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.