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Claiming compensation from Centrelink

Detailed information about options for seeking compensation from Commonwealth government departments is set out in the Law Handbook chapter Complaints Against Government.

Information on claiming compensation specifically from Services Australia (i.e. Centrelink) is contained below.

Compensation should only be sought in specific circumstances. All existing review mechanisms should be exhausted before seeking compensation.

There is no right to receive compensation and any payments made are entirely at the discretion of Services Australia or Department of Finance.

There are three types of compensation payments that can be sought from either Services Australia or Department of Finance:

  1. Payment pursuant to legal liability, where Centrelink has a legal liability to compensate the person;
  2. Compensation for Detriment caused by Defective Administration (referred to as the CDDA Scheme), where a person has suffered detriment as a result of Centrelink’s defective administration;
  3. An Act of Grace payment, where a person has been unintentionally disadvantaged by the effects of Australian government legislation, acts or omissions.

Payment pursuant to legal liability

A person can apply directly to Services Australia for compensation in circumstances where they believe they have a legal claim against the Department.

All Centrelink employees have a duty of care towards the public. A negligent breach of that duty of care may give rise to an action in negligence, for example. In such circumstances Services Australia may make a payment of compensation to a person for breaching its duty to exercise reasonable care. The ability of Services Australia to make such a payment is by virtue of section 23 of the Public Governance, Performance and Accountability Act 2013 (Cth).

A person seeking compensation from Services Australia in these circumstances should complete a Compensation Application Form (SS509) and lodge it with Services Australia A copy of the form is available on the Services Australia website.

Any offer of payment is not an admission of liability by Services Australia, and if an offer is made the person receiving the compensation will be required to sign a deed of release as a condition of settlement. This indemnifies Services Australia against further litigation. There is no review of a decision of Services Australia not to make a payment pursuant to legal liability, as any payment made is entirely at the discretion of Services Australia.

Compensation for detriment caused by defective administration (CDDA Scheme)

Where it can be shown that an individual or group has suffered loss as a result of defective administration on the part of the Services Australia, the Compensation for Detriment caused by Defective Administration scheme (CDDA Scheme) can provide compensation on a discretionary basis. Unlike payment pursuant to legal liability, such liability is not required in the CDDA Scheme.

The CDDA scheme is an administrative scheme and is not governed by legislation. It was established pursuant to the powers contained in section 61 of the Australian Constitution.

Defective administration is defined as an unreasonable failure by an agency to implement appropriate administrative procedures, to comply with existing administrative procedures, or to provide proper advice. The fact that Centrelink has made an error is not sufficient in itself to give rise to a payment under this scheme – it must also be established that the error in question was unreasonable.

Compensation can be granted for both financial and non-financial loss and applications for compensation under the CDDA scheme should be made directly to Centrelink. Decisions made under the CDDA scheme are not appealable or reviewable. However, complaints about the scheme can be made to the Commonwealth Ombudsman.

More information on the CDDA Scheme can be accessed via the Commonwealth Ombudsman’s Factsheet Compensation for Defective Administration.

Act of Grace payments

An Act of Grace payment allows the Commonwealth Finance Minister to make a discretionary payment to a person who is not otherwise entitled to compensation by law, but where payment is appropriate due to special circumstances [see Public Governance, Performance and Accountability Act 2013 (Cth) s 65]. Applications should therefore be made directly to the Minister for Finance.

There are three broad categories in which Act of Grace payments will be considered:

  • where the application of legislation produces unintended anomalous, inequitable, unjust or otherwise unacceptable results in the particular circumstances;
  • where the matter is not covered by legislation but it is intended to introduce legislation and it is considered desirable in the particular case to apply the benefits of the proposed legislation retrospectively
  • where the actions of Centrelink has produced an unintended and inequitable result to the person.

For a claim to be considered under this scheme there must be special circumstances warranting the payment of compensation, that is, there must be something distinctly anomalous or inequitable about the individual’s situation. Act of Grace payments are not common and are often seen as a payment of last resort.

A refusal to grant an Act of Grace payment can be reviewed by the Commonwealth Ombudsman. Decisions about Act of Grace payments can also be reviewed by the Federal Circuit Court [Administrative Decisions (Judicial Review) Act 1977 (Cth)]. Legal advice should be sought before commencing any court application for review.

Claiming compensation from Centrelink  :  Last Revised: Mon Mar 23rd 2020
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.