Forget the two years. That question comes far too early on the BFI model claim form, which most LAs seem to adopt with little editing. The two-year question only tells you one thing: it is safe to assume that the claimant is by now in fact habitually resident. It doesn’t tell you, in the case of a non-EEA national, what their immigration status is; nor does it tell you, in the case of an EEA national, whether they have the right to reside or the right kind of right to reside.
Here is a case in point. The claimant has not completed 12 months’ employment and is still required to register. This means she does not retain worker status during breaks between jobs. The backdating claim might well serve for a previous period of registered employment in the last 52 weeks, but entitlement must end between November and January, unless you are satisfied that she was self-sufficient during those months ( a possibility I suppose). But the main point is: you must decide these things, the two years’ residence doesn’t prove anything.