For more than a decade, Australia has invested heavily in both disability support and disability employment services. Yet employment outcomes for people with disability remain stubbornly low.

Only 23% of working-age NDIS participants are in paid employment. Of that group, just 25% are in open employment at full award wage. For people with psychosocial and neurological disabilities, employment rates fall as low as 7-17%.

These figures raise an important question:

A May 2026 NESA report examines this question through the lens of one often-overlooked issue: the interface between the National Disability Insurance Scheme (NDIS) and Inclusive Employment Australia (IEA), Australia’s new specialist disability employment system that replaced Disability Employment Services (DES) in November 2025.

The findings suggest that improving the disability employment gap may depend as much on how systems work together as on how individual programs are designed, and that the window for action is closing.

Why Does the NDIS-IEA Interface Matter?

Employment is more than an economic outcome. For many people with disability, work provides financial independence, social connection, skills development, confidence and participation in community life.

On paper, the NDIS and disability employment services were designed to complement each other: the NDIS funds disability-related supports, while employment services assist people to prepare for, find and retain work. In practice, many participants have experienced these systems as disconnected rather than complementary.

The NDIS-IEA interface, the connection point between disability support and employment services, is where this disconnection plays out in people’s lives.

Why the Interface Has Failed: A History of Disconnect

The challenges people with disability face in accessing employment are not primarily about individual motivation or capability. They arise from system design.

Before IEA, the NDIS and DES operated largely in isolation from one another. Five structural failures drove poor outcomes:

• No shared data, DES providers had little visibility of a participant’s NDIS plan; NDIS planners often did not understand what DES provided. People were required to tell their story repeatedly
• Role confusion, unclear boundaries meant both systems sometimes stepped back, leaving participants without support, or both stepped forward creating costly duplication
• Incompatible time limits, DES’s two-year support limit was too short for many NDIS participants with complex disability to develop work-readiness and stabilise in employment
• Pathway barriers, many NDIS participants without mutual obligations had no routine referral pathway into specialist employment services, and income support rules created financial disincentives to attempt work
• Systemic cultural disconnect, different IT systems, program rules, Departments and staff cultures, with limited cross-system knowledge or aligned approaches.

The consequences were concrete. In one documented case, a supported employee who secured a job trial waited months for a NDIS plan review to fund the required supports, delayed over the Christmas period. The trial lapsed. This experience of bureaucratic timing mismatch was not exceptional. It was systemic.

What Is Inclusive Employment Australia, and What Does It Change?

Inclusive Employment Australia (IEA) launched on 1 November 2025, replacing DES with several meaningful structural reforms:

• No time limit on participation, a significant change for people with complex disability who could not progress meaningfully within DES’s two-year window
• Expanded eligibility, including voluntary participants not on Centrelink payments and people with a future work capacity of just 0-7 hours per week
• A tiered service model distinguishing those building toward work from those ready to find and maintain employment
• A panel of 83 specialist disability employment providers (reduced from the larger DES network)
• A $10,000 employer wage subsidy to incentivise inclusive hiring
• A Centre for Inclusive Employment to develop evidence-based training and practice standards.

These are important reforms. The removal of time limits alone addresses one of the most significant barriers under the previous system.

What IEA Does Not Resolve

However, IEA does not, of itself, fix the NDIS-IEA interface. The two systems remain governed by different legislation, funded through different streams, operating different IT systems, and accountable to different frameworks.

The machinery-of-government change that transferred the NDIA into the Health, Disability and Ageing portfolio, while IEA remains in the Department of Social Services, adds further complexity. Without deliberate cross-portfolio governance, the operational disconnect historically seen between the NDIS and DES risks persisting, or in some respects becoming harder to resolve.

There is still no shared data infrastructure. Much of the coordination burden falls on participants and their support networks, particularly those least able to carry it.

What the Evidence Shows Works: Individual Placement and Support

The most robustly evidenced employment approach for people with significant disability is Individual Placement and Support (IPS).

IPS is built on a simple but powerful insight: employment does not happen after stabilisation; it happens alongside it. Rather than waiting until people are ‘work ready’, IPS embeds employment support within or closely alongside the disability or clinical support team, helping people enter employment while receiving ongoing support.

IPS consistently achieves competitive employment rates of 40-60% for people with serious mental illness, compared with 20-25% for traditional vocational rehabilitation. The NDIA identifies IPS as having the strongest evidence base for people with psychosocial disability.

The integration principle is central: this ‘place-then-train’ model differs fundamentally from the ‘train-then-place’ approach that characterises most employment services.

The evidence is consistent internationally and domestically: disability employment systems work better when employment and disability supports are integrated, not parallel.

What Australia’s Own Pilots Tell Us

Australia’s NDIS/DES Pathways Pilot, run in the ACT, Greater Darwin and Outer Eastern Melbourne between December 2023 and March 2025, demonstrated that deliberate, modest investment in the connection point between systems increases NDIS participant engagement with employment services.

