Demerits and penalties for not meeting mutual obligation requirements

Demerits and financial penalties may apply for not meeting mutual obligation requirements without a valid reason.

Who this applies to

Demerits and financial penalties for not meeting mutual obligation requirements under the Targeted Compliance Framework apply to both:

  • job seekers with a jobactive and Disability Employment Services provider
  • some ParentsNext participants.

Who this doesn't apply to

There are different penalties for job seekers participating in the Community Development Program who don’t meet their requirements.

Read more about not meeting mutual obligation requirements in the Community Development Program.

How demerits work

Your payments will stop if you don’t meet your mutual obligation requirements. You’ll also get a demerit each time you miss a requirement without a valid reason.

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

You may move to the penalty zone if you get 5 demerits in 6 months.

If you miss any requirements when you’re in the penalty zone, you may get a financial penalty. This penalty may include having your payment cancelled.

In the green zone

You’ll start in the green zone with no demerits.

You’ll stay in the green zone if you’re meeting all the requirements in your plan. To meet your requirements you need to do both of the following:

  • go to appointments, activities and interviews arranged by your provider
  • record your job search efforts and attendance at activities and appointments.

If you can’t go to an appointment or activity you need to talk to your provider beforehand. If you miss a requirement, your payment will stop until you talk to your provider.

If you don’t have a valid reason for missing a requirement your provider will give you a demerit. You’ll also need to meet the requirement you missed before your payment starts again.

In the warning zone

Each time you miss a requirement without a valid reason you’ll get a demerit. If you have 1 or more demerits you’ll be in the warning zone.

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

You’ll need to have a capability interview with your provider if you either:

  • get 3 demerits in 6 months
  • don’t turn up to a job interview or don’t act on a job referral.

Your provider will refer you to us for a Capability Assessment if you get 5 demerits in 6 months.

They’ll also refer you for an assessment if you’ve already had a capability interview and you either:

  • don’t go to a job interview
  • don’t act on a job referral.

Read more about the Capability Assessment.

What happens in the penalty zone

In the penalty zone there are no demerits. Instead you’ll get a financial penalty if you don’t meet your requirements and you don’t have a reasonable excuse.

This means you will:

  • 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.

We can’t waive these penalties.

If you do the right thing for 3 months in the penalty zone, you’ll return to the green zone. If this happens, you’ll have no demerits.

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 failure

You may get a work refusal failure if you either:

  • refuse a suitable job offer
  • don’t start a job you’ve accepted.

A work refusal failure means your payment will be cancelled for 4 weeks.

Unemployment failure

You may get an unemployment failure if you either:

  • choose to leave your job without a valid reason
  • 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.

These cancellations don’t apply if you’re taking part in ParentsNext. They also don’t affect family payments.

What you need to do if your payment is cancelled

If your payment is cancelled, you need to submit a new claim using your Centrelink online account through myGov. You need to wait at least 4 weeks before you get a payment. You may also need to serve other waiting periods.

Read more about what payments you can claim online.

Know where you’re at

Use the online dashboard to help you keep track of both of the following:

  • whether you’re meeting your requirements
  • which zone you’re currently in.

You can access the dashboard from your JobSearch account on the jobactive website. You can also find out more about the compliance system by watching the videos on the jobactive website.

Using your Health Care Card

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

How to avoid penalties

If you’re finding it hard to meet your requirements, it’s important to let your provider know. If you don’t have a provider, talk to us instead. You need to do this before you get a demerit or financial penalty.

You can avoid penalties by doing the things you’ve agreed to in your plan like:

  • going to all your appointments and compulsory activities
  • telling your provider before your appointment or activity if you can’t attend it
  • agreeing to or changing your plan if asked
  • not leaving a job, training course or program without a valid reason
  • showing you’re actively looking for suitable paid work
  • accepting suitable job offers
  • going to job interviews.

If you don’t agree with a demerit or penalty

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

If you disagree with a financial penalty or payment cancellation you can ask us to review the decision. If this happens, you won’t get a payment 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 move with you if you change your provider. This applies if you move to a different provider in either:

  • jobactive
  • Disability Employment Services
  • ParentsNext.

Page last updated: 11 November 2019