Work and Income unlawfully withholding redundant worker payments “for decades”

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.

Second blunder by Work and Income with same beneficiary

A woman has had her benefit cut for the second time – Work and Income have admitted another blunder.

RNZ in April: Woman told her benefit was cut because of Tinder dates

The Ministry for Social Development has apologised to a woman who was told her benefit was stopped because she had been on two Tinder dates.

The solo mother of three said she told her Work and Income case manager the man paid for dinner and a movie, and the case manager said it was a dependent relationship.

The South Auckland woman, who RNZ has agreed not to name, said she told her case manager about the two dates because she was trying to be up front.

The case manager pulled a card from her desk and described what a relationship was to the woman.

“She then asked me whether on my dates he had financially paid for me,” she said.

“I said yes, but that I had offered to pay for myself.”

The case manager then said if he was paying for her dates then she could rely on him for money and WINZ will see that as a relationship, she said.

The woman has been on the benefit since January after her former employer tried to swap her shifts into night shifts, which she couldn’t take-on with three young children.

She said the incident left her feeling ashamed and stressed.

“The way they speak to me, it’s really nasty.”

Quibbling over who pays for a date is oppressive.

But it gets worse. Today RNZ reports: Woman has benefit wrongly suspended for second time

The Ministry of Social Development has admitted it again failed to follow proper process, by not following up with the woman after she told them her daughter would be staying with her grandmother for part of the week.

That was so her daughter didn’t have to change schools after the family moved from west Auckland to South Auckland, the woman said.

Because it meant a change to her circumstances, and she was on the sole parent benefit, the woman knew she should tell Work and Income.

“I knew that this was a big change, I didn’t want to get in trouble so I thought, you know, I’ll call just I just want to be safe.”

But her sole parent benefit was suspended.

The woman said she made repeated attempts to get in touch with Work and Income to sort it out – to no avail.

It was only when she got an advocate from Auckland Action Against Poverty involved that anyone listened.

This looks bad on it’s own, but also suggests fundamental problems in Work and Income. If one person has their wrongly benefit stopped twice there seems to be a good chance similar is happening to others – potentially many others.

Ministry of Social Development group general manager of client service delivery Kay Read said the woman had received an apology.

“We’re sorry, we made a mistake.”

Ms Read said the woman did the right thing by telling Work and Income about her change of circumstances.

“This was then entered by one of our staff into our system without us having a conversation with her to actually learn more about the situation.”

Because the woman still had two children in her care, who were born while she was on the sole parent benefit, Ms Read said she should have transferred on to a jobseeker benefit, but that didn’t happen.

“We should’ve had the conversation… and explained that if we’d taken the time, either phoned her or talk with her at the time she dropped that in, we would’ve understood her circumstances in much greater detail and in fact we wouldn’t have had to adjust anything.”

The mistake was caught before the woman missed a payment, Ms Read said.

But the woman said having her benefit suspended twice has made her question how worthwhile it is to be honest with Work and Income.

Not being honest could end up with much worse repercussions.

It’s hard enough on beneficiaries having to report things like dates, but made far worse when Wirk and Income punish them (wrongly) for being honest.

The government has promised major changes to the culture at Work and Income, as part of its overhaul of the welfare system.

This looks overdue. It could be difficult getting the balance right. Having to report things like social contacts seems oppressive, but I doubt a no questions asked approach to benefit payments will be acceptable either.

Eligibility for benefits needs to be simple, clear and fair.

A Work and Income welcome

I’ve never been to Work and Income. Neither had journalist Vicki Anderson before visiting to observe. She writes about her experience:

Joining the queue at Work and Income: Where no one seems happy

One morning at a Christchurch Work and Income office:

It is 9.28am. Nine people and a toddler are queued outside a Christchurch Work and Income office which is sandwiched between Hell [pizza] and a liquor store. No-one seems happy. Everyone is holding official-looking forms.

I have never been to a Work and Income office before. I am here just to observe.  The security guard outside the  office looks like Rambo, parachuted into suburbia.

“Wait,” he calls as I attempt to walk in.

The doors won’t open unless he turns a key. Before he will turn the key, he needs to see my ID. He is holding a clipboard filled with pages containing lists of names. He searches for my name on the list. These are the people he won’t let inside. He doesn’t say why but he doesn’t have to. Sadly, we all know what happened in Ashburton.

I don’t have the right kind of ID. I need a passport, a driver’s licence or an 18+ card. The only thing with my photo on it is my Press card which I show him but he tells me “that’s not good enough”.

It’s a strange and confronting experience. He looks me up and down. I feel as if I am being judged. He is pleasant but intimidating too.

“I will let you in this time,” he says sternly. “But if this happens three times I can ban you for life.”

After a welcome like that it can only get worse inside. It’s not a nice look.