Updated 21 May 2012

Changes to contribution-based Employment and Support Allowance

• Introduction
• What are the changes?
• Abolition of 104 week linking
• What we are doing to support claimants immediately affected by time limiting
• What is contribution-based Employment and Support Allowance?
• What is the Work Related Activity Group?
• What is the Support Group?
• What will happen if a claimant's contribution-based Employment and Support Allowance is stopped?
• Claimants living abroad
• Claimants living in Northern Ireland
• More information

Introduction

On 1 May 2012 the Welfare Reform Act 2012 introduced two changes to contribution-based Employment and Support Allowance (ESA). They are:

• to limit the period for which people in the Work Related Activity Group (WRAG) can receive contribution-based ESA to 365 days; and
• to prevent any new claims for ESA on the grounds of youth (ESA (Y)).

The ESA 104 week linking rule has also been abolished by separate regulations. The legislation to support these changes applies retrospectively so that claimants in the work related activity group who have already received 365 days of contribution based ESA saw their entitlement end on 30 April 2012.

What are the changes?

The Welfare Reform Act limits the amount of time people who are not in the Support Group can claim contribution-based ESA to a period not exceeding 365 days without re-qualifying. Time spent in the Assessment phase will count towards the 365 day time limit unless it is immediately followed by entitlement to the support component. People not in the Support Group who have already received contribution-based ESA for 365 days or more will have their entitlement stopped as soon as the change takes effect. This means that the last day benefit will be paid for is 30 April 2012.

The Act has also removed the special contribution conditions that allow people aged between 16 and 20 (or under 25 if in education or training at least three months immediately before turning 20) to receive contribution-based ESA without paying National Insurance contributions, this was called ESA 'Youth'. This means that all new claims to contribution-based ESA will need to meet the standard contribution conditions.

People not in the Support Group who are currently claiming contribution-based ESA and qualified under 'Youth' provisions will have their contribution-based ESA time limited to 365 days. People in the Support Group will continue to receive contribution-based ESA providing they continue to meet the qualifying criteria.

Young people will still be able to claim income-related ESA if they are entitled to do so.

All new claimants who are placed in the Work Related Activity Group will be informed that their contribution-based ESA is time limited to 365 days.

People in the Support Group and those solely claiming income-related ESA are unaffected.

Abolition of 104 week linking

Previously, where a claimant left ESA and started work or training within one month, then returned to ESA within 104 weeks, their benefit was re-instated at the same rate as previously. As a result of time limiting, the 104 week linking rule would prevent some claimants who had left benefit and paid National Insurance contributions, for example by working, from re-qualifying for a further 365 days of contribution-based ESA and it has therefore been abolished.

What we are doing to support claimants immediately affected by time limiting

From 29 February 2012 we began contacting claimants in receipt of contribution-based ESA, who have not been assessed for income-related ESA and whose benefit will end between 30 April 2012 and 3 June 2012, to inform them of the change of their entitlement from 30 April 2012 and ask if they wish to be considered for income-related ESA. These claimants were sent a further letter after 9 April 2012.

The standard process we are introducing will ensure that those claimants whose contribution-based ESA stops on or after 4 June 2012, will be issued with a letter eight weeks beforehand. The letter will include details of how to be considered for income-related ESA.

Claimants, where we are already aware of an underlying entitlement to income-related ESA, will be automatically moved onto this when their contribution-based ESA ends.

What is contribution-based Employment and Support Allowance?

People receive contribution-based ESA if they have limited capability for work and have paid enough National Insurance contributions whereas income-related ESA is paid to people depending on their income and savings.

What is the Work Related Activity Group?

If someone is in the Work Related Activity Group, it has been decided that work may not be appropriate for them now, but with support they can prepare for work in the future.

What is the Support Group?

If someone is severely disabled or has a severe health condition they will be placed in the Support Group. They will not be expected to look for work and will get the extra support they need. They will not have to take up any work related support unless they want to.

What will happen if a claimant's contribution-based Employment and Support Allowance is stopped?

People not in the Support Group who have already been entitled to contribution-based ESA for 365 days or more will have their entitlement stopped when the change is introduced. Claimants with an underlying entitlement to income-related ESA will be automatically moved onto this benefit when their contribution-based ESA ends.

Claimants living abroad

Claimants living abroad and receiving contribution-based ESA are also affected by the change. People not in the Support Group who have already been entitled to contribution-based ESA for 365 days or more had their entitlement stopped on 30 April 2012.

Claimants living abroad who have not yet been entitled to contribution-based ESA for 365 days, will be contacted by the International Pension Centre before their entitlement ends to inform them when it will end. They will also be informed that they are not entitled to receive National Insurance credits and may lose their entitlement to receive other Social Security benefits.

More information about Social Security benefits is available at www.dwp.gov.uk/international/

Claimants living in Northern Ireland

Claimants living in Northern Ireland should contact the office in Northern Ireland that normally deals with their benefit for any further information.

More information

• ESA Legislative Changes 2012 for claimants in Great Britain (133KB)
• Questions and answers on the ESA legislative changes (76KB) – updated 21 May 2012
• Employment and Support Allowance – information for claimants (Directgov)