid reason for not meeting the re-engagement requirement or because the requirement cannot be delivered.

This discretion is not intended to be more broadly used.

The payment suspension period generally 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 of resolution time or the failure is reported after the job seeker has been paid for the instalment period in which it occurred).

Job seekers will be notified 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. If they are found to have a valid reason for committing the failure, no demerit will be accrued. 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 digital services job seekers who fail to meet their points requirement, their reconnection requirement will generally be to meet their points requirement.
• 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 (if applicable), or call the digital services contact centre and discuss their reason for failure.
• For non-attendance or misconduct at a compulsory 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.
• If they fail to meet their job search requirement, job seekers would be required to satisfactorily undertake job search as their reconnection 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.