POLKE and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS - [2010] AATA 776

Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 776
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/1204

GENERAL ADMINISTRATIVE DIVISION )

Re JONATHAN POLKE

Applicant

And

SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Deputy President P E Hack SC
Date12 October 2010
PlaceBrisbane (Heard in Darwin)

Decision
The decision of 2 November 2009 is varied by substituting 11 September 2009 for 7 September 2009; the decisions under review are otherwise affirmed.

............Signed..................
Deputy President

CATCHWORDS
SOCIAL WELFARE – pensions, payments and allowances – cancellation of Newstart allowance – interpretation of “unemployed” – applicant not “unemployed” in relevant period –nature of full time employment engaged in by applicant not type of employment that ought be disregarded – no basis to exercise discretion in s 595 of the Social Security Act 1991 (Cth) – decision of 2 November 2009 varied by substituting 11 September 2009 for 7 September 2009 – decisions under review otherwise affirmed
Social Security Act 1991 (Cth), ss 593, 595
Social Security (Administration) Act 1999 (Cth), s 80(1)
Re Rouf & Secretary, Department of Family and Community Services [2004] AATA 838; (2004) 83 ALD 357
Secretary, Department of Employment and Workplace Relations v Joss [2006] FCA 884; (2006) 92 ALD 60
REASONS FOR DECISION

