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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 EEA family members (or Croatians who made their application before 1 July 2018). 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 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 who applied before 1 July 2018). 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 (£166 per week in 2019/20). The guidance cites Bristol City Council v FV [2011] UKUT 494 (AAC) (where the claimant was a street seller of the Big Issue) in support but the decision is clear that if a self-employed person relies on benefits to top up their earnings that fact cannot be used to determine whether the work is effective and genuine. It goes on to 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'. But in another case about a Big Issue seller (DV v SSWP [2017] UKUT 155 (AAC)) (pdf) it was decided that the claimant’s earnings must provide a real contribution towards the income he/she requires. In this instance the seller only sold 40 magazines a week and made a net profit of £50.

If a person is self-employed, but is not currently working, they retain their self-employed status (and thus their right to reside) if they are temporarily unable to work because of illness or accident. From 24 July 2018 changes were made to domestic law to comply with Directive 2004/38/EC so that if a self-employed person ceases trading they retain their self-employed status while they are registered unemployed in a similar way to worker, as set out below.

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 apply to all EEA nationals (including, from 1 July 2018, Croatians).

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 (pdf) 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.

DWP guidance on UC/HB sets up a 'two stage' process. If the claimant has average earnings over the past three months at least equivalent to the national insurance primary threshold (£166 per week / £719 per month in 2019/20) then they are automatically considered to be a worker. But if the average earnings are less 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 DWP guidance (pdf - at para C1499) 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 based on a fixed income threshold is unlawful. But it also goes on to say (at paras C1499-1501) that: ‘Work below the … threshold that is part time or low paid is not necessarily always marginal and ancillary’; ‘the [decision maker] will have to weigh, for example, low hours against long duration of work'; and immediately after gives an example where the decision maker accepts that the claimant is a worker because ‘he has been working for three hours per day, five days a week for the last four months’ (which at the minimum wage in 2019/20 would be only £123.15 per week). If the work is full-time (other than on a fixed-term contract) the European Court has ruled that even a period as short as two weeks can be enough to establish worker status (Case C-483/17 - Tarola v Minister for Social Protection).

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). What counts as ‘temporary’ is not defined and there is no set maximum period. Provided your incapacity is not permanent and there is a reasonable prospect of being able to return to work in the foreseeable future you retain your worker status: LP v SSWP [2016] UKUT 389 (AAC). You do not have to show you have ‘limited capability for work’ – the test is whether you could do the work you were doing previously: HK v SSWP (ESA) [2017] UKUT 421 (AAC). An example of a housing case is Moreno v Hackney LBC (reported in Legal Action, November 2009) where the County Court found that although Mr. Moreno had been unable to work for four years his incapacity was still regarded as being temporary. 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 can mean the worker loses her worker status 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 into a child's death that arose from the consequential loss of benefits.

A single parent with a young child or a pregnant woman who claims universal credit should be awarded it, because even though she is exempt from the full work-related requirements she retains her worker status if she registers 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 a restrictive way or in some cases is 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 are not entitled to UC while their only right to reside is as a jobseeker.

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 (pdf) on this makes clear (at C1435) that anyone faced with losing benefits at this point should be asked about what other rights to reside they may have, but this often does not happen or takes place in a way that claimants do not 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 permanent right of residence (acquired through retirement, permanent incapacity or long-term residence)
  • a student or person in vocational training.

The law about acquiring a permanent right of residence through retirement or incapacity is in Regulation 5 of the EEA regulations.

The importance of registering as unemployed

Even if the claimant is refused benefit (e.g. because they do not have a qualifying right to reside or they have other income) it is imperative that they understand the importance of registering their unemployment (at the Jobcentre Plus office), continue to ‘sign on’ and meet any work-related requirements. By doing so they will receive national insurance credits (which may help them qualify for JSA/ESA at a later date), and more importantly any period recorded as jobseeker or a retained worker can go towards their five-year qualifying period for the permanent right to reside. It is not possible to backdate their registration so that gaps in their record even as short as one month can mean that the worker must start a fresh qualifying period. Workers finishing work often delay making a claim, confident that they will find work quickly. They should be advised that this could put at risk or severely postpone the date they acquire permanent residence.

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 an EEA jobseeker, or a retained worker, as follows:

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

But even if he/she is awarded JSA (including income-based JSA) they are not entitled to UC/HB while their only right to reside is as a jobseeker or as the family member of a jobseeker.

