Editors --- "Newstart allowance: whether self-employment prevents payment" [2011] SocSecRpr 6; (2011) 13(1) Social Security Reporter, Article 6

• LOUIS and SECRETARY TO THE DFHCSIA and Ors
• Background
• The law
• Discussion
• Formal decision

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Newstart allowance: whether self-employment prevents payment

LOUIS and SECRETARY TO THE DFHCSIA and Ors

(2011/30)

Decided: 27th January 2011 by N. Isenberg

Background

Louis was granted newstart allowance (NSA) on 2 December 2006. On 12 June 2007 she informed Centrelink of her intention to purchase and operate a takeaway. This business commenced operation on 1 July 2007. Centrelink did not cancel Louis’s NSA. Instead she signed a number of employment pathway plans (EPPs) with Centrelink and various job network service providers. It was not in dispute that she always reported her income to Centrelink and complied with the terms of each EPP. The terms of many of these plans required her to maintain her involvement with the takeaway.

Centrelink suspended Louis’s NSA on 31 December 2009 and cancelled it on 8 January 2010 on the grounds that her operation of this business prevented her from finding full-time work. On review, the Social Security Appeals Tribunal (SSAT) affirmed this decision, placing some weight on the hours that Louis worked in her business and that her long hours of work prevented her from being regarded as unemployed.

The law

Section 593(1)(a) of the Social Security Act (1991) (the Act) provides that subject to other sections that a person is qualified for newstart allowance if they are unemployed.

Section 595 of the Act provides that it is possible for a person to be treated as unemployed, even if they are engaged in an activity which would otherwise prevent them from being regarded as unemployed. This section of the Act then goes on to list the factors relevant to any decision to disregard an activity for the purposes of determining a person’s eligibility for NSA.

Part 1.1.U.30 of the Guide to Social Security Law outlines the factors which should be considered in determining whether the above discretion should be exercised or not.

Discussion

The AAT considered the nature of the work undertaken by Louis, its duration, her remuneration from the business, her satisfaction of the activity test and other relevant factors.

The Secretary conceded that Louis complied with the terms of her activity agreements and EPPs, including the provision of details of business income as required. The Secretary also conceded that Louis had applied for jobs and attended appointments as required. Louis claimed that her operation of the business maintained her engagement with the labour force and that she had always complied with her job seeker obligations.

The Tribunal found that the discretion under s.595 should be exercised because Louis had not incurred a participation failure during the period in which she was in receipt of NSA. Furthermore, the Tribunal found that Centrelink had failed to establish that Louis’s operation of the business was incompatible with her participation requirements. The Tribunal found that Centrelink’s awareness of Louis’s business operations and the inclusion of business related matters in her EPP amounted to the tacit endorsement of her arrangements by Centrelink. In this regard it could not be claimed that Louis had concealed her arrangements in any way. The Tribunal found that to find the contrary would impose significant financial hardship on Louis and that the discretion under s.595 should be exercised in this case.

Formal decision

The AAT set aside the decision of the SSAT and substituted the decision that Louis should be treated as unemployed as at 31 December 2010.

[I.T.]