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Advising EEA workers and self-employed people

This page is for housing advisers. If you are a new arrival please click here for information more relevant to you.

This section looks at housing problems faced by EEA nationals who are working or self-employed. It does not cover advising Croatians or advising EEA family members. If the person you are advising does not fit the definition of worker or self-employed you may find the page on advising other EEA nationals helpful.

What are the housing and housing benefit rights of EEA workers and self-employed people?

Generally, people who fit the definitions of EEA workers or self-employed:

  • are eligible for a housing allocation, homelessness assistance and housing benefit
  • do not have to pass the habitual residence test to be eligible, and
  • their eligibility covers their family members: see EEA family members for more on this.

Even when they stop work, or are temporarily unable to carry on their business, they often continue to be eligible.

Is the local authority bound to follow a DWP decision about worker status?

DWP decisions about worker/self-employed/jobseeker status are often very harsh and/or based on guidance which is at best misleading or at worst unlawful. Problems can arise when the DWP makes an adverse decision about JSA(IB) (or other passport benefit) and a claim is made for HB.

Often local authority HB departments take the view that they are bound by the DWP decision. But this is not the case: in fact the law is clear that the local authority is the decision-maker for HB not the DWP (Social Security Administration Act 1992 s134(1), s191 (definitions); HB Regulations 2006, regulation 2(1) (definitions) and regulation 89). The authority can take account of the DWP decision but if the claimant challenges it the authority must reach its own conclusion: R(H) 9/04. On the other hand if the DWP has awarded benefit the authority is not normally entitled to take a different view (except perhaps if it has evidence of fraud that the DWP has not considered): CH/4014/2007.

Who is self-employed?

These rules apply to all EEA citizens including Croatians. A person is self-employed if they run their own business - often as a sole trader.

If someone is self-employed and that activity is genuine and effective, then they have the right to reside and the consequent benefit and housing rights. They do not need to earn enough money from their self-employment to be self-sufficient. They do need to be engaged in the business, not necessarily full-time, and not necessarily earning any money from it.

A claimant who for time being has no current business can still be self-employed. It is the nature of self-employment that there are periods of nil or little work and periods of heightened activity. In the former the person may be engaged in various tasks that are necessary to continue the business such as administrative work, maintaining the accounts, marketing and business development. Although a minimum amount of work is necessary to maintain self-employment whether it is sufficient can only be decided in context of the facts at any particular time. The amount of work is only one factor, the claimant's motives and intentions and any other steps they are taking are also relevant: SSWP v JS [2010] UKUT 240 (AAC) at [5].

The DWP has issued guidance for assessing in-work claims including those made by the self-employed. It requires decision makers to ask claimants further questions to test whether the work is 'genuine and effective' where the claimant's average weekly earnings over the last three months are less than the national insurance primary threshold (£155 per week in 2015/16). The guidance cites Bristol City Council v FV [2011] UKUT 494 (AAC) in support but the decision is clear that if a self-employed person relies on benefits to top their earnings that fact cannot be used to determine whether the work is effective and genuine. It goes onto say 'Indeed, the tax credits and housing benefit schemes are based on the fact that people in work will need to have recourse to those benefits to live'.

If the claimant is refused benefit on the basis that their self-employment is not 'effective and genuine' because their earnings are too low they have a good chance of success if they appeal the decision.

If a person has been self-employed, but is not working at the moment, they retain their self-employed status (and thus their right to reside) if they are temporarily unable to work as a result of illness or accident. This is the only route for retaining self-employed status that domestic law provides but is inconsistent with Directive 2004.38/EC which implies that someone can retain their right to reside in all the ways a worker can, as set out below. So if you have a case where this would apply the Aire Centre offers specialist advice on European rights cases.

Proving self-employment

Proof of self-employment may be an issue. Documentation of self-employment may be provided by:

  • an application to HMRC to register for tax and NI payments as self-employed
  • holding a unique tax reference number that indicates self-employment
  • letters from HMRC (for example, demands for payment of national insurance or tax, or to send in the annual self-assessment tax form)
  • a construction industry scheme card (there are specific arrangements for self-employment in the construction industry and the card provides proof of self-employment and that the holder has passed the construction site safety requirements)
  • evidence that a business has been established (a lease on premises, purchase of equipment, publicity material).

