It's a bad thing, because it shows the minimum wage isn't enough and zero-hours contracts aren't keeping people out of poverty.
But people in work who do over sixteen hours per week and who are claiming eg working family tax credits are not free-loading.
This is one of the mechanisms that's designed to get people back into work. There's a benefit cap in place, and that cap is removed if you work more than 16 hours per week.
For how long do they claim benefits?
This could actually be a bad sign.