According to RNZ Work and Income have been illegally delaying paying redundant workers until they have used up all their redundancy funds.
On Friday: Work and Income acts ‘unlawfully’ over benefits and redundancy payments
Work and Income has been acting “unlawfully” and ignoring its own legislation by telling people paid redundancies that they are not eligible for a benefit till that money runs out.
It came to light after RNZ detailed the story of Mary*, a hotel worker made redundant when the Covid-19 lockdown began.
She applied for a job seeker’s benefit but was told she would not receive anything till her redundancy runs out in September.
Work and Income’s Kay Read, group general manager client service delivery, said on Wednesday that payments received when a person stopped work, such as holiday pay and some severance payments, would delay the time when income support payments started.
However, section 422 of the Social Security Act makes clear when calculating a person’s income and benefit level, Work and Income is to “take no account of a redundancy or retirement payment”.
The legislation states:
Regulations made under subsection (1) may (without limitation) authorise MSD,..
(c) in calculating the income of a person for the purpose of determining the rate of benefit, to take no account of a redundancy or retirement payment.
It should have been easy to question and rectify.
Mary’s case was reviewed this week after RNZ asked questions. She has been told a mistake was made and she can receive the benefit.
Mary said it was great to have better news but she was very worried and angry about how many other people had been wrongly advised and simply given up.
The Work and Income employee she dealt with had many years’ experience. She told her she had always applied the rules in this way.
Today: Work and Income wrong on benefits and redundancies for decades
Work and Income appears to have spent decades wrongly advising some benefit applicants that they cannot get support until their redundancy has run out.
Work and Income admitted on Friday it had made an error after it rejected the benefit claim of Mary, an Auckland hotel worker, due to her Covid-19 redundancy payout.
The reversal came after RNZ pointed out that the Social Security Act said redundancy should not be a factor when calculating an entitlement to a benefit. A community law expert said that the law relating to redundancy and benefits had not changed substantially since 1994.
RNZ asked those in a similar situation to Mary to get in touch and has been inundated with scores of emails that highlight cases not only from the past few months, but dating back to the 1990s.
Among them were:
- In 2018 a 63-year-old man was told he had to wait 16 months till his redundancy ran out before he could get the benefit. By that time he was only three months off his pension.
- A woman who was made redundant twice, in different parts of the country, and denied the benefit both times. Eventually she was declared bankrupt after losing her house.
- In 2012 a man who spent six months “burning through all our savings” before he found work.
- In 2011 a former defence force worker says he was told he should return when the money had run out.
- In the early 2000s a sole parent who lost his hospital job and then had to live on his $20,000 redundancy.
- A new dad who was made redundant in the early 1990s and told he couldn’t get anything for six months. He got sick and the family’s debt spiralled.
- A number of people decided not to apply after reading on the Work and Income website they couldn’t because of their redundancy.
Up until Friday, Work and Income’s site continued to say that if a person received a redundancy “your payments from us will start once [it’s] finished”.
RNZ has asked Work and Income and Social Development Minister Carmel Sepuloni a number of further questions about how long the practice had been in place; the number of people affected and whether back payments may need to be made.
A spokeswoman for the minister said Sepuloni had not been aware of the issue but had asked officials for a briefing on Monday. They had advised it was an “operational issue”.
I wonder if this comes under the Prime Ministerial gagging directive.
I’m shocked that it has taken this long to become an issue. Surely people will have complained in the past.
Work and Income earlier said staff had been reminded redundancy payments should not form part of calculations made as to when a person’s benefit payments should start.
It was encouraging anyone who has concerns about how it had calculated their benefit start date to get in contact.
This will affect many people who have been paid less than they are entitled to, but backdating correct payments for decades would be a mammoth correction.
