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A person receiving a social security participation payment may have their payment cancelled if they voluntarily leave their job or are dismissed due to misconduct. They are then not eligible to be paid for a preclusion period - generally 4 weeks.
Similarly, if a person submitting a claim for a social security participation payment has left their job in the same circumstances (i.e. voluntarily or due to misconduct), they also cannot receive payments for a preclusion period, known as a “non-payment period”.
This is referred to as compliance action for ‘unemployment failures’.
Compliance actions for unemployment failures are set out in law and supported by policies.
Decisions occur under the Social Security (Administration Act) 1999. The relevant provision is s 42AH.
Guidelines for these decisions are in the Social Security Guide (3.11.13).
Decisions have been paused
On 5 March 2025, the Secretary of the Department of Employment and Workplace Relations (the Secretary) paused all decisions regarding cancellations of people’s social security participation payments due to unemployment failures.
The reason for taking this decision
It has become clear that decisions regarding compliance action for unemployment failures may not have been validly made.
The department is reviewing its processes to ensure that decision making in this area is as robust as possible. These cancellation decisions will remain paused while this work is ongoing.
People impacted
From 5 March 2025, people who receive social security participation payments will no longer have their payments cancelled for unemployment failures. People will also no longer be subject to a non-payment period for unemployment failures while this pause is in effect.
The department has identified 8,659 times since 8 April 2022 where 8,546 people had their payments cancelled or had a non-payment period for unemployment failures.
For more information visit ‘information for job seekers’.
Actions regarding past decisions
More than $17,000 has been paid in backpay to 10 people under the Social Security (Administration) Act 1999.
The department is considering appropriate next steps for other affected individuals.
Next steps
Processes have been updated to ensure that a person’s social security participation payment is not cancelled due to an unemployment failure.
We will continue to work to ensure decisions are made in a lawful and robust manner.
An independent assurance review examined the IT system operating the Targeted Compliance Framework against policy and business rules to ensure the system is operating as intended.
The review and its recommendations, together with the findings of the Commonwealth Ombudsman’s first report are being acted on as a priority and the urgent actions identified in the reviews are underway.
There is also a legal review examining whether decisions are being properly made and whether decision making processes are aligned with the law.
If the Secretary has reasonable concerns that the system is not operating in accordance with the law, she will take action to stop those decisions immediately.
Further information is also available under Frequently Asked Questions.