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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.
Since 1 July 2018, 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. This is often referred to as reducing a person’s social security participation payment.
Decisions to reduce 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)(c).
Guidelines for these decisions are in the Social Security Guide (3.11.13).
Decisions have been paused
On 6 March 2025, the Secretary of the Department of Employment and Workplace Relations (the Secretary) paused all decisions to reduce people’s social security participation payments due to persistent mutual obligation failures.
The reason for taking this decision
Decision making in this area needs to be well-considered and robust as possible, taking into account other aspects of the mutual obligations framework.
The department does not consider that the decisions that have been made are incorrect, or that job seekers have been incorrectly impacted by these payment reduction decisions. The pause in payment reductions is a precaution and reduction decisions will remain paused while work is underway to improve our processes.
People impacted
From 6 March 2025, people who are on a social security participation payment will not have their payments reduced for persistently failing to meet their mutual obligation requirements.
More information is available at ‘information for job seekers’.
Actions regarding past decisions
The department is considering appropriate next steps, noting that this decision was taken as a precaution while the broader operation of the system is examined.
Next steps
Our systems have been updated to ensure that people’s social security participation payment is not reduced due to persistent mutual obligation failures.
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