The Department of Employment and Workplace Relations has reinstated mutual obligation requirements for Centrelink job seekers, effective immediately, warning that recipients who fail to comply risk having their payments suspended or cancelled. The move comes as the government invites more than 50,000 welfare recipients to apply for compensation after an investigation found hundreds of payments were unlawfully stopped.
Job seekers who fail to meet their mutual obligations or refuse suitable paid work will have five days to supply a valid reason before their payments are suspended for four weeks. If no reason is given or reconnection requirements are not met, the recipient's payment will be cut off entirely.
The Targeted Compliance Framework was partially paused in July 2024 after the Commonwealth Ombudsman found 964 payment cancellations between April 2022 and July 2024 were not made in accordance with the law. The Department of Employment and Workplace Relations (DEWR) said the IT issues that caused the unlawful cancellations have been fixed.
"The department identified that IT systems were not operating in alignment with the law and policies," DEWR said earlier in October. The issue stemmed from a system change introduced in December 2020, which caused some welfare recipients to have their payments cancelled up to four days earlier than legislation allowed.
Compensation is now available under the Compensation for Detriment caused by Defective Administration (CDDA) scheme. The department's 2025–26 annual report showed $870,000 has been paid to more than 600 people. A further 50,652 people are being invited by email to apply for compensation over the coming months. The department said there is no time limit for claims, but an invitation does not guarantee payment.
Adelaide man Daniel, 51, had his payments suspended in 2022 despite being exempt from mutual obligations. His payments were later cancelled, leaving him without income support for more than three years. He challenged the decision after learning of the Ombudsman's findings, and the department reversed the cancellation in October 2025, paying him about $53,000 in back pay. "Without my pensioner dad helping me, I honestly don't know what would have happened," he said.
Advocacy groups have questioned whether the underlying problems have been resolved. Jay Coonan, coordinator of an anti-poverty centre representing several organisations, said the government has not provided evidence that the system can operate fairly and lawfully at scale. "None. None whatsoever," he said of the department's evidence. Disability groups have also criticised the decision, arguing people with disability are disproportionately affected and calling for the framework to be abolished.
DEWR said it would closely monitor the resumed provisions and noted that the most serious cancellation powers remain paused until further safeguards are in place, expected in 2027.
Analysis
Why This Matters
- Welfare recipients who fail to meet mutual obligations now face immediate suspensions and potential loss of income support.
- The resumption follows a period of uncertainty after the government acknowledged unlawful cancellations affected tens of thousands.
- Ongoing concerns from advocacy groups raise questions about the fairness and legality of the compliance system.
Background
The Targeted Compliance Framework was introduced to monitor mutual obligations for Centrelink recipients. In July 2024, it was partially paused after the Commonwealth Ombudsman found 964 payment cancellations were unlawful due to an IT system error dating back to December 2020. The government subsequently began a compensation process for affected individuals.
Key Perspectives
Department of Employment and Workplace Relations (DEWR): Says the IT issues have been fixed through system changes, testing, improved communications, and training. It will closely monitor the resumed provisions and has kept the most serious cancellation powers paused until 2027.
Advocacy groups (including ACOSS, Economic Justice Australia, National Aboriginal and Torres Strait Islander Legal Services, Inclusion Australia): Remain unconvinced that the problems are resolved, saying the department has not provided evidence that the system operates fairly. They call for the framework to be abolished, particularly due to its disproportionate impact on people with disability.
Daniel (affected recipient): Describes three years without income support, homelessness, and reliance on family after his payments were unlawfully cancelled despite being exempt from mutual obligations.
What to Watch
- The number of compensation claims submitted and the total amount paid under the CDDA scheme.
- Any further legal challenges or ombudsman findings regarding the resumed compliance framework.
- The introduction of additional safeguards in 2027 before the most serious cancellation powers are fully reinstated.
Checked
12 claims in this story checked against 2 sources: 10 supported.
Show each claim
- SupportedMutual-obligation requirements have resumed, effective immediately.7NEWS: “Now that the Targeted Compliance Framework has been deemed lawful again, the mutual obligations have resumed.”
- SupportedMore than 50,000 people are being invited to apply for compensation.Just In: “It is now inviting a further 50,652 people to also apply for compensation.”
- SupportedJob seekers who fail to meet obligations or refuse suitable paid work have five days to give a valid reason before a four-week suspension.7NEWS: “Recipients who fail to meet their obligations, or refuse “suitable paid work” will have five days to supply a valid reason why. After that, their payments will be suspended for four weeks.”
- SupportedDEWR said earlier in October, “The department identified that IT systems were not operating in alignment with the law and policies.”7NEWS: ““The department identified that IT systems were not operating in alignment with the law and policies,” the Department of Employment and Workplace Relations (DEWR) said earlier in October.”
- Partly supportedThe framework was partially paused in July 2024 after the Ombudsman found 964 cancellations were not lawful.Just In: “That scheme, which was partially paused in July 2024 when concerns it may have been operating unlawfully first arose, has now restarted with advocates warning the problems have not been fixed. A Commonwealth Ombudsman investigation last year found 964 payment cancellations were not made in accordance with the law.”
- SupportedA December 2020 system change caused some payments to be cancelled up to four days earlier than the law allowed.Just In: “The department said one reason identified for the system failure stemmed from an IT system change introduced in December 2020, which caused some welfare recipients to have their payments cancelled up to four days earlier than legislation allowed.”
- SupportedThe 2025–26 annual report showed $870,000 had been paid to more than 600 people.Just In: “The department's 2025-26 annual report released last week showed $870,000 has been paid in compensation to more than 600 people following the review.”
- SupportedDaniel’s payments were suspended in 2022 despite his exemption, and he later went more than three years without income support.Just In: “His Centrelink payments were suspended in 2022, despite being exempt from mutual obligations with no compulsory activities to complete. His payments were later cancelled, leaving him without income support for more than three years.”
- SupportedThe department reversed Daniel’s cancellation in October 2025 and paid him about $53,000 in back pay.Just In: “A week before his case was due to be heard in October 2025, the department conducted a minister-initiated review, reversed the cancellation decision and paid him about $53,000 in back pay.”
- SupportedDaniel said, “Without my pensioner dad helping me, I honestly don't know what would have happened.”Just In: ““Without my pensioner dad helping me, I honestly don't know what would have happened. There were times I had nowhere to live.””
- Not in the sourcesJay Coonan is a coordinator of an anti-poverty centre that represents several organisations.Just In: “Anti-poverty centre coordinator Jay Coonan said advocacy groups including the Australian Council of Social Service, Economic Justice Australia, National Aboriginal and Torres Strait Islander Legal Services and Inclusion Australia, remain unconvinced”
- SupportedCoonan said “None. None whatsoever,” about the department’s evidence that the problems had been fixed.Just In: “Despite participating in the department's Targeted Compliance Framework Reference group, Mr Coonan said advocacy organisations had not been provided evidence that the issues identified by the Ombudsman had been fixed. “None. None whatsoever,” he said.”