12 October 2010 Deputy President P E Hack SC

Introduction

Mr Jonathan Polke commenced employment with the East Arnhem Shire Council on 11 September 2009. His employment was subject to an “initial probationary period of three months”. As events transpired his employment was terminated on 24 November 2009, within that probationary period, and thereafter Mr Polke applied for Newstart allowance.
In these proceedings Mr Polke contends that he ought to have been regarded as unemployed during that period because of the lack of security of his employment and that he ought to have been treated as qualified for an “employment income nil rate period” during that period of employment.
The legislative background
The qualification for receipt of Newstart allowance is set out in s 593 of the Social Security Act 1991 (Cth). Subject to certain irrelevant exceptions a person is qualified for a Newstart allowance for a period if, relevantly for present purposes,
“(a)the person satisfies the Secretary that:
(i)throughout the period the person is unemployed; …”
The other paragraphs of s 593 are not in issue in these proceedings.
The strict effect of s 593 can be abated in some circumstances by s 595 of the Act. It provides:
“(1)The Secretary may treat a person as being unemployed throughout a period if:
(a)during the period, the person undertakes:
(i)paid work that, in the Secretary’s opinion, is suitable for the person to undertake; or
(ii)any other activity;
as a result of which he or she would, but for this subsection, not be taken to be unemployed; and
(b)the Secretary is of the opinion that, taking into account:
(i)the nature of the work or other activity; and
(ii)the duration of the work or other activity; and
(iii)any remuneration received for the work or other activity; and
(iv)any other matters relating to the work or other activity, or to the person’s circumstances, that the Secretary considers relevant;
the activity should be disregarded.
…
(3)In deciding whether to treat a person as being unemployed, the Secretary is to take into account:
(a)the nature of the activity undertaken by the person so as to comply with a requirement under subsection 601(1A) (activity test) or a requirement in a Newstart Employment Pathway Plan; and
(b)the duration of the activity; and
(c)any other matters relating to the activity that the Secretary considers relevant.”
It is necessary, finally, to make mention of s 80(1) of the Social Security (Administration) Act 1999 (Cth). It provides,
“(1)If the Secretary is satisfied that a social security payment is being, or has been, paid to a person:
(a)who is not, or was not, qualified for the payment; or
(b)to whom the payment is not, or was not payable;
the Secretary is to determine that the payment is to be cancelled or suspended.”
Factual background
Mr Polke applied for Newstart allowance in early 2008. The level of his bank deposits was such that he was required to serve a “liquid assets waiting period” i.e. a period during which he was not entitled to receive Newstart allowance, from 15 March 2008. He began receiving Newstart allowance from 21 June 2008.
The East Arnhem Shire Council made Mr Polke an offer of employment as the CDEP Manager at Yirrkala by letter dated 27 August 2009. Mr Polke accepted the offer and countersigned the letter on 11 September 2009, the day he commenced employment. The position was described in the letter as “a permanent, full time position” which, the letter said, would “operate under the East Arnhem Shire Council Employee Collective Agreement 2009-2012”. The letter continued:
“Your employment will be subject to an initial probationary period of three months commencing on your commencement date. During the probationary period either the CEO or you may terminate this Agreement on 2 weeks’ written notice. Before the end of the probationary period, the Shire Services Manager Yirrkala will review your performance. If your performance has not been successful during this period, the Chief Executive Officer may terminate this Agreement or extend the probationary period for a further three months, up to a total of six months. If your performance has met the Council’s requirements, then your appointment will be confirmed in writing.
In addition, Clause 13.7 Summary Dismissal will be appropriate for the following:
1. During your employment with EASC, you may become privy to information that is confidential. It is a condition of your employment that you treat such information as confidential and that you will not divulge information or documents unless authorised in writing by the Council or Chief Executive Officer.
2. If as a result of your Criminal History or Working with Children check, or additional criminal conviction whilst employed with EASC, it is deemed that you are unsuitable to continue in your designated role. The onus of disclosure to EASC for relevant convictions rests with the employee. Failure to report may result in summary dismissal.”
After commencing this employment Mr Polke continued to receive and complete the fortnightly “Application for Payment Form” which disclosed the dates of his employment, his employer and the amount of his earnings before tax. On several of these forms Mr Polke made mention of the fact that the employment was on probation and that it might be permanent. Despite this Centrelink wrote to Mr Polke on 30 September 2009 to “confirm that we have your correct employment details”. Mr Polke contacted Centrelink as requested and on 6 October 2009 Centrelink wrote to the East Arnhem Shire Council requesting details of Mr Polke’s employment.
