Ever since 39-year-old John Evenett qualified to teach history and business studies two years ago, he has been struggling to find a teaching job that will pay the bills.

His inability to find a permanent post, which he puts down to being older and therefore more expensive than other newly qualified teachers, has forced him into supply work, only to discover that a change in the benefits regulations will leave him worse off than if he were unemployed.

Until May this year, Mr Evenett was able to scrape by during the school holidays thanks to the jobseekers’ allowance, housing benefit and a council tax rebate. But he then received a letter from the Benefits Agency telling him that, as he was self-employed, he would no longer be entitled to any benefits.

“I am disgusted,” says Mr Evenett, who has lost Pounds 106 a week. “I spent 18 months retraining so I could do the job I love, only to find that I would be better off on the dole.” He is now living on a tax rebate and loans from his mother.

John Evenett fails to understand how he can be classified as self-employed when he is a member of a PAYE scheme, and why musicians and actors are allowed to claim benefits between jobs while supply teachers apparently are not.

“This change in the rules will badly affect supply teachers who fill in at short notice, working for odd days here and there. Schools could find short-term cover difficult to get,” Mr Evenett says.

He is now appealing against the decision and is taking his case to the Independent Tribunal Service.

The National Union of Teachers, which has referred the case to its senior solicitor, is also worried about the impact new regulations could have on schools. “With increasing numbers of teachers now doing supply work, the situation is potentially very serious,” says Peter Gunnell, a principal officer for the NUT.

Supply teachers exist in limbo, as far as employment rights and regulations are concerned, according to Tracy Bovington of Nord Anglia, one of the largest companies providing supply teachers.

“Now that growing numbers of staff in a range of employment areas are working on a temporary basis, it’s high time the Government made a decision about their status,” Ms Bovington says. “In common with other agency staff, such as secretaries, supply teachers are not employed by anyone and are not entitled to holiday or sick pay.”

A court case in 1997 (TimePlan Education Group Ltd v the NUT) on the employment status of supply teachers failed to resolve the issue. The judge decided supply teachers were not employed by the local education authority or the school governing body, but did not say they were self-employed.

Ms Bovington has spotted one obvious discrepancy in the benefits Agency’s decision. While self-employed people pay all the National Insurance contributions due, an agency will pay the employer’s NI contribution, so, strictly speaking, an agency employee cannot be regarded as self-employed.

The system is riddled with anomalies. Interpretation of the rules by Benefits Agency offices seems patchy and inconsistent. In the past, supply teachers in some areas have been declared ineligible for the jobseekers’ allowance during school holidays. The Employment Service argument ran that supply teachers knew when they went into the profession that they would not be paid when schools were closed, and periods without income were therefore an occupational hazard.

On the other hand, the Benefits Agency has always taken school holidays into account when assessing low-paid supply teachers for family credit.

Tracy Bovington concludes: “Supply teaching can be a baptism of fire and we should encourage those who will drop everything at 7.30am so they can take a secondary maths lesson.”