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A person who receives a social security participation payment and repeatedly fails to meet their mutual obligation requirements, is subject to an escalating range of compliance action under the Targeted Compliance Framework.
If a person has twice been assessed (first, by their provider and then secondly, by Services Australia) as able but unwilling to meet their mutual obligation requirements, then financial penalties may apply under the Targeted Compliance Framework.
In most cases, the eighth time a person does not meet their mutual obligation requirements without a reasonable excuse their social security participation payment may be cancelled on the basis that they have committed persistent mutual obligation failures. If this occurs, they will need to re-apply for payment and won’t be paid again for four weeks.
Decisions to cancel a person’s social security participation payment for persistent mutual obligation failures are set out in law and supported by policies.
Decisions occur under the Social Security (Administration) Act 1999 and the Social Security (Administration) (Non-Compliance) Determination 2018 (No. 1). The relevant provision in the Social Security (Administration) Act 1999 is s 42AF(2)(d).
Guidelines for these decisions are in the Social Security Guide (3.11.13).
Decisions have been paused
On 4 July 2024, the Secretary of the Department of Employment and Workplace Relations (the Secretary) paused cancellations of people’s social security participation payments due to persistent mutual obligation failures.
The reason for taking this decision
In July 2024 it became clear that decisions being made to cancel payments due to persistent mutual obligation 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, and these decisions will remain paused while this work is ongoing.
People impacted
Since 4 July 2024, people who are receiving social security participation payments have not had their payments cancelled for persistently failing to meet their mutual obligation requirements.
The department has identified 964 people who had their social security participation payment cancelled 985 times between 8 April 2022 and 4 July 2024 who may have been impacted by past cancellation decisions.
What we’re doing
The department has reviewed each decision which cancelled a person’s social security participation payments due to persistent mutual obligation failures between 8 April 2022 and 4 July 2024.
Compensation has been paid under the Compensation for Detriment Caused by Defective Administration (CDDA) Scheme to people who were found to suffer a detriment on initial review. As of 2 October, over $870,000 has been repaid to more than 600 individuals.
The department has contacted the remaining affected individuals so they can provide further information to support consideration for compensation. The department has considered additional information provided to date and made decisions under the CDDA Scheme.
The department will continue to review this additional information and make further compensation decisions as appropriate.
Standard Operating Procedures
Standard Operating Procedures (SOPs) explain our processes. To provide transparency on the remediation process, you can view the SOPs on our website. They outline how we reviewed certain decisions made to cancel people’s social security payments under s42AF(2)(d).
Read the review summary and criteria
More information
You can call the Department of Employment and Workplace Relations on the National Customer Service Line for more information, to make a complaint or provide feedback on 1800 805 260 or NationalCustomerServiceLine@dewr.gov.au.
Next steps
Our systems have been updated to ensure that people’s social security participation payments are not cancelled due to persistent mutual obligation failures.
We will continue to work to ensure decisions taken 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 available in the Frequently Asked Questions.