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Self-employed persons

This content applies to England

The meaning of 'self-employed' for the purposes of the right to reside and access to homelessness assistance.

Definition and right to reside of 'self-employed' persons

EEA nationals who are self-employed persons (and their family members) have a right to reside and are eligible for homelessness assistance. European Union directives and UK regulations use the term 'self-employed person'.[1]

A self-employed person is an 'independent provider of services', in contrast a worker 'performs services for and under the direction of another person in return for which s/he receives remuneration'.[2]

As in the case of workers, the self-employed activity must be 'effective and genuine' and not be on such a small scale as to be classified as 'marginal and/or ancillary'.[3] If a self-employed person is dependent on means-tested benefits, this is not relevant in determining whether her/his self-employed activities are genuine and effective.[4] See the page Workers for more information on 'genuine and effective' activity.

The definition of what constitutes economic activity is broad. It may include:

  • selling the Big Issue[5] (but note that in one case, the very low income of a Big Issue seller was relevant to the finding that her economic activity was not 'genuine and effective'[6])
  • activities carried out as a member of a community religion[7]
  • prostitution.[8]

A person who has taken preparatory steps to set up a business or provide services can qualify as self-employed.[9] However, caring for a person whose entitlement to a qualifying state benefit means that the carer receives carer's allowance is not an economic activity, nor can the receipt of carer's allowance in this situation be regarded as remuneration as there is no link between payment of the allowance and the level of caring services provided.[10]

Retaining self-employed status

The rules for retaining self-employed status are similar to the those for EEA workers. A person who is no longer in self-employment retains her/his self-employed status if s/he:[11]

  • is temporarily unable to engage in activities as self-employed for reasons not of her/his making
  • is temporarily unable to engage in activities as a self-employed person as the result of an illness or accident
  • has become involuntarily unemployed after a period of self-employment, and is registered as a jobseeker (see below)
  • has given up self-employment due to the physical constraints of the late stages of pregnancy and the aftermath of childbirth, provided that she returns to self-employed or employment within a reasonable period after the birth of her child (see below).[12]

Involuntary unemployment
The Court of Justice of the European Union (CJEU) has ruled in the case of Gusa that legislative provisions[13] which allow a worker to retain worker status after having become involuntarily unemployed and when registered as a job-seeker, also apply to a self-employed person (with effect from 24 July 2018, the UK regulations have been amended accordingly).[14] This case concerned a self-employed plasterer who could not find work because building work had dried up following a time of economic recession.

The CJEU stated that the reference in the English language version of the Citizenship Directive (which allows EU citizens to move and live freely within the EU) to a person being able to retain worker status if they are in involuntarily unemployment after having been employed must be read to include having been self-employed. The Court pointed out that this is in keeping with the aims of the Directive, and that translations of the Directive into other languages do not distinguish between employment and self-employment. This judgment will have implications for EEA nationals seeking to build up five years' lawful residence in the UK in order to acquire a permanent right to reside.

For how long the status can be retained

The rules that cover how long a worker can retain their status in the case of involuntary unemployment, including the Genuine Prospect of Work (GPOW) test, will also apply to how long a person may retain their self-employed status.[15] See the page Workers for details.

Note that a self-employed person who is not working can also remain 'self-employed' if s/he is seeking self-employed work. How long this might continue will depend upon the individual's particular circumstances.[16]

Pregnancy and childbirth
The Court of Justice of the European Union (CJEU) has held that a woman who ceases employment as a result of the physical constraints of pregnancy and the aftermath of childbirth retains her worker status provided that she starts working again (or re-enters the labour market) within a 'reasonable period' of giving birth. This is known as the ‘St Prix’ ruling (details can be found on the Workers page).

In a subsequent CJEU's decision, it has been ruled that there can be no difference in the treatment of pregnant EEA self-employed persons who give up their economic activity due to the physical constraints of the late stages of pregnancy and childbirth and  EEA workers in similar circumstances,  therefore a self-employed EEA national who ceases self-employment because of physical constraints of the late stages of pregnancy and the aftermath of childbirth will retain the status of being self-employed, provided that she returns to self-employment (whether the same or different) or employment within a 'reasonable period' after the birth of her child.[17]

See the Workers page for more details about the 'St Prix' provision and the meaning of the 'reasonable period'. 

