UK Social Security and Child Support Commissioners' Decisions

[1996] UKSSCSC CIS_166_1994 (11 January 1996)

MJG/LB/6

commissioner's File: CIS/166/94

SOCIAL SECURITY ACT 1986

SOCIAL SECURITY ADMINISTRATION ACT 1992.

APPEAL FROM DECISION OF SOCIAL SECURITY APPEAL TRIBUNAL ON A

QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. I allow the claimant's appeal against the decision of the social security appeal tribunal dated 27 April 1993 as that decision is erroneous in law and I set it aside. I remit the case for rehearing and redetermination, in accordance with the directions in this decision, to an entirely differently constituted social security appeal tribunal: Social Security Administration Act 1992, section 23.
2. This is an appeal to the Commissioner by the claimant, a man aged 61 at the time of the proceedings before the tribunal. The appeal is against the unanimous decision of a social security appeal tribunal dated 27 April 1993 which dismissed the claimant's appeal against a decision of an adjudication officer issued on 12 January 1993 in the following terms,

"Earnings from self-employment fall to be taken into account at the weekly rate of £86.52 in the calculation of Income Support from 24.11.92. As this figure exceeds the weekly applicable amount [the claimant] is not entitled to Income Support."

3. The facts are summarized in the written submission by the adjudication officer to the tribunal as follows,

"[The claimant] is aged 61. He lives alone in owner occupied accommodation and claimed Income Support on 24.11.92. having last worked on 7.11.92. as a self-employed builder. [The claimant] has not ceased trading and has provided details of all the work done since 31.10.88. ... [The claimant] is not entitled to Unemployment Benefit and has no other income. He has savings of less than £2,500. [The claimant] appeals on the ground that he has not worked since October 1992 and has not earned any money."

4. The appeal has been the subject of two oral hearings before me. The first was on 21 February 1995 at which the claimant was not present but was represented by Mr R Demello of Counsel. The adjudication officer was represented by Miss Thomas of the Office of the Solicitor to the Departments of Health and Social Security. At the second hearing on 2 December 1995 (when the decision of the Court of Appeal in Chief Adjudication Officer v. Ellis, 15 February 1995, was available) Mr Demello and Miss Thomas again appeared. I am indebted to them both for their considerable assistance and helpful arguments in this case.
5. Both were agreed that the original decision of the social security appeal tribunal (dated 27 April 1993) could not stand as the tribunal had erred in law instating that the definition of "self-employed earner" in section 2(1) (b) of the Social Security Contributions and Benefit Act 1992 was not relevant. It clearly was relevant, though the tribunal was led into this error by a submission made to it by the presenting officer.
6. Further facts were found by the tribunal and embodied in the Chairman's note of evidence as follows,

"[Claimant] came to England in 1953 from Ireland into the building trade. From 1957 onwards he worked as self employed builder until 1988 ... on sub-contract basis. In 1988 and 1989 appellant went self employed entirely on his own. Has not claimed unemployment benefit since 1963. ... The documents establish more or less regular employment - short periods of unemployment only. Clearly, his periods of unemployment were during the winter months. The appellant has always had some work in the pipeline, even if there was a break of weeks - he knew there was something else coming up. By November 1992 work had run dry. Document 25 lists jobs undertaken from 1 June 1992 to 2 November 1992. Since he re-started on 1 February 1993 he is now in full-time self-employment again."

7. On those facts the tribunal applied regulation.30 of the Income Support (General) Regulations 1987 and held that on the yearly calculation provided for by regulation 30 (see below) the earnings of the claimant needed to be spread out over the period of inactivity (which was in fact 24 November 1992 to 8 February 1993). Consequently, the tribunal held that his income was in excess of his applicable amount under the income support scheme and he was not therefore entitled to income support.
8. The relevant statutory provision is section 124(1) of the Social Security Contributions and Benefits Act 1992 reading as
follows,

"124(1) A person in Great Britain is entitled to income support if -

(a) he is of or over the age of eighteen....

(b) he has no income or his income does not exceed the applicable amount;

(c) he is not engaged in remunerative work and, if he is a member of a married or unmarried couple, the other member is not so engaged; and

(d) except in such circumstances as may be prescribed

(i) he is available for, and actively seeking, employment;

(ii) he is not receiving relevant education.."

