Demerits and penalties for not meeting mutual obligation requirements

Job seekers and ParentsNext participants could get demerits and financial penalties for not meeting mutual obligation requirements.

Who this applies to

Demerits and financial penalties apply to:

  • job seekers, including those on Youth Allowance, in jobactive, Disability Employment Services or online employment services
  • compulsory ParentsNext participants.

Watch the introduction to the compliance system videos on the jobactive website.

Who this doesn't apply to

There are different penalties for job seekers in the Community Development Program. Read more about not meeting mutual obligation requirements in the Community Development Program.

How demerits work

If you don’t meet your mutual obligation requirements you may have your payment suspended and you could get a demerit.

You’ll need to talk to your provider before your payment can start again. If they decide you don’t have a reasonable excuse they’ll give you a demerit but you won’t lose any money.

Each demerit lasts 6 months from the date you get it.

If you get 3 demerits in 6 months

You’ll need to attend a Capability Interview to discuss you circumstances and why you are not meeting your requirements.

If you get 5 demerits in 6 months

You’ll need to have a Capability Assessment. This makes sure your requirements are reasonable for your circumstances.

You may also have a Capability Assessment if you don’t go to a job interview and you don’t have a reasonable excuse.

If you disagree with a demerit

If you disagree with a demerit, you need to talk to your provider. We can’t change or remove demerits.

How to keep track of your demerits

You can keep track of your demerits using the dashboard in your JobSearch account on the jobactive website.

The dashboard shows 3 zones. These are:

  • green zone
  • warning zone
  • penalty zone.

In the green zone

You have no demerits.

You’re responsible for making sure you’re meeting all the requirements in your Job Plan.

You must record what you do to meet your requirements in your jobactive account. This includes recording your:

  • attendance at activities and appointments
  • job search efforts.

If you’re unable to meet your mutual obligation requirements, you should talk to your provider.

In the warning zone

If you have 1 or more demerits you’ll be in the warning zone.

You’ll get a demerit each time you don’t meet your requirements and you don’t have a reasonable excuse.

In the penalty zone

There are no demerits in the penalty zone. Instead, you may get a financial penalty.

Watch the compliance system videos about the zones and using the dashboard on the jobactive website.

What happens in the penalty zone

In the penalty zone there are no demerits. Instead, you may get a financial penalty if you don’t meet your requirements.

Your payment will be suspended and you’ll need to talk to your provider about why you didn’t meet your requirements. If your provider decides you don’t have a reasonable excuse they’ll refer it to us.

If it’s your first or second penalty you can either:

  • talk to us about your reasons before we make a decision
  • accept the penalty without talking to us.

If you’re facing a third penalty you cannot accept it without talking to us. If you don’t contact us, your payment will stay suspended and you won’t be able to report or get paid.

If you get a penalty you’ll:

  • lose half of your fortnightly payment for the first penalty
  • lose all of your fortnightly payment for the second penalty
  • have your payment cancelled if you get a third penalty.

If we cancel your payment, you can submit a new claim. Keep in mind you won’t get a payment for at least 4 weeks. It could be longer as other waiting periods may also apply.

We can’t waive these penalties.

If you meet your requirements for 3 months, you’ll return to the green zone with no demerits.

Watch the compliance system videos about understanding financial penalties on the jobactive website.

What other penalties apply

You could have your payment cancelled if you get a work refusal or unemployment failure. This applies even if you don’t have any demerits. Work refusal and unemployment failure penalties don’t apply if you’re in ParentsNext.

This cancellation won't affect your family payments.

Work refusal failure

You may get a work refusal failure if you don’t:

  • accept a suitable job offer, even if it’s not in your preferred field
  • start a job you’ve accepted.

You’ll have your payment suspended until you talk to your provider about the failure.

If they decide you don’t have a reasonable excuse, you’ll need to talk to us.

If we decide you don’t have a reasonable excuse and the job was suitable, we’ll cancel your payment.

You can reapply for payment, but you’ll have to wait at least 4 weeks before you’re paid again.

Unemployment failure

You may get an unemployment failure if you:

  • choose to leave your job without a reasonable excuse
  • lose your job due to misconduct.

An unemployment failure means you won’t get a payment for either:

  • 4 weeks
  • 6 weeks if you got relocation assistance for the job from your provider.

What you need to do if your payment is cancelled

You can submit a new claim at any time using your Centrelink online account through myGov. You'll need to wait at least 4 weeks before you get a payment. You may also need to serve other waiting periods.

Read more about claiming a payment online.

Using your Health Care Card

If you already have a Heath Care Card, you can keep using it even if you have a penalty applied.

How to avoid penalties

You can avoid getting demerits and penalties by doing the things you’ve agreed to in your Job Plan.

If you’re finding it hard to meet your requirements, it’s important to let your provider know as soon as possible. You need to do this before you miss an appointment or activity.

If you can’t go to an appointment or activity

You need to talk to your provider before your appointment or activity is due to start.

If you don’t agree with a penalty

If you disagree with a financial penalty or payment cancellation, you can ask us to review the decision. If this happens, the penalty will stay in place until we finish the review. If we change the decision, you may get back pay.

Read more about review and appeals of a Centrelink decision.

What happens if you move to a different provider

Your demerits and financial penalties stay with you if you change your provider.

Page last updated: 3 March 2021