Lee and Secretary, Department of Social Services (Social services second review)
[2021] AATA 3574
•7 October 2021
Lee and Secretary, Department of Social Services (Social services second review) [2021] AATA 3574 (7 October 2021)
Division:GENERAL DIVISION
File Number: 2021/2701
Re:Jeremy Lee
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Member R Maguire
Date:7 October 2021
Place:Brisbane
The reviewable decision is affirmed.
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Member R Maguire
Catchwords
SOCIAL SECURITY – Newstart Allowance – suspension of benefits – whether Applicant was beneficiary of termination payment – whether payment should enliven income maintenance period – calculation of income maintenance period – decision affirmed
Legislation
Social Security Act 1991 (Cth)
REASONS FOR DECISION
Member R Maguire
7 October 2021
INTRODUCTION
The Applicant seeks the review of a decision made by the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT 1) on 24 March 2021 affirming the decision made on 20 September 2019 of an authorised review officer of Services Australia (“the Respondent”) to suspend payment of Newstart allowance (now known as Jobseeker) to the Applicant for the period 1 August 2019 to 29 January 2020 following application of an income maintenance period.
At the heart of the decision to suspend was the conclusion that a payment received by the Applicant from his former employer in consequence of a Fair Work Commission Order dated 22 July 2019 was to be characterised as a termination payment such that Income Maintenance period applied.
ISSUES
The issue before this Tribunal is whether the payment received by the Applicant was a termination payment so as to be captured by sections 1068 – G7AG to 1068 – G7AR of the Social Security Act 1991 (Cth) (“the Act”), and therefore give rise to an Income Maintenance Period.
LEGISLATION
Section 643 of the Act provides that the rate of new start allowance is calculated using Benefit Rate Calculator B at the end of section 1068 of the Act. Module G of Benefit Rate Calculator B sets out that an income tested affects the rate of new start allowance.
Sections 1068 – G7AG to 1068 – G7AR provide for an Income Maintenance Period to apply when a person receives a termination payment.
Section 1068 – G7AH of the Act provides:
Certain termination payments taken to be ordinary income
1068 – G7AH If:
(a)a person’s employment has been terminated; and
(b)the person receives a termination payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);
the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates.
Section 1068 – G7AQ of the Act includes the following definition of a “termination payment”:
“termination payment” includes:
(a)a redundancy payment; and
(b)a leave payment relating to a person’s employment that has been terminated; and
(c)any other payment that is connected with the termination of a person’s employment.
Section 1068-G7AM provides a discretion to waive the whole or any part of an income maintenance if the Secretary is satisfied of severe financial hardship:
If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.
FACTUAL BACKGROUND
On 12 February 2018, the Applicant ceased employment with his former employer Superior Wood Pty Ltd.[1] On 22 May 2018, he commenced receiving a Newstart allowance.[2]
[1] Exhibit 1, T Documents T5 at page 33.
[2] Exhibit 1, T Documents T18 at page 94.
Following the cessation of his employment, the Applicant complained to the Fair Work Commission that he had been unfairly dismissed, and sought a remedy. He achieved the remedy on 22 July 2019, when the Fair Work Commission made the following orders:[3]
Superior Wood Pty Ltd is to pay Mr Jeremy Lee compensation in the amount of $24,117.08 less tax according to law, and 9.5% superannuation contribution into Mr Lee’s nominated superannuation fund as an appropriate amount for remuneration lost. These amounts are to be paid to Mr Lee within 14 days at the date of this order.
This order comes into effect on 22 July 2019.
[3] Exhibit 1, T Documents T7 at page 35.
A payment slip dated 1 August 2019[4] was subsequently produced and confirmed payment of a total gross amount as $24,117.08 and a net amount after tax of $16,399.62. In its terms, and under the heading “Description” on the payment slip, the payment was described as “Employment Termination Payment”.
[4] Exhibit 1, T Documents T7 at page 36.
In consequence of this payment, on 7 August 2021, the Applicant was forwarded a notice of suspension of his new start allowance[5] which relevantly stated:
A decision has been made to stop your new start allowance from 1 August 2019 until 29 January 2020 because your income is too high. This is because we are taking into account money you have received for a redundancy payment and or unused leave entitlements for example, annual leave and long service leave) this is called an Income Maintenance Period.
[5] Exhibit 1, T Documents T8 at page 37.
It can be seen from the foregoing, that the terms of the notice of 7 August 2019 were not felicitous to Section 1068 – G7AQ of the Act, and omitted reference to the all-inclusive words found in subsection (c), namely and critically “any other payment that is connected with the termination of a person’s employment”.
Unsurprisingly, this gave rise to a misunderstanding.
In a submission[6] dated 21 April 2021 the Applicant contended in essence that the compensation paid to him was for a legal remedy, and was not income due to employment and not income from lost employment. He said he did not receive income so the allowance should not have been suspended. He further contended that income is defined by the reason for the payment, not the payer. He further contended that if his employer had not breached his rights his employer would not have had to pay him anything because no income was owed. He contended his payment was not a termination payment because it was not accrued during employment or due upon dismissal. He further contended that both Centrelink and the ATO had wrongly asserted that his payment was income, and had deceptively claimed a large portion of his compensation.
[6] Exhibit 3, Applicant’s Statement.
Before this Tribunal, it has only been contended that the income maintenance period did not apply. It has not been contended that it has been improperly calculated. Neither has it been contended that “severe financial hardship” provides a reason to waive some or all of the income maintenance period.
The payment at the heart of this application would clearly not have been made but for the Applicant’s prior employment. The Fair Work Commission ordered the payment “as an appropriate amount for remuneration lost”. Moreover, the former employer clearly made the payment as an “Employment Termination Payment”. The payment clearly fell within sub paragraph (c) of section 1068 – G7AQ, as it fell within the description “any other payment that is connected with the termination of a person’s employment”.
The decision by the Respondent, the ARO and AAT 1 were clearly correct. The submissions by the Applicant to the contrary are ill-founded in fact, and misconceived in law.
Before this Tribunal, no submission has been made, or evidence adduced so as to suggest that the income maintenance period has been improperly calculated, or that the Applicant has suffered severe financial hardship so as to enliven the discretion to waive some or all of that period.
DECISION
Accordingly, the decision under review is affirmed.
I certify that the preceding 19 (nineteen) paragraphs are a true copy of the reasons for the decision herein of Member R Maguire
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Associate
Dated: 7 October 2021
Date of hearing: 2 September 2021 Date final submissions received: 16 August 2021 Applicant: By telephone Solicitors for the Respondent: Ms J Forsyth, Mills Oakley Lawyers
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