9. Mr Demello submitted that as during the period from 24 November 1992 to 8 February 1993 the claimant could not have been said to be "engaged in remunerative work" (section 124 (1) (c) ) it was wrong to disentitle him to income support on the ground that his income exceeded the applicable amount under section 124 (1) (b) . There is little doubt that during the period from 24 November 1992 to 8 February 1993 the claimant was not "engaged in remunerative work" within the meaning of section 124(1)(8). The meaning of "engaged in remunerative work" is provided for by regulation 5 of the Income Support (General) Regulations 1987, the general principle of which is to be found in regulation 5(1) reading as follows,

"Persons treated as engaged in remunerative work.

5(1) Subject to the following provisions of this regulation, for the purposes of [Social Security Contributions and Benefits Act section 124(1)(c)] (conditions of entitlement to income support), remunerative

work	is work in which a person in engaged, or, where	his
hours	of work fluctuate, he is engaged on average, for	not
less	than 16 hours a week, being work for which payment	is
made	or which is done in expectation of payment".

10. Clearly, the claimant was not during the period from 24 November 1992 to 8 February 1993 "engaged in remunerative work" during that period simply because he was not working and was certainly not working for 16 hours or more a week. There is no doubt therefore that he would not be disentitled to income support under sub-section (c) of section 124(1) of the Social Security Contributions and Benefits Act 1992. That being so, Mr Demello submitted that he should not be disentitled by applying section 124(1) (b) by holding that his income exceeded his applicable amount, when the income in question was said to derive from his builder's business in which, during the period in question, he had not been engaged in remunerative work.
11. Fully to explore that contention involves also considering the provisions of regulations 28 and 30 of the Income Support (General) Regulations 1987. Regulation 28 provides that, for the
purposes of section 124(1) of the 1992 Act, the "income of a claimant shall be calculated on a weekly basis ... by determining in accordance with this Part ... the weekly amount of his income". That takes one to regulation 30 headed "Calculation of Earnings of Self-Employed Earners" which, so far as is relevant and as in force at the time provides, as follows,

"30(1) ... where a claimant's income consists of earnings from employment as a self-employed earner the weekly amount of his earnings shall be determined by reference to his average weekly earnings from that employment -

(a) over a period of 52 weeks; or

(b) where the claimant has recently become engaged in that employment or there has been a change which is likely to affect the normal pattern of business, over such other period of weeks as may, in any particular case, enable the weekly amount of his earnings to be determined more accurately."

12. Because of the use by regulation 30(1) of the expression "earnings from employment as a self-employed earner" there is then imported the definition of "self-employed earner" in regulation 2(1) of the 1987 Regulations, which provides that "'self-employed earner' shall be construed in accordance with section 2(1)(b) of [the Social Security Contributions and Benefits Act 1992 section 2(i)(b)]".
13. Section 2(1)(b) of the 1992 Act provides as follows,

"2 (1) In this Part of this Act and Parts II to V below(a)

(b).^.'self-employed . earner' means a person who is gainfully employed in Great Britain otherwise than in employed earner's employment (whether or not he is also employed in such employment)".

14. In my judgment, Mr Demello's contention (though ably and persuasively made) must be rejected. I in fact accept the contrary argument of Miss Thomas that the conditions of entitlement in section 124(1) of the 1992 Act are cumulative and all of them must be satisfied for there to be entitlement to income support. That is in fact clear from the way in which section 124 is framed. It follows that, even though the subject matter may be the same, the mere fact that a claimant may be able to show that he is not "engaged in remunerative work" under section 124(l) (c) does not mean that there could not be potential disentitlement on the ground that his income as a self-employed earner exceeded the applicable amount. The concepts are different. "Remunerative work" is defined by regulation 5 of 1987 Regulations and relates to actual work for a given number of hours . The concept of "gainful employment" in section 2 (1) (b) of the 1992 Act imported by regulation 2 of the 1987 Regulations,
so far as regulation 30 is concerned, is a different concept. It can involve a person being regarded as in gainful employment even though in the period in question he is neither working nor receiving any money or other gain from that employment (see e.g. Van Dyke v. Minister of Pensions and National Insurance [1955] 1 Q.B. 29).
15. Consequently I hold that this matter must be considered under section 124(1)(b) of the Contributions and Benefits Act 1992. That in turn involves considering the provisions of regulation 30 of the 1987 Regulations, which are set out in paragraph 11 above. One must therefore inquire whether the claimant was, during the relevant period from 24 November 1992 to 8 February 1993, "in gainful employment". In that connection, the adjudication officer's written submission to the Commissioner (dated 5 May 1994) rightly suggests that the original tribunal did not inquire into all the elements of what could or could not constitute gainful employment. At paragraph 21 of that document the adjudication officer submits that,

