# Why do self employed people not get social welfare?



## Shawady

If a self employed person has to close their business and have no income they are not entitled to unemployment benefit.
What is the reason for this?
If they can prove they have no income ar they sill not entitled to claim anything from the government?


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## papervalue

Shawady said:


> If a self employed person has to close their business and have no income they are not entitled to unemployment benefit.
> What is the reason for this?
> If they can prove they have no income ar they sill not entitled to claim anything from the government?


 
Normally means tested if no income from self employed and some qualify for assistance once means tested


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## Setanta12

At a guess, its assumed that the business even if its failed, still has some residual value  (or assets) to be realised in the event of a sale.

I will stress I'm guessing here and know that it doesn't really apply to the vast majority of self-employed people.


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## gipimann

The reason they don't qualify for Jobseeker's Benefit is that it's based on having sufficient qualifying PRSI contributions - Class S cons (paid by self-employed) isn't one of the qualifying PRSI classes.   

They can apply for Jobseeker's Allowance, which as others have said is means-tested.  The means test will assess savings, other income (e.g. spouse/partner's wages if appropriate), and property other than the family home.


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## Setanta12

But why originally ws it set up that way, was the original rationale ?


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## Magpie

Because they haven't paid for non-means tested benefit. They can apply for JA if they have no income like anyone else.


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## z107

> But why originally ws it set up that way, was the original rationale ?


It was probably political. Self employed are pretty much unrepresented.
This would also account for the loss of PAYE tax credits.

Notice the way that the more represented get more. TDs being top of the heap.


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## tenchi-fan

They do. 
They don't get jobseekers benefit because they haven't paid contributions for it.
But they get jobseekers allowance. It's a means-tested benefit - if you have assets to support yourself (possibly accumulated from money you earned while self-employed) you're not entitled.


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## gipimann

Setanta12 said:


> But why originally ws it set up that way, was the original rationale ?


 
If I recall, the rationale was that the PRSI paid by the self-employed was to provide for a state pension rather than any other benefits (like Jobseeker's or Illness Benefits) during working life.


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## ClaireM

If a selfemployed person put aside an amount equivalent to the employers PRSI contribution for their employee, 10.75% of earnings, then they would have a safety net to provide for them during the times when they have little or no income.

Self employed people have more control over when and how they receive their income than employees.


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## jj72

yep as above, it becomes means tested, this way if they have tonnes of loot in bank, its taken into account


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## claire.ezo

self employed pay class s PRSI , which is lower rate which does not cover job-seeker benefit but you might be entitled to job-seeker allowance which is mean tested.


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## lff12

umop3p!sdn said:


> It was probably political. Self employed are pretty much unrepresented.
> This would also account for the loss of PAYE tax credits.
> 
> Notice the way that the more represented get more. TDs being top of the heap.



It goes back to the 1980s and yes it was very political.  There was a huge myth for years, heavily pushed by public sector unions in particular, that all self employed people were making a fortune and paying no tax.
Until 87 I think there was no PRSI which then introduced S class which brought in very limited benefits.  Incidentally there was also no way you could set up a pension for yourself at that point which is why many small self employed bought into property as a long term alternative to a pension.  Unfortunately when private pensions were permitted they were badly exploited by pension providers who did very nicely out of people putting large sums in later in life.

A lot of it was just perception, there was no real awareness that many self employed had unlimited liability and effectively could lose everything.  There were the few better off who quietly moved around assets to avoid them being seized but it effectively made a whole generation very anti self employment and very incapable of small scale entrepeneurship right at a time when it was badly needed.

Even now I think there are a few disadvantages to self employment that a lot of people are not aware of and only discover when things start going wrong.


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## Rumpelstilz

*Why do self-employed people not get social welfare?*



lff12 said:


> .
> 
> Even now I think there are a few disadvantages to self employment that a lot of people are not aware of and only discover when things start going wrong.



It doesn't have to be that bad ("Things start going wrong"), you just have to be self-employed on low income, have a family with children and you get treated like dirt by the government. Compared to employed people on the same income you don't get Back to school Allowance, the higher rate of Child Benefit, the special rate of the Higher Education Grant scheme etc. etc. Every time the government announces some compensation for people on social welfare or on low income (see reduction of child benefit) they "forget" about the self-employed.


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## Subtitle

Most people who are self employed, are that because they wanted to work. My other half is a one man operation and always has been. Work isn't great, we maybe have 200 euro to 250 euro a week to pay all household bills for a family of five. Two 
will be at college next year and we arent entitled to a grant because it's not based on the current year of employment. 
If my OH loses even more work he will not be entitled to JA for 18 months. We can visit the community welfare officer on a weekly basis to ask for money to live on until then.
So no FIS, no JB or JA
We always just ticked along, so we don't have a fortune 'hidden away' or anything.
Feeling very down about this country right now, as all our taxes are up to date and yet we have no help.