Question of fact
A self-employed person does not need to be actively working in order to maintain self-employment. The concept of self employment 'encompasses periods of both feast and famine', and just because there is no work to do at a particular moment does not mean a person has ceased to be self-employed. Self-employment includes periods of rest, and holidays. The amount of work done is only one factor in determining whether a person has continued to be self-employed, and any other steps the person is taking in the course of self-employment - such as marketing to generate more work - are also relevant. The question can only be decided in the context of the facts at any particular time.[18]

Children in education

The primary carer of a child of a formerly self-employed worker who is in full time education does not acquire a right to reside, in contrast to the position of the primary carer of the child of a worker who is not classed as self-employed.[19] See the page Family of workers and self-employed.

Wales

The legislative references and the footnotes on this page reflect the law in England. In Wales, very similar rules made under Welsh legislation apply, but the references may be different. Contact Shelter Cymru for more information about the law in Wales.

[1] Article 7(1) Directive 2004/58/EC (Citizenship Directive); reg 4 Immigration (European Economic Area) Regulations 2016 SI 2016/1052.

[2] Allonby v Accrington and Rossendale College [2004] EUECJ C-256/01; Tilianu v Secretary of State for Work and Pensions [2010] EWCA Civ 1397.

[3] Levin v Staatssecretaris van Justitie [1982] EUECJ R-53/81; HMRC v IT (CTC) [2016] UKUT 252 (AAC).

[4] Kempf v Staatssecretaris van Justitie [1986] EUECJ R-139/85.

[5] Bristol CC v FV (HB) [2011] UKUT 494 (AAC); HMRC v IT (CTC) [2016] UKUT 252 (AAC).

[6] DV v SSWP [2017] UKUT 155 (AAC).

[7] Steymann v Staatssecretaris van Justitie [1988] EUECJ R-196/87.

[8] Jany v Staatssecretaris van Justitie, [2001] EUECJ C-268/99.

[9] F v HMRC (TC) [2017] UKUT 334 (AAC); Social Security Commissioners' decision CIS/3559/1997.

[10] JR v SSWP (IS); JR v Leeds CC and another (HB) [2014] UKUT 0154 (AAC).

[11] reg 6(4) Immigration (European Economic Area) Regulations 2016 SI 2016/1052, as amended by Immigration (European Economic Area) (Amendment) Regulations 2018 SI 2018/801; HMRC v Henrika Dakneviciute Case C-544/18 (CJEU 19 September 2019); Gusa v Minister for Social Protection (Ireland) Case C-442/16 (CJEU 20 December 2017).

[12] HMRC v Henrika Dakneviciute Case C-544/18 (CJEU 19 September 2019).

[13] Article 7(3)(b)-(c) Directive 2004/58/EC; reg. 6(2)(b)-(c) Immigration (European Economic Area) Regulations 2016 SI 2016/1052.

[14] Gusa v Minister for Social Protection (Ireland) Case C-442/16 (CJEU 20 December 2017); reg 6(4) Immigration (European Economic Area) Regulations 2016 SI 2016/1052, as amended by Immigration (European Economic Area) (Amendment) Regulations 2018 SI 2018/801. See also DMG Memo 15/18.

[15] SB v SSWP (UC) [2019] UKUT 219 (AAC).

[16] Secretary of State for Work and Pensions v AL (JSA) [2010] UKUT 451 (AAC); Secretary of State for Work and Pensions v JB (JSA) [2011] UKUT 96 (AAC).

[17] HMRC v Henrika Dakneviciute Case C-544/18 (CJEU 19 September 2019).

[18] SSWP v JS (IS) [2010] UKUT 240 (AAC).

[19] Secretary of State for Work and Pensions v (1) Czop (2) Punakova [2012] EUECJ C-147/11 and C-148/11; RM v Secretary of State for Work and Pensions (IS) [2014] UKUT 401 AAC; Hrabkova v Secretary of State for Work and Pensions [2017] EWCA Civ 794.

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