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Can you receive unemployment benefits whilst a temporary worker?
Can you receive unemployment benefits whilst a temporary worker?
Legal issues

Can you receive unemployment benefits whilst a temporary worker?

You’re unemployed and then you land a temporary job. The question is, are you still eligible for benefits? Read on to find out.
Summary
  • Universal Credit (UC)
  • Finally...

Ultimately, when it comes to unemployment benefits such as jobseeker’s allowance, temporary workers are on a level playing field with employees. You’ll still be entitled to receive benefits, provided that you meet certain conditions related to your income and hours worked, regardless of whether you’re a temporary worker or permanent employee. Below, we’ll explain UK temporary workers’ rights when claiming unemployment benefits.

Which benefits can I claim if I’m unemployed?

Anyone can lose their job, including temporary workers and permanent employees. As a temporary worker, you are not guaranteed to have back-to-back assignments and therefore need to know which benefits are available, in case you find yourself without work. While you’re looking for another job, you should be able to claim benefits to cover your living expenses. We’ll explain your options below:

Jobseeker’s Allowance (JSA)

To claim Jobseeker’s Allowance (JSA), you must be capable of working and be actively looking for a job. You’ll be assigned a ‘Work Coach’, and expected to provide regular updates and evidence of your job search.

You also need to meet certain criteria. You must be working less than 16 hours per week and your partner less than 24 hours a week.

There are two types of JSA:

Income-based Jobseeker’s Allowance: Means tested. This has now been replaced by Universal Credit and new applicants are no longer accepted. People who were already receiving income-based JSA will carry on receiving it, unless they no longer qualify or they apply for Universal Credit.

Contribution-based or ‘New Style’ Jobseeker’s Allowance: In order to apply, you need to have been working and have paid enough national insurance contributions within the two years preceding your application. You can receive contribution-based JSA for up to six months.

Current JSA rates for those with no earnings are:

£59.20 per week for under 25s

£74.70 per week for over 25s

Handy tip: You can claim JSA online at www.gov.uk, or phone Job Centre Plus on 0800 055 6688.

Universal Credit (UC)

Universal Credit was introduced in 2012 as part of the Welfare Reform Act, as a way of simplifying the social security benefits system. It is an overarching benefit which has replaced six other benefits: Income-based Jobseeker’s Allowance, Income-based Employment and Support Allowance, Income Support, Child Tax Credit, Working Tax Credit and Housing Benefit. Universal Credit is paid monthly.

Note that if you are already receiving any of these other benefits, you should continue to receive them unless you start a new UC application.

You can claim Universal Credit if you are on a low income, regardless of whether or not you’re working and how many hours. You must be under pension age and have £16,000 or less in savings. The amount that you receive is based on your income, and other factors such as whether you have children.

To find out how much you could claim, try the UK Government benefits calculators here: https://www.gov.uk/benefits-calculators

I’ve started a temporary work assignment – am I still eligible for JSA/UC?

If you’re receiving benefits when you get your temporary job, you’ll need to declare this as a change to your circumstances.

For JSA, if you’re working 16 hours or more, you’ll be classed as a full-time worker and your payments will be stopped. If you work less than 16 hours, your payments will be reduced based on a sliding scale. You must declare your change in circumstances as soon as you’re earning £5 or more per week.

You’ll need to declare your work start date, hours, and your pay before and after tax. If you claim with a partner, you also need to inform gov.uk or Job Centre Plus of any change in your partner’s work situation.

There is no maximum number of hours you can work in order to keep claiming, Universal Credit, but your payment will be reduced by 63p for every £1 earned. If you have one or more children you’ll have an ‘allowance’ which is protected against any reduction in payment. This means that if you are not receiving any help with housing costs, you can earn £515 per month before your Universal Credit starts to drop. The allowance drops to £293 per month for claimants who already receive help with their housing costs.

The reduction in UC payments is gradual as your earnings increase. You will be informed if your payments stop completely. Remember that you can always reapply if your earnings fall again.

It’s usually better to provide too much information than too little. If you’re not sure whether you need to report a change, get in touch with Job Centre Plus or the Universal Credit helpline (https://www.gov.uk/universal-credit/contact-universal-credit) to check. You can also get advice from your Work Coach.

Will I be taxed on my benefits?

Note that Jobseeker’s Allowance is taxable alongside your temping income. So if your overall income exceeds your annual tax allowance, you’ll have to start paying tax. The annual tax allowance for the 2021/2022 tax year is £12,570: if your income for the whole tax year is less then you won’t pay a penny in tax.

Universal Credit payments are not taxable.

Finally...

Under UK law, temporary workers have the same rights to claim unemployment benefits such as Jobseeker’s Allowance or Universal Credit as permanent employees. Jobseeker’s Allowance is only open to those who have paid enough in national insurance and have been working within the previous two years, while Universal Credit is open to anyone on a low income.

As explained earlier, if you take on a temporary role, that doesn’t necessarily mean that you’ll lose your benefits. You may be entitled to a partial payment in line with your earnings and working hours. Make sure that you declare any changes, and the new amount will be calculated for you.

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