Understanding Employment and Support Allowance (ESA)

What is Employment and Support Allowance (ESA)?

Employment and Support Allowance (ESA) is a benefit provided by the UK government to individuals who have a limited capability for work due to illness or disability. It offers two main forms of support:

• Financial assistance: ESA provides weekly payments to help individuals meet their living costs while they are unable to work.
• Employment support: ESA claimants are assigned a Work Coach who can offer tailored support to help them prepare for, find, and stay in work. This includes guidance on:
  
  • Identifying suitable job opportunities
  • Building skills and confidence
  • Managing their health condition in the workplace

Understanding the Two Types of ESA:

ESA comes in two main types, each with its own eligibility criteria and payment rates:

1. Income-related ESA:

• Eligibility: Based on a combination of your National Insurance contributions and your household income.
• Purpose: Offers financial support to those who haven't paid enough National Insurance to qualify for contribution-based ESA.
• Payment rate: Based on your individual circumstances and household income.
• Important note: Income-related ESA is being gradually replaced by Universal Credit. However, new claims for income-related ESA are still possible in certain situations.

2. Contribution-based ESA:

• Eligibility: Based on your National Insurance contributions.
• Purpose: Offers financial support to those who have paid enough National Insurance contributions.
• Payment rate: Fixed rate based on your National Insurance contributions.
• Important note: Contribution-based ESA is the more relevant type for HR managers and employers, as it applies to individuals with a strong employment history who may face temporary illness or disability.

Key Points for HR Managers and Employers:

• Understanding ESA can help you better support employees who are experiencing illness or disability.
  
  
• ESA claimants are still considered potential employees and may be entitled to reasonable adjustments in the workplace.
  
  
• Working with Work Coaches can provide valuable insights into an employee's needs and limitations, aiding in workplace adaptations.

• Government-funded programs can offer financial support and training to help employees with disabilities return to work.

Useful Read: The Phased Return to Work Process: Balancing Employee Health and Business Needs

Can I get an Employment and Support Allowance (ESA)?

It depends on your circumstances whether you can receive either or both types of Employment and Support Allowance (ESA).

Income-related Employment and Support Allowance (ESA)

A new benefit called Universal Credit replaces income-based Employment and Support Allowance. ESA is only available for those with income-related needs during the following periods. You will lose legacy benefits if you apply for Universal Credit and receive a Child Tax Credit or housing benefit at the time. 

Utilize our benefits calculator or seek advice if you would like to know if you are eligible to claim income-related ESA. The Find an Adviser tool allows you to find an advice agency near you. 

Income-related employment and support allowance might still be available to you if you meet the following criteria:

• In the absence of a change in qualifying conditions or a claim for Universal Credit, income-related ESA stays as your current income-related benefit.
  
  
• ESA contribution-based benefits are being received by you (or your partner), and you applied for them before your area was digital.

You also have a low income and savings below £16,000, and you can only work part-time. ESA is only available if you work in a "permitted job".

Contributory/New Style Employment and Support Allowance

In addition to paying more than enough national insurance contributions, you can apply for the new style ESA if you have a limited ability to work. You can only receive ESA while working if your job is considered "permitted work". Income-related ESA can be paid with contribution-based ESA if you qualify for both. Contribution-based ESA can be obtained along with Universal Credit if you qualify for the former instead of the latter. A new application for new-style employment and support allowance is a new claim for contribution-based ESA.

Work Capability Assessment

You must demonstrate that you have limited work capacity to claim ESA. The Work Capability Assessment will determine whether you have limited work capacity. 

There are two parts to the Work Capability Assessment:

• Limited Capability for Work Questionnaire (ESA50)
• Medical assessment

You will receive a questionnaire known as the ESA50. The questionnaire must be filled out and returned before processing your claim. An in-person medical assessment is usually required. DWP will receive a report of your findings from a healthcare professional after a face-to-face appointment.

The DWP will use your questionnaire and the medical assessment report to determine whether you have limited capability for work. You will receive points based on the results of the Work Capability Assessment.

A score of less than 15 points will result in you no longer receiving ESA. A score of 15 points or more qualifies you for ESA, and your eligibility remains the same. 

The DWP will place you in one of two categories if it determines that you have limited work capacity:

• Work-related activity group
• Support group

Work-related activity group members participate in activities that prepare them for returning to work, including job-focused interviews at the job center. It is optional for support group members to participate in any activities.

People who have a terminal illness

You are eligible for special benefits if you have a terminal illness and expect to die within a year. The Support group will be automatically assigned to you at the start of your claim without having to undergo an assessment.

