• A new Minimum Earnings Threshold will be introduced from 1 March 2014. This threshold will help to determine whether an EEA national’s previous or current work can be treated as genuine and effective for the purposes of deciding whether they have a right to reside in the UK as a worker or self employed person.
• The Minimum Earnings Threshold has been set at the level at which workers start to pay National Insurance Contributions (NICs), currently £149 a week (or £153 a week in the 2014/15 tax year). If an EEA national can prove that they have been earning at least this amount for a period of 3 months immediately before they claim HB their work can be treated as genuine and effective and they will have a right to reside as a worker or self employed person.
• If they do not satisfy the Minimum Earnings Threshold criteria, a further assessment will be undertaken against a broader range of criteria (such as hours worked, pattern of work, nature of employment contract etc) to determine whether their employment is genuine and effective. It is a two tier process.
• Tier 1 – Whether the Minimum Earnings Threshold has been met for a required period
• 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.
• An EEA national who has worked as an employee or in a self employed capacity in Great Britain will be automatically considered as a worker or self employed person for the purposes of EU law if:
– their average gross earnings were more than £646 per calendar month (£149 a week) in 2013/14, and/or £663 per calendar month (£153 a week) in 2014/15, and
– the gross earnings were at, or above that level for a continuous period of 3 months immediately before the date from which benefit has been claimed.
• If these conditions are met, DMs should accept that the work activity was genuine and effective and that while in work the EEA national had worker or self employed status, as appropriate, in EU law. In this case there is no need to apply Tier 2 assessment
• The level of the Minimum Earning Threshold is linked to the level of the HMRC Primary Earnings Threshold (PET), which is the point at which employees must pay Class 1 NICs. Self employed have to pay Class 2 and Class 4 NICs at this point too. As the PET level is uprated every April, DMs should ensure that they use the PET level relevant to the 3 month period of earnings under consideration. Where this period spans the April PET uprating, DMs should use the pre-uprating PET rate for the entire period.
• In all cases where an EEA national’s average gross earnings from employment of self employment fall below the Minimum Earnings Threshold and/or their earnings have not been at that level for a continuous period of 3 months.
• The DM will need to examine each case as a whole, taking account of all circumstances, to determine whether the EEA national’s activity was genuine and effective, and not marginal and ancillary and decide whether the person
• is/was a worker or a self employed person, applying the guidance set out below
• and in Annex A (which sets out on the factors, derived from EU case law, to take
• into account when deciding whether an EEA national is/was a worker).
• Where the Minimum Earnings Threshold is not met the DM will need to consider two questions:
• is the person exercising their EU freedom of movement rights as a worker and is the work genuine and effective
• In order for a person to be exercising their EU law rights of free movement as a worker, there must be a real link between that person and the labour market of the host member state.
• A worker must be actually pursuing activities as an employed person or seriously wish to pursue activities as an employed person.
• DMs can look at all the circumstances, including the person’s primary motivation in taking up employment and whether, during periods when they were not employed, the person seriously wished to pursue employment by actively looking for work with a genuine chance of being engaged.
When considering what is genuine and effective work decision makers take into account the following factors
• In deciding whether a person is a worker account should be taken of all the occupational activities the person has undertaken in the host member state
• As a worker must receive remuneration, unpaid voluntary activity is not work
• The mere fact that there is a legally binding employment relationship is not of itself conclusive of whether the employee is a worker
• A person working part-time can be a worker provided that the work undertaken is genuine and effective but not where activities are on such a small scale as to be regarded as purely marginal or ancillary
• As long as the work is genuine and effective it is irrelevant whether it yields an income lower that the amount considered the minimum required for subsistence in the host Member State (in the case of the UK, the relevant applicable amount for an income-related benefit)
• The fact that a person seeks to supplement the remuneration from his work by means of financial assistance drawn from public funds does not preclude him from being regarded as a worker
• A person employed under an ‘on-call’ or ‘zero-hour’ contract is not precluded from being a worker provided the work is genuine and effective
• An employee undertaking genuine and effective work is a worker even if the person is employed under a contract that is performed illegally
The fact that the person has claimed benefit should not be considered relevant when deciding whether the work is genuine and effective.