Situation 1 – you’re on Universal Credit when you finish work.
If your job ends you must report this to DWP, on your online account. If you cannot access this you can phone the UC Helpline.
If you don’t report ending work within 5 working days you could be sanctioned.
Your Claimant Commitment
Because you are no longer in work you will probably need to agree a new Claimant Commitment with your Work Coach. You must agree to the revised commitment within 5 working days or the claim could be closed.
If you are fit for work and have no caring responsibilities this will probably mean having to look for work for 35 hours a week.
For the first 4 weeks you’re out of work your Work Coach might let you limit the type of work you have to look for, or how much you earn, if they think it’s reasonable and that you have reasonable prospects of getting that type of work soon.
How do my final earnings affect my Universal Credit?
Even though you’re no longer working, your final earnings from work (which could include holiday pay, pay in lieu of notice, tax refund) will be taken into account in the Assessment Period you receive these payments.
Example:
Chloe has been getting Universal Credit to top up her earnings from work. Her Assessment Periods run from 24th of one month to 23rd of the next. Her 12 month contract ends on 31st July and she gets paid her final wages. Nearly four weeks later, on 27th August, she receives a further payment of £280.00 for holiday that she is owed. The DWP will take the £280 into account as earnings when they assess Chloe’s Universal Credit award for the Assessment Period 24th August to 23rd September even though she did no actual work during that period.
See How income affects an award for more information.
What if I get a Redundancy Payment?
Statutory and contractual redundancy payments, whether paid as a lump sum or over a given period, don’t count as earnings but as capital/savings.
So the effect on your Universal Credit depends on how much redundancy pay you get.
- If you get a redundancy payment that takes the total assessable capital/savings you have over £16,000, you won’t be entitled to Universal Credit from the start of the Assessment Period in which you get it.
- If it takes your total assessable capital/savings to anywhere between £6,000 and £16,000 then your Universal Credit will take this into account and it will be deemed to be generating you an income – so this will either reduce your Universal Credit award or could take you off Universal Credit.
- If you get less than £6,000, and it doesn’t take the assessable capital/savings you have over £6,000, then it doesn’t affect your Universal Credit amount.
See How savings affect an award for more information.
Example:
Tanya had been getting Universal Credit to top up her wage since having her daughter last year. She has just been made redundant and has reported this on her UC journal. She is expecting to receive a redundancy payment of £4,600 as well as some holiday pay.
Her Universal Credit award will take into account any final wages / holiday pay that she is due – these will be included as earnings when her Universal Credit is assessed in the Assessment Period that they are paid.
But the redundancy payment is classed as savings, not earnings, and as long as her total savings remain below £6,000 the redundancy payment will not affect her Universal Credit award.
What if I still have to pay for childcare?
If you have had a Childcare Element in your Universal Credit award while you were working, and you are still paying for childcare (for example because your childcare provider requires payment for a notice period or you hope to find a new job quickly and want to keep the place open) you can still have the Childcare Cost Element included for the Assessment Period in which the job finishes, and in the following Assessment Period. Make sure you continue to pay for and report the childcare in the normal way.
See Help with childcare costs for more information.
I know that while I was in work the Benefit Cap didn’t apply to me – will it apply now I’ve stopped working?
If you are already on Universal Credit or claiming it because your work has finished, and your total ‘welfare’ is higher than your Benefit Cap limit then you may find that your Universal Credit award is reduced.
The Benefit Cap generally only affects families with three of more children, or those with high rents.
But if you have been working for 12 months or more then you may find that the Benefit Cap should not be applied straight away – you may be entitled to a ‘grace period’. You are entitled to a ‘grace period’ if you have earned above a certain amount – £793 (or £722 before April 2024) in each of the 12 months before finishing work. In these cases the Benefit Cap should not be applied until after a 9 month ‘grace period’.
If you have not earned enough or for long enough then the Benefit Cap may apply – although some claimants are exempt from the Benefit Cap anyway, due to receiving certain other benefits.
If you’re worried about the Benefit Cap, speak to a Benefits Adviser.
See Benefit Cap for more information.
NOTE: We have heard that if a claimant does not specifically ask for the grace period to be applied, it could be missed, as the Universal Credit computer system does not automatically apply it.
Situation 2 – You haven’t claimed Universal Credit yet – but you need to because your job’s ended.
First check that this is the best option for you – if you have been claiming Tax Credits and/or Housing Benefit you may be better off staying on these.
If your best option is to claim Universal Credit then you’ll need to think carefully about when you claim.
Earnings are taken into account to reduce how much Universal Credit you can get, in the Monthly Assessment Period in which you are paid. Your first Assessment Period starts on the date you make a claim.
Final earnings, holiday pay, pay in lieu of notice, and tax refunds all count as earnings.
So if you know you’re going to receive a payment from work in a few days, it can be worth delaying claiming until after you’ve got these final earnings so they’re not taken into account. But obviously if it could be a while before you receive this payment or if it’s just for a small amount, then it may be better claiming straight away. Speak to a Benefit Adviser if you want to work out what’s best for you.
Example:
Badrul has been working full time. But his employer had to make him redundant: he will receive some final wages and a redundancy payment of around £2,400.
He contacted a Benefits Adviser who explained that as he has no other capital/savings, the redundancy payment will not affect his Universal Credit award. But she worked out that because Badrul is due a large payment of earnings in the next few days he is best waiting until after he has received this final wage payment before making a claim for Universal Credit.
Can my children get free school meals?
All children in primary 1 to 5, at schools run by their local council or funded by the Scottish Government, can get free school lunches during term-time. Your financial circumstances do not matter.
For other children, the local council can grant your child/children free school meals if you’re on Universal Credit and, in your last Assessment Period, your monthly earned income is not more than £850 (before any work allowance).