The results also illustrate the scale of the referral cliff that exists without that deliberate investment:

The Pilot found that local relationships, designated contact points and active trust-building between providers materially improved participant engagement. The lesson: the interface works better when it is deliberately designed, not assumed.

The Urgent Risk: NDIS Budget Reform and the October 2026 Deadline

The scale of the proposed NDIS reforms is substantial:

• Up to 160,000 participants may exit the NDIS by the end of the decade (from ~760,000 to ~600,000)
• Average per-participant plan budgets are targeted to fall from $31,000 to $26,000
• $37.8 billion in savings are projected over four years
• Support coordinator and plan manager spending will be reduced by 30%
• Social and community participation supports, the funding most directly linked to employment preparation, will be reset from 1 October 2026.

These changes matter enormously for the NDIS-IEA interface. If NDIS participants lose access to the therapy, skill development and support that enables work-readiness, IEA cannot compensate. IEA helps people find jobs; it cannot do the underlying disability support work the NDIS is meant to fund.

Support coordination is also a key mechanism through which participants navigate the NDIS-IEA interface. Reducing it by 30% risks further isolating the participants least able to navigate the system independently.

There is also a displacement risk within IEA itself. Expanded eligibility may bring in participants with less complex needs who are easier to place, creating market pressures that disfavour intensive investment in harder-to-reach NDIS participants, a dynamic familiar from DES.

The proposed ‘foundational supports’ tier, disability supports outside individual NDIS packages, could address some of these gaps if well-designed and connected to IEA. But foundational supports remain largely conceptual, with design, funding and governance yet to be determined. A key risk is implementation of cuts before alternative supports are operational.

What Future Disability Employment Policy Must Address

NESA’s research does not point to a single solution. But it identifies eight specific actions that are needed:

1. Build shared data infrastructure

A consent-based, shared participant record that travels with the person between the NDIS and IEA. IEA providers need visibility of NDIS plan goals; NDIS planners need a working understanding of what IEA provides.

2. Fund an employment gateway role within the NDIS

Establish a clear, resourced role, whether as a ‘Vocational Discovery’ line item (as proposed by the Centre for Disability Employment Research and Practice) or within expanded Local Area Coordination, to actively bridge NDIS participants into IEA.

3. Adopt IPS integration principles at the interface

IEA providers working with people with complex disability should have established, regular relationships with NDIS providers and LACs for shared participants, genuine team-based planning, not ad hoc referrals.

4. Protect employment-related NDIS supports from budget cuts

Explicitly carve out employment-linked capacity building supports, communication therapy, social skills development, supported transport, assistive technology for work, from any broad reductions. The NDIA and DSS should jointly identify which NDIS support categories are functionally linked to employment outcomes before implementing reforms.

5. Invest in cross-portfolio governance

Leverage disability employment-specific local governance (as part of DEWR’s broader employment services reform) and establish a cross-agency Secretaries’ Committee (DEWR, DSS, Department of Health and Treasury) to coordinate NDIS cost-savings with disability employment outcomes.

6. Design foundational supports with employment explicitly in scope

The foundational supports tier should include vocational assessment, career exploration and work experience, co-designed with IEA and with people with disability, with direct transition pathways into IEA.

7. Systematically co-design with people with disability

Establish ongoing, resourced co-design mechanisms, including people with intellectual disability, psychosocial disability and those from culturally and linguistically diverse backgrounds, to identify where the interface is working and where it is not.

8. Measure the interface itself

Commission systematic evaluation through data linkage studies, longitudinal participant tracking and provider surveys. Individual program outcomes are insufficient, the interface itself must be measured.

Why This Matters, and Why Now

The implications of getting the NDIS-IEA interface right extend beyond disability employment programs. They affect:

• People with disability seeking meaningful work and financial independence
• Employers looking to access a broader, diverse talent pool
• Communities seeking greater social and economic participation
• Governments pursuing productivity, workforce participation and NDIS cost-sustainability goals
• Service providers working to support sustainable employment outcomes.

With NDIS capacity-building and community participation reform cuts commencing 1 October 2026, the window for policy intervention is narrow. If those reforms proceed without careful attention to their employment implications, some of the gains promised by IEA may be offset before they are realised.

The evidence about what works exists. The question is whether there will be sustained political will and practical investment to make the NDIS-IEA interface work for the many tens of thousands of NDIS participants who say they want to work.

Access the Full Research

NESA’s full report and executive summary explore these issues in depth, examine the evidence base, and set out practical options for strengthening the NDIS-IEA interface.

Download the Executive Summary and Full Report below. We encourage readers to engage with the complete research and join the discussion about what effective disability employment policy should look like in the years ahead.

To discuss the research or NESA’s work in this space, contact NESA directly via our website.