The Council’s response, although inaccurate in relation to the commencement date of Mr Polke’s employment, led to a decision by Centrelink on 2 November 2009 to cancel Mr Polke’s Newstart allowance with effect from 7 September 2009. It was accepted by the Secretary at the hearing that the date of effect was wrong and that the date of effect ought to have been 11 September 2009[1]. Mr Polke says, and I accept, that immediately thereafter he contacted Centrelink and reiterated that his employment was not permanent.
[1] The error was originally that of the East Arnhem Shire Council in its response to the Centrelink correspondence.
On 24 November 2009 Mr Polke’s employment was terminated. Mr Polke again claimed Newstart allowance and this was granted on 8 December 2009 but only with effect from 2 March 2010. That date was determined because it was decided to apply a liquid assets waiting period, an income maintenance period and a one week ordinary waiting period. Mr Polke sought review of the decision of 2 November 2009 to cancel his Newstart allowance and the decision of 8 December 2009 to impose waiting periods to 2 March 2010. On review by an Authorised Review Officer the latter decision was varied by deleting the application of a one week ordinary waiting period but the decisions were otherwise affirmed. The decisions, as varied in that way, were affirmed by the Social Security Appeals Tribunal on 16 March 2010.
Consideration
Three issues arise:
· was Mr Polke unemployed between 11 September 2009 and 24 November 2009 (the s 593 question);
· if Mr Polke was not unemployed during that period ought he be treated as if he had been unemployed during that period (the s 595 question); and
· if both questions are answered adversely to Mr Polke ought his Newstart allowance have been suspended rather than cancelled (the s 80 question).
The term “unemployed” is not otherwise defined in the legislation. The Secretary’s submissions drew attention to the discussion of the term by Graham J in Secretary, Department of Employment and Workplace Relations v Joss[2] where his Honour said:
[2] [2006] FCA 884; (2006) 92 ALD 60.
“[12]In the Macquarie Dictionary (A Delbridge et al (eds), Revised 3rd Ed, The Macquarie Library Pty Ltd, Macquarie University, 2003, p 619) ‘unemployed’ is defined as:
·     1. out of work, especially temporarily and involuntarily; without work or employment.
·     2. not employed; not in use; not kept busy or at work.
·     3. not in productive or profitable use.
…
[13]In The Oxford English Dictionary (JA Simpson & ESC Weiner (eds), Vol XIX, 2nd Ed, Clarendon Press, Oxford, 1989) ‘unemployed’ is defined as follows:
·     1. Not put to use; not applied to some end or purpose …
·     2. … Not engaged in any work or occupation; idle; … temporarily out of work.
…
[14]When one has regard to the dictionary definitions and to the context in which the word ‘unemployed’ appears in the Act, the connotation suggested in the first of the Macquarie Dictionary meanings seems to be most apposite.
[15]Such a connotation is consistent with ‘not being engaged in work of a remunerative nature’ as suggested in Re McKenna. That expression which the Tribunal in Re McKenna said must yield to special cases might be better stated as ‘not being engaged in work of a potentially remunerative nature’. Undoubtedly a person will be unemployed when they are without work or employment and that situation is both temporary and involuntary.”
In fairness to Mr Polke I should say that he did not suggest that he was unemployed during the period of his employment with the East Arnhem Shire Council nor did he suggest that he ought to receive Newstart allowance during the period. The essence of his complaint is that he ought not to have to serve a further liquid assets waiting period before being again eligible to receive Newstart allowance. But whether that is correct or not depends upon the legislation, not of notions of fairness or unfairness. Thus, it is necessary to examine each of the three issues even where not relied on by Mr Polke.
Here, so far as the s 593 question is concerned, there can be no question that in the relevant period Mr Polke was not unemployed. He was, in fact, employed in a full time position with the East Arnhem Shire Council and received remuneration for doing so. He was undertaking paid work that was suitable to him. The fact that his contract of employment was capable of being terminated does not detract from that conclusion.
That conclusion is sufficient to satisfy s 595(1)(a) of the Social Security Act. What is in issue is whether, having regard to the matters in s 595(1)(b) of that Act, that activity ought to be disregarded and Mr Polke treated as being unemployed during the period. The policy intent of the section was explained in this way in the Explanatory Memorandum to the Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) Act 2005 (Cth):
“Section 595 is concerned with the Secretary’s power to treat people as unemployed in certain circumstances. As a result of the Welfare to Work measures, some people who might previously have sought to claim either Parenting Payment or Disability Support Pension will now need to establish entitlement to other payments such as newstart allowance. One qualification criterion for newstart allowance is that the person must be unemployed. However, it is recognised that some people in the affected group will already be working to capacity or undertaking other appropriate activities, with the effect that they might not be correctly described as ‘unemployed’. Accordingly, new subsection 595(1) creates a power for the Secretary to treat a person as unemployed in the circumstances specified in proposed new subsection 595(1).”
