Self-employed people and contribution-based Jobseeker’s Allowance

Contributory social security benefits are paid to individuals with a sufficient record of National Insurance contributions. With the phasing out of the additional State Pension and the introduction of a single-tier State Pension from 6 April 2016, self-employed people will be eligible for the same contributory benefits and pension as employed earners, with one exception. Self-employed people cannot claim contribution-based Jobseeker’s Allowance (JSA).

The rule which excludes self-employed people from contributory unemployment benefits is long-standing. The main justification has been the difficulty in deciding whether a person who was self-employed is genuinely unemployed, given the fact that self-employed people can, to some extent at least, control their own working patterns.

From time to time it is suggested that self-employed people should be allowed to pay Class 1 (employee) National Insurance contributions on a voluntary basis, to enable them to claim contribution-based JSA should they become unemployed. Successive governments, including the current one, have however rejected such calls.

One issue that would have to be addressed when considering whether to extend contributory JSA to the self-employed is the fact that, even taking into account their reduced benefit eligibility, the self-employed contribute significantly less to the National Insurance system than employees.