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’ll 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 3 months 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.
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 capital/savings you have over £16,000, you won’t be entitled to UC from the start of the Assessment Period in which you get it.
- If it takes your total 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 £6000, and it doesn’t take any capital/savings you have over £6000, then it doesn’t affect your Universal Credit amount.
See How savings affect an award for more information.
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?
Not everyone has their Universal Credit reduced by the Benefit Cap – but some do.
If you’ve been in work for at least 12 months, you may be entitled to a 9 month ‘grace period’ when your job ends, to protect you while looking for work.
If you’re worried about the Benefit Cap, speak to a Benefits Adviser.
See Benefit Cap for more information.
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, 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.
Can my children get free school meals?
The local authority can grant your child/children free school meals if you’re on Universal Credit and, in your last Assessment Period, you earned less than £616.67 (England and Wales). If it’s higher than this but was previously lower, the DWP can take the average earnings of the last 3 Assessment Periods. In Scotland the threshold is £610. So if you have finished work, you might qualify for free school meals in your second monthly Assessment Period.
See I need extra financial help for more information.
NOTE: In England and Wales, once your child is eligible, they’ll stay entitled until the end of the level of education they’re in (primary / secondary / further).