As noted in the Bristol case above, the key requirement for proving self-employment is that the person is engaged in running their business which in this instance included selling the Big Issue. It is often helpful to provide a record of the activities involved: a simple diary recording all work done including administration, following up leads for work, etc.

The fact that someone may not have registered or attempted to register as self-employed does not mean that they are not self-employed, although registration is a legal requirement, and people should be advised of possible consequences if they do not register.

Who is a worker?

These rules do not apply to Croatians in their first year of employment in the UK. The European Commission, however, is taking action against the UK government on this which may result in changes.

Broadly a person is a worker if they are engaged in paid work for an employer (see below for more details). The concept of worker must not be interpreted narrowly. Any person who performs services under the direction of another in return for payment falls within the definition provided that the activities are real ('effective') and genuine and not so small scale as to be regarded as purely marginal and ancillary (see for example Levin v Staatssecretaris van Justitie (Case 53/81)).

Work does not have to be full-time or permanent, and it does not have to provide a sufficient income for the worker's subsistence. European case law suggests that work for as little as ten hours a week can be sufficient to retain worker status, an opinion that was supported in DWP guidance for some years and is still the official position of the European Commission (see Commission communication COM(2002) 694 at 2.1).

'Effective' means that the work, even if there is no formal contract, is something that is recognisably a labour contract: there is an employer, an employee, and an agreement between them that the worker will perform certain tasks in return for which the employer will pay or offer services (such as free accommodation) or goods. Problems occur when the arrangement is between friends or family members and informal, because there may be suspicion that the work is neither effective nor 'genuine'. It helps if there is proof that the arrangement includes sanctions if the worker fails to do the work that is agreed.

'Marginal' can be taken to mean that the work involves so little time and money as to be largely irrelevant to the lifestyle of the worker. It is 'ancillary' because in this situation the worker is clearly actually spending most of their time on something else, not work. So a student who gets a job behind the student union bar for two hours a week is actually a student, their work is marginal and ancillary to their actual role as a student.

Low hours and wages are not automatically marginal. The facts of the situation may show that the low hours and wages are the product of particular circumstances (a reduction in hours to deal with illness or a childcare crisis, or a decision by the firm to go on to short-term working temporarily). Or there may be realistic prospects that the hours and/or wages will increase later. Working a small number of hours may not indicate marginality where the pay rate is high: earning £50 an hour for four hours a week, for example.

Recent DWP guidance on benefits including HB set up a 'two stage' process to look more closely at claims based on work where the claimant earns less than the national insurance primary threshold (£155 per week in 2015/16) on average over the last three months. If this is triggered the decision-maker must consider the following when deciding whether the work is marginal:

  • whether the work was regular or intermittent
  • the period of employment
  • whether work was intended to be short-term or long-term at the outset
  • the number of hours worked
  • the level of earnings.

The guidance recognises that '[...] the case law does not identify one consistent approach to applying these and other factors: each case must be decided on its own merits.' This statement itself effectively concedes that routinely refusing applications on the basis of a fixed income threshold is unlawful.

The DWP guidance applies only to benefits. When assessing eligibility for housing or homelessness services, the statutory instruments, Codes of Guidance on allocations and homelessness (and relevant case law) still apply. Housing decision-makers can obviously have regard to factors the DWP or HB took into account in making their decision, but they must come to their own conclusion based on the legislation and case law. This can lead to situations where the council have to accommodate an applicant who cannot currently pay rent because benefit has been refused (presumably pending a challenge). The duty to accommodate is not dependant on an applicant’s ability to pay rent: in fact the Homelessness Suitability of Accommodation Order is clear that the accommodation must be 'affordable'. In these situations the local authority may choose to charge rent (in the hope that HB will eventually cover it once the issue is sorted out) but suspend collection while the occupant is unable to afford it. The authority can make a reasonable charge for accommodation but in doing so it should take into account what the applicant can afford to pay: R(Yekini) v LB Southwark [2014]

