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Social Security Reporter |
Definition of ‘unemployed’ for newstart allowance and waiting periods
(2010/776)
Decided: 12th October 2010 by P. E. Hack
Polke applied for newstart allowance in 2008 and was required to serve a ‘liquid assets waiting period’ from 15 March 2008 due to the level of his assets. He began receiving newstart allowance from 21 June 2008. He was offered employment with the East Arnhem Shire Council as the CDEP Manager at Yirrkala and accepted the offer. The position was described in the letter as ‘a permanent, full time position’ which would ‘operate under the East Arnhem Shire Council Employee Collective Agreement 2009-2012’. The letter of offer stated:
Your employment will be subject to an initial probationary period of three months commencing on your commencement date. During the probationary period either the CEO or you may terminate this Agreement on 2 weeks’ written notice. Before the end of the probationary period, the Shire Services Manager Yirrkala will review your performance. If your performance has not been successful during this period, the Chief Executive Officer may terminate this Agreement or extend the probationary period for a further three months, up to a total of six months. If your performance has met the Council’s requirements, then your appointment will be confirmed in writing.
In addition, Clause 13.7 Summary Dismissal will be appropriate for the following:
1. During your employment with EASC, you may become privy to information that is confidential. It is a condition of your employment that you treat such information as confidential and that you will not divulge information or documents unless authorised in writing by the Council or Chief Executive Officer.
2. If as a result of your Criminal History or Working with Children check, or additional criminal conviction whilst employed with EASC, it is deemed that you are unsuitable to continue in your designated role. The onus of disclosure to EASC for relevant convictions rests with the employee. Failure to report may result in summary dismissal.
After commencing this employment Polke continued to complete the fortnightly ‘Application for Payment Form’ in which he notified the dates of his employment, his employer and the amount of his gross earnings. On a number of these Polke mentioned that the employment was on probation and that it might be permanent. Centrelink wrote to Polke on 30 September 2009 to ‘confirm that we have your correct employment details’. He contacted Centrelink as requested and on 6 October 2009 Centrelink wrote to the East Arnhem Shire Council requesting details of his employment.
The Council’s response led to a decision by Centrelink on 2 November 2009 to cancel Polke’s newstart allowance with effect from 7 September 2009. Polke immediately contacted Centrelink and reiterated that his employment was not permanent.
On 24 November 2009 Polke’s employment was terminated and he again claimed newstart allowance which was granted on 8 December 2009 but with effect from 2 March 2010 as Centrelink determined to apply a liquid assets waiting period, an income maintenance period and a one week ordinary waiting period. Polke sought a review of the decisions to cancel his newstart allowance and to impose waiting periods. An authorised review officer varied the decision by deleting the application of a one week ordinary waiting period but the other decisions were affirmed. The decisions, as varied in that way, were affirmed by the Social Security Appeals Tribunal on 16 March 2010.
The AAT considered the following issues:
• Was Polke unemployed between 11 September 2009 and 24 November 2009 (s.593 of the Social Security Act 1991 (the Act))?
• If Polke was not unemployed during that period should he be treated as if he had been unemployed during that period (s.595)?
• Should his newstart allowance have been suspended rather than cancelled (s.80)?
The term ‘unemployed’ is not defined in the legislation. The Secretary’s submissions drew attention to the discussion of the term in Secretary, Department of Employment and Workplace Relations v Joss [2006] FCA 884; (2006) 92 ALD 60:
[12] In the Macquarie Dictionary (A Delbridge et al (eds), Revised 3rd Ed, The Macquarie Library Pty Ltd, Macquarie University, 2003, p 619) ‘unemployed’ is defined as:
1. out of work, especially temporarily and involuntarily; without work or employment.
2. not employed; not in use; not kept busy or at work.
3. not in productive or profitable use.
...
[13] In The Oxford English Dictionary (JA Simpson & ESC Weiner (eds), Vol XIX, 2nd Ed, Clarendon Press, Oxford, 1989) ‘unemployed’ is defined as follows:
1. Not put to use; not applied to some end or purpose ...
2. Not engaged in any work or occupation; idle; ... temporarily out of work.
...
[14] When one has regard to the dictionary definitions and to the context in which the word ‘unemployed’ appears in the Act, the connotation suggested in the first of the Macquarie Dictionary meanings seems to be most apposite.
[15] Such a connotation is consistent with ‘not being engaged in work of a remunerative nature’ as suggested in McKenna. That expression which the Tribunal in McKenna said must yield to special cases might be better stated as ‘not being engaged in work of a potentially remunerative nature’. Undoubtedly a person will be unemployed when they are without work or employment and that situation is both temporary and involuntary.
Polke did not suggest that he was unemployed during the period of his employment or that he ought to have received newstart allowance during the period. He argued that he should not have to serve a further liquid assets waiting period before being again eligible to receive newstart allowance.
