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Migrants from the European Economic Area (EEA) who claim to have been in work or self-employed in order to gain access to a wider range of benefits will face a more robust test from 1 March 2014.

Being defined as a 鈥榳orker鈥� under EU law allows people more generous access to in and out-of-work benefits such as Jobseeker鈥檚 Allowance (JSA), Housing Benefit, Child Benefit and Child Tax Credit. Currently European Union case law means the definition of a 鈥榳orker鈥� is very broad, meaning some people may benefit from this even if, in reality, they do very little work.

So in order to help ensure benefits only go to those who are genuinely working a minimum earnings threshold will be introduced as part of the government鈥檚 long-term plan to cap welfare and reduce immigration so our economy delivers for people who actively contribute and want to work hard and play by the rules.

Work and Pensions Secretary Iain Duncan Smith said:

As part of the government鈥檚 long-term economic plan we have taken action to make sure our economy delivers for people who want to work hard, play by the rules and contribute to this country.

These reforms will ensure we have a fair system 鈥� one which provides support for genuine workers and jobseekers, but does not allow people to come to our country and take advantage of our benefits system. The British public are rightly concerned that migrants should contribute to this country, and not be drawn here by the attractiveness of our benefits system.

To show they are undertaking genuine and effective work in the UK an EEA migrant will have to show that for the last 3 months they have been earning at the level at which employees start paying National Insurance. This is 拢150 a week 鈥� equivalent to working 24 hours a week at National Minimum Wage. An EEA migrant who has some earnings but doesn鈥檛 satisfy the minimum earnings threshold, will be assessed against a broader range of criteria to decide whether they should still be considered as a worker, or self-employed.

An EEA migrant who has a right to reside as a jobseeker is subject to other restrictions. EEA jobseekers must live in the UK for 3 months and satisfy the Habitual Residence Test before they are entitled to claim income-based JSA, and from 1 April they will be ineligible for Housing Benefit.

Migrants who are economically inactive are not entitled to claim income-related benefits such as Income Support or income-based Jobseeker鈥檚 Allowance. They must be self-sufficient and have comprehensive sickness insurance.

Last November, the Prime Minister set out a number of areas where he wanted the benefit system to be tightened and the introduction of the minimum earning threshold will mean all measures will be introduced by April this year. This includes:

• from 1 January all EEA jobseekers have to wait for 3 months before they can get income-based JSA 鈥� this will make sure that only people who have a clear commitment to the UK and plan to contribute to the economy have access to our welfare system
• after 3 months, migrants will also have to take a stronger, more robust Habitual Residence Test if they want to claim income-based JSA
• if they pass the Habitual Residence Test, EEA jobseekers will then only be able to get JSA for 6 months. After 6 months, only those who have a job offer or compelling evidence that they have a genuine chance of finding work will be able to continue claiming
• from 1 April, new migrant jobseekers from the European Economic Area (EEA) will no longer be able to get Housing Benefit (HB)

Minimum earnings threshold 鈥� case study

Mr A, an EEA national aged 24, claims income-based JSA on 12 March 2014 and is subject to the Habitual Residence Test. He provides evidence that he arrived in the UK on 1 February 2014 and has been working since 3 February as a horticultural labourer on a zero hours employment contract. His employment ended on 3 March. His pay slips show he earned:

• 拢56 in week commencing 3 February
• 拢0 in w/c 10 February
• 拢0 in w/c 17 February
• 拢25 in w/c 24 February

As he has been employed for just over a month and his earnings have been below 拢149 a week, he does not satisfy the Minimum Earnings Threshold. He is therefore subject to a fuller assessment of whether his work was genuine and effective. A Decision Maker decides Mr A鈥檚 work activities were marginal and ancillary and so he was not a worker who could retain that status.

EEA nationals鈥� entitlement to benefits

The table below shows that it is beneficial to be classified as a worker because in comparison to a jobseeker a person with worker (or retained worker) status can claim some benefits that would not be otherwise available, and receive JSA earlier than would otherwise be the case.

Benefit type	Benefit	Worker	Jobseeker
In-work benefits	Child Benefit and Child Tax Credit	Yes	Yes
	Working Tax Credit	Not applicable	Not applicable
Out of work benefits	3 month residency requirement for JSA?	No	Yes
	JSA	Yes	Yes
	ESA	Yes	No
	Income Support	Yes	No
	Pension Credit	Yes	No
	Housing Benefit	Yes	No

More information

Minimum earnings threshold measure: The level of the minimum earnings threshold will be pinned to the level of the Class 1 National Insurance Contributions Primary Threshold. (PT). The PT is 拢149 a week (拢7755 a year) in 2013/14, and 拢153 a week (拢7956 a year) in 2014/15. This is the point at which employees must pay Class 1 National Insurance Contributions. This is equivalent to around 24 hours a week at the National Minimum Wage.

Under EU case law, work must be 鈥榞enuine and effective鈥� and not on so small a scale to as to be 鈥榤arginal and ancillary鈥� 鈥� however there is not clear definition for what this means. Today鈥檚 measure will bring greater clarity and robustness to decision-making in this area.

In terms of benefits administered by HMRC, this change of policy applies to Child Benefit and Child Tax Credit. Eligibility for Working Tax Credit is subject to different rules, which are unaffected by this change of policy. The change also applies to Jobseeker鈥檚 Allowance and Housing Benefit.

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