"Whether a claimant is so employed will depend on that person's current and prospective activities and his intentions. That being so, I would further submit that the facts upon which the tribunal in the instant case should have made findings includes the following -

(i) whether new orders were foreseeable;

(ii) whether the business was a going concern and regarded as such by the claimant, his bankers, creditors and others;

(iii) whether the claimant was genuinely available for actively seeking alternative work;

(iv) whether the claimant hoped or intended to resume work in his business when economic conditions improved;

(v) whether the claimant was undertaking activities in connection with the business hitherto pursued;

(vi) whether there was work in the pipeline;

(vii) whether the claimant was regarded as self-employed by the Secretary of State and the Inland Revenue;

(viii) whether the claimant held himself out as being anxious to become employed for purpose of gain (for example by advertising or otherwise soliciting new trade); and

(ix) whether the interruption in question was part of the normal pattern of either the claimant's particular work or the general occupation being pursued."

I accept those detailed factual tests as being correct. The new tribunal will need to have regard to them and make their findings of fact accordingly in order to determine whether the claimant can be said to have been "gainfully employed" during the period between 24 November 1992 to 8 February 1993.

16. If the new tribunal concludes that the claimant was "gainfully employed" in that period, they will then need to consider in detail the provisions of regulation 30 of the 1987 regulations. In that context, they may well wish to consider the further points made in the adjudication officer's written submission dated 5 May 1994. That officer submits that, contrary to the decision of the original tribunal; it may well be that the normal 52 week basis should be departed from in this case by reliance on the provisions of regulation 30 (1) (b) quoted in paragraph 11 above. The adjudication officer submits as follows,

"Hence, if with the benefit of hindsight they (i.e. the tribunal] could see that the interruption in work that prompted the claimant's claim was in point of fact a change which was likely to affect the normal pattern of business, it would, in my submission, be incumbent upon the tribunal to apply regulation 30(1)(b). Furthermore, if the change had produced, or was likely to produce, a substantial reduction in the claimant's income for a considerable time, then because the purpose of regulation 30(1)(b) is clearly to facilitate the most accurate possible calculation of the claimant's earnings, it would, in my submission, be appropriate for the tribunal to begin the period of assessment with the date on which the change occurred; in which case it may well transpire no earnings would fall to be taken into account."

17. I accept that submission as also being correct in law. The new tribunal will wish to consider the possible application of regulation 30(1)(b) accordingly. They should also bear in mind regulation 38(10), which provides as follows,

"38(10) Notwithstanding regulation 30 (calculation of earnings of self-employed earners) ... an adjudication officer may assess any item of the claimant's income or expenditure over a period other than that determined under regulation 30% as may, in the particular case, enable the weekly amount of that item of income or expenditure to be determined more accurately."

18. Lastly, I turn to a jurisdictional matter which is the subject of erudite and careful examination in the adjudication officer's written submission of 5 May 1994, at paragraphs 9 - 16. The adjudication officer points out that in R(FC)2/90 (at paragraphs 15 - 16) it was held that, under the social security legislation as it was before the consolidation in the 1992 Acts a question whether a person was a "self-employed earner" was for the was for the statutory authorities, i.e. the adjudication
officer, social security appeal tribunal and Commissioner, and not for the Secretary of State. Under the consolidation in the 1992 legislation it is not entirely clear that that is still so, by looking solely at section 17 of the Social Security Administration Act 1992 which deals with Secretary of State's questions. However, of course, no change in the law would be intended to be effected by the Social Security Administration Act 1992, which was solely a Consolidation Act, other than for amendments to give effect to recommendations of the Law Commission, but there was no recommended amendment in relation to this matter. The 1992 Act was, therefore, enacted by Parliament under the special consolidation procedure. The Secretary of State has been notified of this particular point and he has indicated to the adjudication officer that he does not wish to contend that there is any alteration in the law and would not wish to contend that decision R(FC)2/90 was not still good law under the consolidating legislation. The point arises here of course because of the reference by regulation 30 to "earnings as a self-employed earner". Clearly whether or not a claimant is in receipt of such earnings and therefore whether he is a self-employed earner are, undoubtedly, therefore still questions for the statutory authorities and not for the Secretary of State.

M.J. Goodman
Commissioner

11 January 1996