Can Contractors Go On The Dole?

contractor Unemployment levels are generally expected to rise, posing a challenge for full-time staff and contract workers alike. But do contractors have the same options for unemployment benefits in Australia?

I was at a press conference last week when fellow hack Adam Turner posed an interesting question to the surrounding group of writers, nearly all of whom were self-employed: what happens if a freelance or contract worker runs so short of work that they decide to apply for the dole? Can they apply for the dole and keep seeking out new work, or do they need to surrender to the full-time employment stream?

This isn't just a question for freelance writers, of course. Industries like IT are now dominated by contractors, and part-time work or self-employment is increasingly common across the board. According to the Australian Bureau of Statistics, as of November 2007, at least half a million Australia were workers on contract rather than in a full-time job. In tight economic times, that number may well have gone up and even at face value, that represents a significant group.

The usual caveat: I am not a Centrelink case worker, so what this represents is mostly linkage to and interpretation of the relevant material online. What actually happens to you might well depend on the case worker involved and the employment options in your area. With that in mind, let's dive in.

According to Centrelink, to qualify for Newstart Alliance (the current label for what someone my age would call "the dole"), you need to be an Australian resident, over 21, not on strike, looking for paid work and "prepared to enter into an Activity Agreement" (which can include retraining, work for the dole schemes and voluntary activity).

Let's assume that you've been self-employed and actively tapping your contacts for work, but nothing's eventuated. The big caveat is that waiting periods apply. Pretty much everyone who applies for Newstart has to wait for a week, and seasonal workers (which includes contractors) can be forced to wait much longer (PDF link). The aim of that process is to encourage you to find other work, of course, but it's not much help in times of crisis.

The exact period of the delay varies depending on the nature of your work and what you get paid. But as a very rough guide, if you earn more than $1,000 a week in a contract job, that excess will be used to calculate the period of exclusion.

An added complication is that assets tests are applied. If you have more than a certain amount of liquid assets in the bank (the relevant figure is $5,000 for households and $2,500 for singles), payment may be deferred. $2,500 is a pretty low amount to have in your emergency fund, but if you have more than that, funds likely won't be forthcoming. If you have $5,500 in the bank and are single, you may not receive any payment for 13 weeks. In other words, you'll be forced to spend your savings first.

And even then, the rewards aren't enormous. For a single person, the maximum fortnightly payment is $453.30. In a capital city, that likely won't cover much more than your rent.

As ever, political reality is some way behind what's happening in the real world. The welfare system is clearly biased towards full-time workers (though even then there are plenty of restrictions), and it's likely to be some time before that changes. But if you are self-employed, the message right now is clear: make sure you have a decent emergency savings fund for if times get tough.

That doesn't mean you shouldn't apply: if you've been paying taxes, you should seek your entitlements. But don't have high expectations.

Lifehacker's weekly Loaded column looks at better ways to manage (and stop worrying about) your money.


Comments

    I have always found it ridiculous that you can't have more than $2500 in the bank to get the dole, but you can have a car, house, plasma screen, whatever. It's a real kick in the shins for people trying to save up for something bigger, but have fallen temporarily on hard times

    Thanks for following it up Gus. I guess what you're saying is that freelancers like us are pretty much screwed. I don't think it would be worth going through the pain of dealing with Centrelink for a mere $200 per week - although I'd get a bit more coz I'm not single - especially if they expect you to burn through all your savings before they'll help you. I'd say the time that you wasted battling with bureaucrats would be better spent looking for work.

    About a month ago, right after Rudd announced his plan for the dole, 3AW had tennis phenom Todd Woodbridge on the show as a guest commentator to discuss Andrew Bolt's Herald article about government handouts. Despite being a millionaire, he's a contractor now and was pretty pissed off that the Rudd government, in the space of about 3 months, rolled out or planned to rollout about five different economic "packages" of which Todd was entitled to ZERO. Basically, his complaint was that his tax was helping to pay into a system of which he gets nothing in return due to his demographic (single, childless, high income, freelancer).

    Policies:
    - Job Entrenchment Package
    - Baby Bonus
    - Skilled computer
    - First home buyer
    - $900 simulour package
    - Green package
    - Highest tax brackets paying more now than ever

    I felt little pity for the guy based on his bank account, but he was right about being upset (and was quite eloquent in the process).

    The interview can be found here (MP3 link): www.crikey.com.au/Media/audio/MCRIKEY-4098b78e-1715-4599-a3a6-50eb776e3df3.mp3

      The extended waiting period is a nuisance, but the general wait (and the being forced to spend your savings) applies to everyone -- and most of this stuff has been policy for a while as far as I can tell.

    As you say, you should at least apply.

    Even if you get nothing , e statistics will at least reflect the full impact on the real workforce.

    i KNOW THAT this is an old thread, but it seems some of you have some answers. So your kind help would be great.
    My friend/partner is a private contractor. She is a landscape architect, and right now she has no work. I mean NO work. And She has had little work for a couple of years, to be honest.
    But now she thinks maybe she should apply for the dole. She is looking for work at Coles or in a plant nursery or whatever. she is definitely willing to work. She is bored otherwise.
    And there is no work coming in in the foreseeable future.

    Anyway, centrelink asked her for details. I gave her our bank accounts.
    they add up to over $50,000 dollars.
    And our stock shares add up to over $300,000 dollars. We get some dividends from time to time
    but not much, because I don't buy blue chips normally.

    My question is
    a) do you think she is entitled to the dole?
    b) if you know the answer to this through experience, ....how much would she be entitled too ? and is it worth the hassle? (she may have found a job by the time you read this ....I certainly hope so....she is just moping around in the garden now)
    c) you might wonder what I do. I have been losing money steadily on the stock market....and would like to search for work too. But at 63 there is little chance .

    thanks for your answers in advance
    mercury

    Hi,
    Firstly you didn't include "rent assistance" - but thats only if you rent, not mortgage - which at max is around $110p/f.

    Secondly, I find it humorous that around 3 or 4 times the phrase "my savings" was used in reference to:

    "being forced to use my SAVINGS before being allowed the dole"

    as apposed to the phrase "my money" as in:

    "being forced to use my MONEY before I am allowed the dole."

    Cheeky...

    Mark L.

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