Minimum Earnings Threshold - Establishing whether an EEA national is/was a “worker” or a “self-employed person”
On 21 February 2014 the DWP issued a Press release confirming that an earnings threshold is to be introduced into the definition of ‘worker’ for EU migrants from 1 March 2014 (click here). Under the new test, deciding whether an EEA claimant is a worker or self-employed for the purposes of EU law will from 1 March 2014 be a two tier process: -
Tier 1: Whether the Minimum Earnings Threshold has been met for a required period; and
Tier 2: In cases where the Minimum Earnings Threshold criteria have not been met whether the EEA national was in genuine and effective work assessed against a set of secondary criteria.
Under Tier 1 new EEA claimants will have to have earned £149 a week in 2013/2014 - and £153 a week in 2014/2015 - for a period of three months in order to be automatically accepted as having 'worker' status for the purposes of claiming benefits. Where an EEA claimant’s earnings do not reach this minimum threshold, then the EEA claimant will be assessed under Tier 2 to decide whether they should still be considered as a worker or self-employed. The DWP Press Release states:
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 ‘worker’ under EU law allows people more generous access to in and out-of-work benefits such as Jobseeker’s Allowance (JSA), Housing Benefit, Child Benefit and Child Tax Credit. Currently European Union case law means the definition of a ‘worker’ 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’s 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.
The DWP has issued guidance to decision makers on applying earnings threshold: -
- DMG 1/04 JSA(IB) – Right to Reside – Establishing whether an EEA national is/was a “worker” or a “self-employed person” – click here
- HB Circular A3/2014: Minimum Earnings Threshold – click here
These set out detailed guidance, based on domestic and EU case law, on assessing whether employed or self employed activity is 'genuine and effective', and not 'marginal and ancillary' where someone’s earnings are below the earnings threshold.
NB: The minimum earnings threshold will be pinned to the level of the Class 1 National Insurance Contributions 'Primary Threshold'. This is £149 a week (£7,755 a year) for 2013/2014, and will be £153 a week (£7,956 a year) in 2014/2015. £150 is equivalent to working 24 hours a week at the National Minimum Wage.