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## Rumpelstilz

*Why do self-employed people not get social welfare?*

I can accept that self employed people do not get Family Income Supplement as this isn't really a Social Welfare payment, it is a work incentive for people to take low paid jobs. If it was a social welfare payment it could not be made dependant on your work status. I my opinion this would be unconstitutional. But to exclude self employed on low income from social welfare payments like Back to school allowance is in my opinion mean.


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## Welfarite

Rumpelstilz said:


> Compared to employed people on the same income you don't get Back to school Allowance, the higher rate of Child Benefit, the special rate of the Higher Education Grant scheme etc. etc.


 


Rumpelstilz said:


> But to exclude self employed on low income from social welfare payments like Back to school allowance is in my opinion mean.


 
Not too sure where you're coming from here. What do you mean by the 'higher rate of Child Benefit'? There is only one rate for employed and self-employed. And the Back-to-School Allowance is a measn-tested payment, irrespective of whether you are employed or self-employed.


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## Rumpelstilz

You are right, Welfarite, "higher rate" was the wrong word, but people on FIS got compensated for the reduction of child benefit by an increase of their FIS payment (this is what the minister said last year when she reduced the child benefit).
Self employed people cannot apply for Back to school allowance unless they also get a Social Welfare Payment or HSE payment. Let's take a couple with 3 children for example. The current income limit for them is 624 € per week. So if the income of employed people is 620 € they could get BTSA because they would normally get FIS as well. But self employed on 420 € cannot even apply for BTSA because they don't get FIS. This is what I meant with "mean" and in my opinion it discriminates against a certain group of workers.


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## Welfarite

Ah, got you now! Yes, the premise of your argument is that FIS can 'buy' you into these other payments adn because S/E cannot get FIS, they cannot avail of these payments. Good point! I don't see why S/E are excluded from the FIS scheme even when it is a 'work incentive scheme', as you point out. The argument could also be made that people are disincentivised to increase their hours/income as they would lose FIS


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## FioBi

My OH is self employed and pays at PRSI class S and is not entitled to JA or JB. For people in employment they pay employee PRSI and their employer pays 10.75% PRSI on their behalf and this is what entitles them to JB. For self employed people they pay slightly more as an individual but do not pay the employers 10.75% because they are NOT ALLOWED to pay it and therefore they cannot claim JB. My husband wanted to pay it when he was working but couldn't.
Also people seem to forget not only do self employed people earn their own living they employ other people and pay their PRSI. My OH has employed people for the last 25 years up to 20 people at one time but now if he has no work he gets nothing!!  Why would anyone want to create jobs in this country?


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## theo67

_But to exclude self employed on low income from social welfare payments like Back to school allowance is in my opinion mean. _

All selfemployed who earned low income/less than SW rate in past 12 months are entitled to Jobseekers Allowance.If self-employment continues and earnings are low,top up to SW rates are paid.This is and always was,so.Many "media experts" regularly trot out that self-employed cannot claim dole.This is untrue,but a self-employed person must show that 

1)Self-employment has ceased

or 

2) If self-employment is continuing,income from self-employment is below 
SW rates.The weekly difference is paid.


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## FioBi

This is JA but for Self Employed JB is not payable and for JA spouses income is taken into account.

What happens if Self employed person has investment property that they cannot sell or cannot rent? Is the value of the investment property taken into account and how is it valued?


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## Welfarite

theo67 said:


> _But to exclude self employed on low income from social welfare payments like Back to school allowance is in my opinion mean. _
> 
> All selfemployed who earned low income/less than SW rate in past 12 months are entitled to Jobseekers Allowance.If self-employment continues and earnings are low,top up to SW rates are paid.This is and always was,so.Many "media experts" regularly trot out that self-employed cannot claim dole.This is untrue,but a self-employed person must show that
> 
> 1)Self-employment has ceased
> 
> or
> 
> 2) If self-employment is continuing,income from self-employment is below
> SW rates.The weekly difference is paid.


The point, I think, that Rumplestiltz is making is not regarding the income limits in general. Rather, S/E cannot apply for FIS which has a higher income limit based on number of kids. This rules them out of the Back to School Allowance and higher CB rates, which are available if one is in receipt of FIS.
I agree though that the perception that S/E cannot qualify for, say, JA is bandied about by the media.


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## theo67

FioBi said:


> This is JA but for Self Employed JB is not payable and for JA spouses income is taken into account.
> 
> What happens if Self employed person has investment property that they cannot sell or cannot rent? Is the value of the investment property taken into account and how is it valued?


 

For JA,investment property is taken into account.It is valued on its 
estimated current market value less any outstanding mortgage.If the
nett value is over 40,000 it will effect rate of payment.


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## FioBi

Thanks for that Theo67


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## Welfarite

theo67 said:


> If the
> nett value is over 40,000 it will effect rate of payment.


 
All capital over 20k is taken into account (including assessment of any nett property value other than family home), not 40k (you may be thinking of joint assessment for a couple?).


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