Retaining worker status: incapacity for work

'Worker' status is retained where the worker is temporarily unable to work due to illness or a work-related accident. This applies to those who are not currently in employment (being ill while an employee is simply being a worker). There is no time limit for this and so long as the incapacity is temporary and the worker intends to return to work when able, then the status is retained. How long can a worker be 'temporarily' unable to work? In Moreno v Hackney LBC 2009 the County Court found that Mr. Moreno was indeed temporarily unable to work for four years from 2004 (reported in Legal Action November 2009). Hackney Council had failed to consider whether the treatment he was receiving would result in him getting well enough to work. Even if the former worker’s incapacity is permanent, s/he may have acquired a right to reside as a retired worker if s/he has worked in the UK for at least one year.

The DWP Guidance cites CIS/3182/2005 in support of its view that the illness must be that of the worker. However, the reported decision R(IS)4/09 implies that this issue is fact sensitive. In this case the worker retained their status while caring for their temporarily disabled partner and it was indicated that a similar outcome may have been reached if they had been caring for a sick child.

Retaining worker status: pregnancy and maternity

A woman who gives up work because of the physical constraints on her pregnancy or of the aftermath of childbirth remains a worker provided that she is able to return to work, or find another job, within a reasonable period after the birth of her child: St Prix v SSWP (C-507/12 CJEU).

The situation of former workers who become pregnant is more complicated. The DWP often advises women in the late stages of pregnancy to stop signing on as available for work. But this risks losing their workers rights unless they are 'temporarily unable to work due to illness' (which may be the case if the pregnancy is complicated or there is, for example, high blood pressure). Likewise once the child is born, the mother is often encouraged to stop claiming as unemployed which also results in the loss of worker status. The DWP has said that it will revise its procedures as a result of a Serious Case Review (pdf) into a child's death that arose from the consequential loss of benefits.

A single parent or pregnant woman who claims income support despite notifying DWP in the process that she is seeking work, should be awarded it even though she should have claimed JSA. Further she is still a retained worker despite the fact she is on IS (and not JSA) because she registered her intention to seek work: SSWP v Elmi [2011] EWCA Civ 1403.

Retaining worker status: vocational training

An unemployed worker who is engaged in vocational training including training linked to their previous job retains their worker status while doing so.

Advising unemployed workers: first steps

Retaining worker status during a period of unemployment is where a person is at the greatest risk of a poor or otherwise adverse decision. Establishing a right to reside through seeking work is inherently more hazardous than the alternative routes outlined above because:

  • some rights are subject to time limiting, after which either the right expires or the conditions for retention are more onerous
  • the guidance for decision-makers is often expressed or interpreted in way that restrictive or in some cases actually unlawful
  • access to housing and benefits is extremely limited if the right to reside is as a 'jobseeker' rather than that of an unemployed retained worker; jobseekers normally have access to JSA(IB) only;
  • a jobseeker has to prove that they are habitually resident to be entitled to JSA whereas a worker with retained status does not.

When approaching any problem of this kind advisers should always consider whether an alternative route is available to retaining their worker status (e.g. sickness, maternity) which is not subject to the above hazards associated with seeking work.

DWP guidance (at 073131-32) (pdf) on this makes it clear that anyone faced with losing benefits at this point should be asked about what rights to reside they have, but it is clear that this is not happening, or not happening in a way that claimants understand. Many unemployed claimants will have at least one other right to reside, the most common being:

  • a retained worker who is temporarily unable to work because of sickness or maternity (see above) but who has chosen to sign on because they were unaware of the rules or have been poorly advised
  • a family member
  • a parent of a child in education
  • a long term resident
  • a student or person in vocational training

Retaining worker status and the right to reside while unemployed

If no alternative right to reside exists, the rights of an unemployed work seeker to housing and benefits depend on whether they are a retained worker or an EEA jobseeker as follows:

  • a retained worker has a right to reside and full access to housing and benefits (including JSA(IB) and HB) without any further conditions
  • a jobseeker has a right to reside and is entitled to JSA(IB) if:
      • they are actually habitually resident; and
      • they have been resident in the UK and seeking work for at least three months

    while they receive JSA(IB) and their only right to reside is as jobseeker (or as the family member of a jobseeker) they cannot get HB.