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

  • he/she is seeking, available for, work
  • has registered as a jobseeker at the jobcentre by claiming JSA/UC (or a claim for income support provided he/she has notified the DWP they are seeking work (SSWP v Elmi [2011] EWCA Civ 1403). Small gaps between finishing work and registering as a unemployed can be ignored: SSWP v MK [2013] UKUT 163 (AAC); and
  • he/she continues to 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. The one year’s work does not need to be continuous: SSWP v MM [2015] UKUT 128 (AAC).

  • 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 that he/she can only regain a right to reside after a period of absence from the UK and only then as a jobseeker (so he/she cannot get UC/HB) if he/she can provide 'compelling evidence' of their prospects for work on their return.
  • If he/she enters the UK seeking for work his/her only rights to reside are the initial three-month period of unconditional residence and after that as a jobseeker neither of which allow access housing or to UC/HB/CTR (but he/she might be able to get JSA for up to three months).

The DWP calls the requirement for ‘compelling evidence’ the ‘genuine prospects of work’ test and interprets it very narrowly within the constraints of its guidance. But the law says ‘compelling evidence’ just means ‘on the balance of probabilities’: SSWP v MB [2017] AACR 6. In practice, the DWP 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.

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.

Effects of the EU Settlement Scheme

All EEA nationals living in the UK and all people with EU rights to reside (including family members of EEA nationals and ‘Zambrano carers’ can apply to the EU Settlement Scheme and can do so until 30 June 2021 (or 31 December 2020 if the UK leaves the EU with no deal). 

Successful applicants who can prove they have lived continuously in the UK for five years get ‘EU settled status’.  Those who can prove residence for shorter periods get ‘EU Pre-Settled Status’ and can later apply to convert this into EU Settled Status.  These are statuses granted under the Immigration Rules, so that people with them may have both an EU right to reside and a UK immigration status.

EU Settled Status is indefinite leave granted with no conditions attached and so people with this leave are eligible for housing and benefits.  For housing and homelessness services they are in eligible Class C. 

EU Pre-Settled Status is limited leave that does not fit into any eligible class for housing and homelessness services and is excluded as a qualifying right for universal credit or housing benefit. So generally, people with EU Pre-Settled Status have to rely on their EU rights to reside to be eligible.

There are three exceptions to this:

  1. In England, people who
    • have a non-qualifying right to reside (i.e. a right to reside in the first three months after arriving in the UK, a right to reside as a workseeker or as a ‘Zambrano carer’)
    • got EU Pre-Settled Status before 7 May 2019, and
    • applied for housing or for homelessness help before 7 May 2019

have transitional protection, which means that they continue to be eligible for housing and for homelessness assistance.  They are not eligible for universal credit or housing benefit.

  1. In Wales people who
    • have a non-qualifying right to reside (i.e. a right to reside in the first three months after arriving in the UK, a right to reside as a workseeker or as a ‘Zambrano carer’), and
    • got EU Pre-Settled Status before 19 July 2019, and
    • applied for housing or homelessness help before 19 July 2019

have transitional protection, which means they continue to be eligible for housing and homelessness assistance. They are not eligible for universal credit or housing benefit.

  1. In England and Wales, people are entitled to help with council tax. 

Why is this the case?

  1. The housing eligibility regulations in both England and Wales describe people with non-qualifying rights to reside as people whose only right to reside is that non-qualifying right to reside. These exclusions are replicated in the universal credit and housing benefit regulations (which apply to England, Scotland and Wales).
  2. Once people have pre-settled status they have another right to reside so that would make them eligible. 
  3. But the eligibility regulations have been amended: in England, from 7 May 2019 by SI 2019 No. 861; and in Wales from 19 July 2019 by SI 2019 No. 1041. These mean that having a right to reside from Pre-Settled Status under the EU Settlement Scheme does not in itself make the person eligible. A similar change has been made to the universal credit and housing benefit regulations by SI 2019 No. 872.
  4. So, in England from 7 May 2019, or in Wales from 19 July 2019, people with non-qualifying rights to reside who have EU Pre-Settled Status are not eligible. But if they applied in time before then they have transitional protection and are eligible provided they were habitually resident.

For the time being, no changes have been made to the council tax reduction regulations in either England or Wales so pre-settled status is not listed as a non-qualifying right to reside (although it is expected this will change at some point). 

Chartered Institute of Housing
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Background Topics

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

Chartered Institute of Housing