Paul Browne, a former mayor, was convicted of supplying the DSS benefits office with false information about fellow Lib Dem councillor and claimant Paul Edmondson.
The DSS told the court Mr Browne had denied Mr Edmondson was helping him in his aerial-fitting business.
Mr Browne told the court he had offered to take his friend out with him because he was on the verge of suicide. He said he was asked by the DSS investigator if he employed anyone, to which he said no because he did not pay Mr Edmondson.
He will remain leader of the Liberal Democrat group.