An unemployed person must meet the job-seeking condition to have a right to reside either as retained worker or a jobseeker. The job-seeking condition is that the unemployed person:

  • has registered as a jobseeker at the jobcentre (which can include a claim for income support provided they clearly notified the DWP they are seeking work (SSWP v Elmi [2011] EWCA Civ 1403)
  • he/she is present in the UK seeking employment, and
  • he/she can provide evidence that they are seeking work and that they have a genuine chance of being engaged

but if he/she has previously had the right to reside as jobseeker for three months (91 days) or for six months as a retained worker the evidence he/she provides must be 'compelling'. If they meet this requirement their status as a retained worker or a jobseeker is as follows:

  • If he/she has worked in the UK for at least one year and seeks work immediately after losing his/her right to reside as a worker (or right to reside as a student or as self-sufficient or self-employed person), he/she retains their worker status for as long as they meet the job-seeking condition.
  • If he/she has worked in the UK for less than a year and seeks work immediately after losing their right to reside as a worker (or other right to reside as a student or as self-sufficient or self-employed person), they retain their worker status for up to six months. After their worker status has expired they can regain a right to reside as a jobseeker but only if they have a period of absence from the UK and they can immediately satisfy the requirement to provide compelling evidence of their prospects for work. If the absence from the UK is a continuous period of at least 12 months the requirement for compelling evidence postponed for a further period of job-seeking of up to 91 days.
  • If a person has entered the UK seeking work he/she enjoys an initial 91-day period of unconditional residence during which he/she is not entitled to housing or benefits. After 91 days of condition-free residence he/she has a right to reside as a jobseeker for a further 91 days (making 182 days in total). However, this 91 day period is reduced by any days previously spent in the UK as jobseeker, unless the previous period is separated by a continuous absence from the UK of at least 12 months. If the 91 days has been spent without a 12-month break then the right to reside as a jobseeker can only continue after an absence and if he or she can immediately satisfy the compelling evidence test. Apart from the requirement for a break and providing compelling evidence there is no time limit a person can be a jobseeker while seeking work.

The DWP interprets the requirement for 'compelling' evidence very narrowly within the constraints of its guidance. In practice, it only accepts a job offer or evidence that the claimant's employability has changed significantly since signing on, e.g. through retraining or moving to an area with more job opportunities. However, since the regulations do not define the term it should be given its ordinary meaning and arguably it restricts the right to reside in a way not permitted by EU law. CPAG is interested in assisting appeals on these grounds as test cases. See also further information.

Where a former worker has resided in the UK for some time before losing benefits, and especially where there may be some challenge to the loss of benefits and alleged loss of right to reside, if they have social care issues (as a vulnerable adult or a household with children) they may be able to get help from social services: see people with social care needs.

Transitional rules: periods of job-seeking starting before 1st January 2014

The following transitional rules apply when determining the right to reside and right to HB of a jobseeker:

  • in calculating whether a person has reached their 91-day allowance (with respect to the requirements for compelling evidence and absence from the UK) any period(s) of job-seeking that took place between 1 January 2014 and 10 November 2014 (when the law was introduced) are also counted except to the extent that their total exceeds 91 days
  • if an unemployed person was receiving HB on 31 March 2014 because they qualified for JSA(IB) as a jobseeker they remain entitled to HB until either their JSA(IB) or HB they make a new claim for HB. Note that a change of address does require a new claim for HB unless the claimant moves outside the local authority area.
Chartered Institute of Housing

Background Topics

How can we improve housing for new migrants in the UK?

Chartered Institute of Housing