New Zealand

Work and Income wrong on benefits and redundancies for decades

06:33 am on 10 May 2020
Glen Scanlon, Contributor

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 is part of the Ministry of Social Development. Photo: RNZ / Rebekah Parsons-King

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.

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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".

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.

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