New laws are set to change the government’s welfare payment system in an aim to prevent overpayments.

Legislation to be introduced in the first sitting fortnight of the year will change the way 1.2 million working welfare recipients report their gross earnings to Centrelink, according to The Australian.

Under the current system, welfare ­recipients report to Centrelink by calculating their employment earnings based on the number of shifts they work and their hourly rate, and receive the corresponding payment.

This form of reporting ultimately led to a recently abandoned aspect of the welfare system — income averaging — which left many recipients having to prove they had not been overpaid, or else they would be forced to pay back a debt.

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The new laws propose the use of online payroll data which pre-fills the employment and income details of welfare recipients. The details can be changed online or via an app.

Social Services Minister Anne Ruston said the new laws would stop overpayments from ­occurring.

“We want to make sure that Australians who need financial support are able to get the support that they are eligible for — no less and no more,” she said.

“The current system of calculating earnings can be confusing and lead to misreporting, especially when accounting for overtime or penalty rates. These changes will make accurate reporting much easier for people getting a social security payment.”

The changes would supposedly save the government $2.1bn over four years, Ruston said.