The AAT considered that as far as s.593 is concerned, Polke was employed in a full time position with the East Arnhem Shire Council and received remuneration for his employment. He was undertaking paid work that was suitable to him. The fact that his contract of employment was capable of being terminated did not detract from that conclusion and it was sufficient to satisfy s.595(1)(a) of the Act. Consideration was given as to whether, having regard to the matters in s.595(1)(b) of that Act, that activity should have been disregarded and Polke treated as being unemployed during the period. The policy intent of the section is contained in the Explanatory Memorandum to the Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) Act 2005 (Cth):
Section 595 is concerned with the Secretary’s power to treat people as unemployed in certain circumstances. As a result of the Welfare to Work measures, some people who might previously have sought to claim either Parenting Payment or Disability Support Pension will now need to establish entitlement to other payments such as newstart allowance. One qualification criterion for newstart allowance is that the person must be unemployed. However, it is recognised that some people in the affected group will already be working to capacity or undertaking other appropriate activities, with the effect that they might not be correctly described as ‘unemployed’. Accordingly, new subsection 595(1) creates a power for the Secretary to treat a person as unemployed in the circumstances specified in proposed new subsection 595(1).
The AAT considered that the criteria in sub-paragraphs (i) to (iv) seem to run counter to the notion that full time employment of the nature engaged in by Polke is the type of employment that ought be disregarded. Rather, sporadic or intermittent work, or work on a week to week basis, might properly be disregarded. Polke argued that the fact that his employment was subject to a probationary period had the effect that it should be disregarded. The AAT did not agree and considered that a probationary period was not unusual in employment contracts, but commonplace. The point was not that Polke’s contract was terminated during the probationary period rather that Polke was offered, and accepted, full time employment in a responsible position at a commensurate salary. There was nothing intermittent or sporadic about the employment (Rouf & Secretary, Department of Family & Community Services [2004] AATA 838; (2004) 83 ALD 357) and it was permanent in nature but subject to the possibility that within the first three months, the employer could terminate the employment without cause if it elected to do so. But it had to make such an election. If no election was made the employer could only terminate in accordance with the other terms of the contract for summary dismissal.
Polke contended that the Workplace Relations Act 1996 (Cth) and Div. 4 of Part 12 provided after the probationary period an employer could not terminate an employee’s contract of employment. Section 638(1)(c) of that Act has the effect of excluding the operation of some provisions of that Act that would otherwise permit an employee to see relief from the Australian Industrial Relations Commission against termination of employment that was ‘harsh, unjust or unreasonable’ however an employer remains able to terminate employment in circumstances that do not answer that description. In particular, that Act permits an employer to terminate employment for ‘genuine operational reasons or for reasons that include genuine operational reasons’. In the AAT’s view the legislation did not have the effect for which Polke contended.
The AAT concluded there was no basis on which it could exercise the discretion in s.595 of the Act.
Finally the AAT considered the choice between cancellation and suspension that must be made once it was determined that a recipient was no longer qualified for newstart allowance.
As at 2 November 2009, when the decision was made to cancel Polke’s newstart allowance, he was a person to whom a social security payment had been paid and he was not then qualified for the payment therefore the Secretary was required to determine whether the payment was to be cancelled or suspended. The legislation provides no assistance regarding which of those alternatives should be adopted however the policy set out in the departmental Guide to Social Security Law, suggests that ‘normally suspension may occur for very short periods of time’.
Under the heading ‘Employment Income Nil Rate Period’ on which Polke placed reliance, the Guide states:
A customer whose social security pension or benefit is not payable because of ordinary income, made up entirely or partly of employment income ... may qualify for an employment income nil rate period.
...
If during an employment income nil rate period the customer’s income falls and their social security pension or benefit becomes payable again, the customer’s payment will recommence.
Explanation: The employment income nil rate period policy provides incentives for customers to take up work, particularly substantial part-time or irregular casual work. It acknowledges the increasing casual nature of jobs and the lack of job security in some occupations, and enables customers to get back onto payment easily during a nil rate period.
...
Qualification rules for an employment income nil rate period:
Customers qualify for an employment income nil rate period if their social security pension or benefit is not payable because of ordinary income, made up entirely or partly of employment income ... and they:
• are below age pension age ..., and
• are receiving a social security pension or benefit ..., and
• remain qualified, ... except for the requirement of [widow’s pension] to have a partner on [age pension] or [disability support pension], for their social security pension or benefit, including meeting the employment qualifications ..., and
• continue to satisfy the payability provisions for their social security pensions or benefit, except for being not payable due to the income.
The AAT considered that the text of the policy makes it plain that persons in Polke’s situation are not the intended beneficiaries of the policy. Therefore, newstart allowance customers who take up paid work but who are still considered to be unemployed because the work is casual or short term, may qualify. Those who take up paid work and are no longer unemployed do not.
The AAT was satisfied that the decisions under review were in accordance with the legislation and policy, subject only to a correction of the date of cancellation of newstart allowance.
The decision under review was affirmed.
[S.P.]
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URL: http://www.austlii.edu.au/au/journals/SocSecRpr/2010/48.html