The announcement also said job seekers would need to perform a minimum of three job-search activities every week for a month and report back to the Ministry of Social Development (MSD).
The new sanctions would ensure there was "accountability in the welfare system", Social Development and Employment Minister Louise Upston said.
"It's important beneficiaries who can work are taking steps to re-enter the workforce," Upston said.
"Consequences must exist for those who don't."
The new sanctions are part of the government's beneficiary traffic light system.
The system applies to people who receive a benefit with work or social obligations, such as Jobseeker Support.
They are given a green, orange or red status. Once someone is moved to red, they are sanctioned.
Those sanctioned will have to provide evidence of their activities at the end of their sanction to return to 'green' in the system, Upston said.