The criteria in sub-paragraphs (i) to (iv) seem to me to run counter to the notion that full time employment of the nature engaged in by Mr Polke is the type of employment that ought be disregarded. Rather, they suggest that sporadic or intermittent work, or work on a week to week basis, might properly be disregarded. Mr Polke argues that the fact that his employment was subject to a probationary period has the effect that it ought be disregarded. I cannot agree. A probationary period is not at all unusual in employment contracts in this country, it is commonplace. It is not to the point that Mr Polke’s contract was terminated during the probationary period. What is of significance is that Mr Polke was offered, and accepted, full time employment in a responsible position at a commensurate salary. There was nothing intermittent or sporadic about the employment[3] and it was permanent in nature but subject to the possibility that, within the first three months, the employer could terminate the employment without cause if it elected to do so. But it had to make such an election. If no election was made the employer could only terminate in accordance with the other terms of the contract for summary dismissal.
[3] See e.g. Re Rouf & Secretary, Department of Family & Community Services [2004] AATA 838; (2004) 83 ALD 357.
Mr Polke placed some reliance on legislation which, he contended, meant that after the probationary period an employer could not terminate an employee’s contract of employment. I assume that the legislation that he had in mind was the Workplace Relations Act 1996 (Cth) and Div. 4 of Part 12 of that Act in particular. It is certainly the case that s 638(1)(c) of that Act has the effect of excluding the operation of some provisions of that Act that would otherwise permit an employee to see relief from the Australian Industrial Relations Commission against termination of employment that was “harsh, unjust or unreasonable” however it remains the case that an employer remains able to terminate employment in circumstances that do not answer that description. In particular, that Act permits an employer to terminate employment for “genuine operational reasons or for reasons that include genuine operational reasons”. In my view the legislation does not have the effect for which Mr Polke contended.
There is, then, no basis on which I could exercise the discretion in s 595 of the Social Security Act.
The final question concerns the choice between cancellation and suspension that must be made once it is determined that a recipient is no longer qualified for payment of Newstart allowance. As at 2 November 2009, when the decision was made to cancel Mr Polke’s Newstart allowance, he was a person to whom a social security payment had been paid and he was not then qualified for the payment thus the Secretary was required to determine whether the payment was to be cancelled or suspended. The legislation provides no assistance regarding which of those alternatives ought be adopted however the policy adopted by the Secretary, set out in the departmental Guide to Social Security Law, suggests that “normally suspension may occur for very short periods of time”[4].
[4] Paragraph 3.2.1.90.
The matter appears to be dealt with further in the Guide[5] under the heading “Employment Income Nil Rate Period” on which Mr Polke placed considerable reliance. It is not clear from the Guide however I assume that this part of the policy informs the choice between cancellation and suspension. The Guide says this,
[5]    Paragraph 3.1.12 and following.
“A customer whose social security pension or benefit is not payable because of ordinary income, made up entirely or partly of employment income … may qualify for an employment income nil rate period.
…
If during an employment income nil rate period the customer’s income falls and their social security pension or benefit becomes payable again, the customer’s payment will recommence.
Explanation: The employment income nil rate period policy provides incentives for customers to take up work, particularly substantial part-time or irregular casual work. It acknowledges the increasing casual nature of jobs and the lack of job security in some occupations, and enables customers to get back onto payment easily during a nil rate period.
…
Qualification rules for an employment income nil rate period.
Customers qualify for an employment income nil rate period if their social security pension or benefit is not payable because of ordinary income, made up entirely or partly of employment income … and they:
·           are below age pension age …, and
·           are receiving a social security pension or benefit …, and
·           remain qualified, … except for the requirement of [widow’s pension] to have a partner on [age pension] or [disability support pension], for their social security pension or benefit, including meeting the employment qualifications …, and
·           continue to satisfy the payability provisions for their social security pensions or benefit, except for being not payable due to the income.”
The text of the policy thereafter makes it plain that persons in Mr Polke’s situation are not the intended beneficiaries of the policy. Thus, it is said that Newstart allowance customers who take up paid work but who are still considered to be unemployed because the work is casual or short term, may qualify. Those who take up paid work and are no longer unemployed do not.
In the result I am satisfied that the decisions under review are in accordance with the legislation and policy, subject only to a correction of the date of cancellation of Newstart allowance. I would then vary the decision of 2 November 2009 by substituting 11 September 2009 for 7 September 2009 but would otherwise affirm the decisions under review.
I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC
Signed:         .............Signed...........................................................
  Associate
Date of Hearing  27 September 2010
Date of Decision  12 October 2010
Applicant  In person
For the respondent  Departmental advocate

GENERAL ADMINISTRATIVE DIVISION		)
Re		JONATHAN POLKE