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There are 2 ways in which a person can be regarded as unemployed for NSA purposes:
Act reference: SSAct section 595 Persons may be treated as unemployed
For the purposes of NSA, an unemployed person is, in broad terms, someone who does not have paid work but wants to have paid work. An essential requirement is that the person has a present intention to be part of the labour market. It is not sufficient that the person is simply without work.
Example: Young children are not in paid employment, but their lack of attachment to the labour market (e.g. as job seekers) precludes them being considered unemployed. Similarly, people who have completely retired from the workforce do not have paid work, but are not unemployed as they have no connection to the labour market.
A person without work who is fully committed to an activity that is incompatible with labour market attachment would also not be regarded as unemployed in the general sense. For example, a person with full-time caring commitments may not be able to look for or undertake paid work despite wishing to do so. In some cases, people undertaking activities that would prevent them being regarded as unemployed in the general sense can still be treated as unemployed (see 'Unemployed - section 595' below).
A person who has had paid work during a period would also not be regarded as unemployed throughout that period, regardless of the hours worked or the amount paid. However, in some circumstances such a person may be treated as unemployed (see 'Unemployed - section 595' below).
The extent of a person's compliance with any applicable activity test requirements can be useful in determining whether a person is genuinely committed to engagement with the labour market (see 'Relationship between activity test compliance and unemployed status' below).
Section 595 gives the Secretary the discretion to treat a person as unemployed where the person would not be regarded as unemployed in the general sense. Use of the discretion supports the objective or increasing or maintaining a person's engagement in the labour market.
The most common use of the discretion is to enable a person who undertakes paid work to continue to be regarded as unemployed. A person on NSA is generally required to look for and undertake suitable work. The NSA income test is intended to support this be ensuring that people benefit financially by taking up paid work. This objective would be undermined if a person in paid employment could not be regarded as unemployed, since the person would not qualify for NSA even if they had an entitlement to part-rate NSA under the income test. The discretion to treat an employed person as unemployed for NSA purposes should therefore be exercised in such a way as to further the objective of increased workforce participation, rather than providing a disincentive for people to increase their hours of work.
Although employment is actively encouraged for NSA recipients, the section 595 discretion is not always exercised to disregard employment. For example, a person who is working less than the number of hours required to satisfy their activity test requirement, and who is not willing to look for or undertake alternative work, would fail the activity test and not be considered unemployed. As a general rule, however, where the person has employment and also satisfies the activity test, the employment will be disregarded.
Section 595 is also used to continue to treat as unemployed a person who is undertaking an activity the Secretary considers appropriate to disregard.
Act reference: SSAct section 595 Persons may be treated as unemployed
Policy reference: SS Guide 3.2.2 Who is Unemployed for NSA?
While the activity test is not directly related to the issue of whether a person is unemployed, compliance with activity test requirements will be an indicator of whether the person's intended or actual engagement with the labour market is genuine and sufficient.
When determining if a person is unemployed, the following factors may be considered:
Policy reference: SS Guide 3.2.2 Who is Unemployed for NSA?
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Last reviewed: 7 May 2007
