PEOPLE receiving disability and unemployment payments can expect to get a more sympathetic ear from job agencies after the federal employment department issued a directive to be more compassionate.

The Department of Education, Employment and Workplace Relations wrote to all job agencies earlier this month urging them to consider people's individual circumstances before cutting off their payments.

Tens of thousands of people have been caught by tough rules which demand that payments be cut off for eight weeks if someone fails to meet the conditions of their payments, such as failing to go to a job interview three times.

Welfare advocates argued the punishment was too harsh, particularly on people with episodic mental illnesses or the homeless.

But now the employment department is urging job agencies to be more compassionate.

In the letter the department says job agencies have "considerable discretion" when it comes to imposing the penalty.

Agencies were told that they should not report breaches "in instances where a job seeker has a reasonable reason for failing to meet their requirement or where you are satisfied that the job seeker would comply with the requirement if given another opportunity to do so".

"In addition, any barriers to a job seeker's capacity to comply with their requirements must be taken into consideration," the letter says. It also stresses that agencies' contracts with the Federal Government will not be affected by the new "be nice" directive.

In April the Minister for Employment Participation, Brendan O'Connor, wrote to employment agencies telling them to use discretion when dealing with job seekers who had failed one of the conditions of their welfare payments, such as attending an interview or applying for a position.

But the numbers of people having their payments docked remained stable, leading welfare advocates to speculate that job agencies were scared of losing their contracts if they did not report every failure.