How does it work?

The claim phase begins in week 14. You will be placed in one of two groups by the Work Capability Assessment during the main phase of your claim:

• Work-related activity group
• Support group

Work-related activity group

The work coach will conduct work-based interviews with you in this group. The support system you have will help you prepare for work that is suitable for you.

A refusal to attend, or a lack of participation in, the work-focused interviews may impact your eligibility for ESA. Your introductory rate and a 'work-related activity part' will be paid if you make your claim before 3 April 2017. To qualify for a 'work-related activity part', your ESA claim must have been submitted after 3 April 2017.

Support Group

Those in this group are not expected to work due to illness or disability severely affecting their ability to work. Voluntary contributions may be made if you wish. Moreover, if you wish to speak with a work coach, you do not have to attend interviews focused on your work. You will be paid a 'support part' along with the basic rate.

Do I qualify for ESA?

ESAs of both types are subject to the same set of standard rules. You must:

• Not be working
• 16 years of age or older
• Under the age of state pension. 
• Currently living in Great Britain
• You will not be eligible to receive Income Support, Jobseeker's Allowance or Statutory Sick Pay when you are unemployed
• Work capabilities are limited. Work Capability Assessment tests this capability
  
  

In what ways are you eligible for ESA?

The ESA application process has a lot of rules, and determining if you qualify can be challenging. Those receiving Personal Independence Payments or Disability Living Allowance may apply for ESA if employed, self-employed, or unemployed.

Providing

• Your state pension age is under 65
• Sick or Maternity Pay has not been paid, and you have not returned to work
• Not paid Jobseeker's Allowance

You may claim ESA if you have spent time living and working overseas. To qualify, you must have paid enough qualifying National Insurance Contributions in the UK or have paid NICs while living in another country that accepts social security.

What to do if your circumstances change?

You must report any changes in your circumstances as soon as possible to receive the correct amount of ESA.

Circumstances change in the following ways:

• Apprenticeships, education, training, or starting work
• Moving home
• Change your name
• Moving in or moving out
• Changes in the amount of benefits you receive or that any family members receive
• Pension changes, savings changes, investments changes or property changes
• Student loans, grants, sick pay, or charity contributions can change your money.
• Changing your doctor
• Disability or medical support services
• Hospitalization, nursing home care, or sheltered housing
• Spending any amount of time abroad
  
  

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Will ESA affect my other benefits?

You can receive full Housing benefits if you receive income-related ESA. You must live in certain types of accommodation to be eligible for new Housing Benefit claims. Housing costs will be covered by Universal Credit only if you get contributory ESA. Aside from providing access to Sure Start Maternity Grants, Funeral Payments, and Winter Fuel Payments, income-related ESAs can help you meet other expenses.

Mortgage interest loans are repayable loans that help you cover mortgage interest costs if you have an income-related ESA. An income-related ESA can help with healthcare costs, such as prescriptions, glasses vouchers, and travel to the hospital.

A low-income scheme might help with NHS charges if you receive only contributory ESA. ESA claims won't affect Disability Living Allowance or Personal Independence Payment because their rules differ.

The benefit cap

'Benefit caps' limit the benefits you can receive as an out-of-worker or parent with children under 18. A cap may apply to you depending on your circumstances and location.

• In Greater London, the weekly cap is £296.35 for singles and £442.31 for families (whether or not there are children).
• Singles outside Greater London have a weekly cap of £257.69, while couples have a cap of £384.62 (with or without children).

You or a member of your household may receive the support component of ESA without having to pay the cap.

How getting new style, ESA affects your Universal Credit payment

Your household income may be low enough to qualify for Universal Credit along with New Style ESA if you need extra assistance with housing costs or raising children.

The same amount will reduce Universal Credit if you qualify for ESA.

New Style ESA comes with class 1 national insurance credits if you are entitled to both and receive Universal Credit simultaneously.

The same applies to employees and self-employed individuals. Your future State Pension entitlement and other contribution-based benefits, such as redundancy payments and maternity or paternity allowances, will increase if you earn credits this way.

Useful Read: What is Statutory Redundancy Pay? A Guide for UK Employers

How do I challenge an Employment and Support Allowance (ESA) decision?

The decision maker should summarize the Health Care Professional's findings in their decision letter and the points they earned on your work capability assessment. If you believe the information used to make a decision was incorrect, you can challenge it. The one-month appeals period is usually short, so speaking with a lawyer as soon as possible is imperative.