UK Social Security and Child Support Commissioners' Decisions

[2000] UKSSCSC CS_4300_1999 (11 December 2000)

R(S) 1/02

Mr. M. Rowland CS/4300/1999

11.12.00 CIB/6904/1999

Incapacity for work - linking periods of incapacity for work separated by days of entitlement to disability working allowance - whether claimant entitled to disability working allowance for the week when last engaged in remunerative work

Remunerative work - claimant on sick leave and in receipt of statutory sick pay - whether engaged in remunerative work

In CS/4300/1999, the claimant had been entitled to severe disablement allowance (SDA) until 8 April 1998. On 9 April 1998, he started work for a fixed period, which was to end on 1 November 1998. He was awarded disability working allowance (DWA) from 14 April 1998 to 12 October 1998. On 12 October 1998, he became incapable of work and was paid statutory sick pay (SSP) until the end of his term of employment. His claim for income support (IS) on 13 October 1998 was disallowed because his SSP exceeded his applicable amount. On 2 November 1998, he claimed both IS and SDA. His SDA claim was refused by the adjudication officer on the ground that he had not been incapable of work and disabled for 196 days. Under section 68(10) of the Social Security Contributions and Benefits Act 1992, days of entitlement to disability working allowance were to be treated as having been days of incapacity for work and disablement if inter alia the claimant was entitled to disability working allowance for the week in which there fell the last day on which the claimant was engaged in remunerative work. However, the adjudication officer considered that section 68(10) could not assist the claimant because SDA could not be paid from the date when DWA ended, as the claimant was then entitled to SSP. As a result, IS was awarded without a disability premium. The tribunal allowed the claimant's appeal and found he was entitled to SDA from 13 October 1998. The adjudication officer appealed to the Commissioner, before whom it was argued that, as long as a contract of service existed and a person was on sick leave, he was to be regarded as still being engaged in remunerative work.

The claimant in CIB/6904/1999 had been in receipt of long-term incapacity benefit (IB) until 1 April 1997. On 2 April 1997 he started work and was awarded DWA. He became incapable of work on 6 May 1998 and was paid SSP until 18 August 1998, when he asked his employer to stop paying him SSP because he believed that this would enable him to claim long-term IB. The adjudication officer awarded only the lower rate of short-term IB, on the ground that the claimant had not been incapable of work for 196 days. Under section 30C(5) of the Social Security Contributions and Benefits Act 1992, days of entitlement to disability working allowance were to be treated as having been days of incapacity for work if inter alia the claimant was entitled to disability working allowance for the week in which there fell the last day on which the claimant was engaged in remunerative work. The claimant appealed. The adjudication officer submitted to the tribunal that IB should not have been awarded until 22 November 1998, when entitlement to SSP would have ceased, and that section 30C(5) could not assist the claimant to qualify for long-term IB because it required that the claimant be entitled to DWA when the contract of employment was terminated. The tribunal accepted those submissions and the claimant appealed to the Commissioner.

Held, allowing both appeals in part, that:

a person who is incapable of work and who is not actually working has ceased to be "engaged …. in remunerative work", notwithstanding that a contract of employment continues to subsist (paras. 7 to 12);

IB and SDA are not payable during any period when a claimant is entitled to statutory sick pay but days of entitlement to SSP may be taken into account for some purposes when calculating entitlement to IB and SDA so that a claimant may be able to take advantage of section 30C(5) or section 68(10) when entitlement to SSP expires (para. 13);

in CS/4300/1999, the tribunal had erred in awarding SDA from 13 October 1998, because the claimant was still in receipt of SSP, but the claimant was entitled to SDA from 2 November 1998 provided he had been disabled from 13 October 1998 (paras. 14 and 15);

in CIB/6904/1999, the tribunal had correctly held that the claimant was not entitled to IB while entitled to SSP, notwithstanding the fact that he had asked his employer to cease payments, but had erred in not finding that the claimant was entitled to long-term IB from 22 November 1998 (para. 16).

The Commissioner substituted his own decisions for those of the tribunals.

DECISIONS OF THE SOCIAL SECURITY COMMISSIONER

1. These appeals raise a common point of construction arising out of provisions linking claims to benefits for incapacity for work falling either side of a period of entitlement to disability working allowance. I held an oral hearing at Preston Combined Court Centre. The Secretary of State was represented in both cases by Mr. Huw James, solicitor, acting as agent for the Solicitor to the Departments of Social Security and Health, the claimant in CS/4300/1999 was represented by Mr. Brendan Webster, solicitor, of Messrs. Addie Jones of Fleetwood, and the claimant in CIB/6904/1999 was represented by Mr. Anthony Lingard of the Welfare Rights Service of Lancashire County Council.
2. Disability working allowance, now renamed disabled person's tax credit (see the Tax Credits Act 1999), was introduced by the Disability Living Allowance and Disability Working Allowance Act 1991 which amended the Social Security Act 1986. There was then consolidating legislation and, at the time material to these appeals, section 129(1) of the Social Security Contributions and Benefits Act 1992 provided:

"A person in Great Britain who has attained the age of 16 and qualifies under subsection (2) or (2A) below is entitled to a disability working allowance if, when the claim is made or is treated as made-

(a) he is engaged and normally engaged in remunerative work;

(b) he has a physical or mental disability which puts him at a disadvantage in getting a job;

(c) … ;

(d) … "

Paragraph (c), which it is unnecessary to set out, makes it plain that disability working allowance is an income-related benefit. Subsections (2) and (2A) provide that the claimant must previously have been entitled to a qualifying benefit. Among the qualifying benefits are the higher rate of short-term incapacity benefit, long-term incapacity benefit and severe disablement allowance.

3. Plainly, a claimant entitled to incapacity benefit or severe disablement allowance who starts work and so becomes entitled to disability working allowance is likely to lose entitlement to the incapacity benefit or severe disablement allowance because those are benefits payable to those who are incapable of work (see regulation 16 of the Social Security (Incapacity for Work) (General) Regulations 1985, although regulation 17 provides for some exceptions). In the absence of any special provision, that might act as a disincentive to take up work because, while earnings may exceed the amount of those benefits while a person is actually working, a person with disabilities may be prone to periods of incapacity for work and reluctant to let go of the security of entitlement to incapacity benefit or severe disablement allowance if losing entitlement to those benefits for a short period while working may affect entitlement during future periods of incapacity for work. In the case of incapacity benefit, the problem arises because the rate of payment depends on the length of time for which the person has already been entitled to benefit during the particular period of incapacity for work (although periods separated by less than eight weeks are linked). In the case of severe disablement allowance, entitlement to the allowance depends on the claimant having been incapable of work for a continuous period of 196 days. If the claimant works for a short period, the 196 day qualifying period must be served all over again. The provisions at the centre of these two appeals were, as I understand the legislation, designed to remove that disincentive.
4. In relation to incapacity benefit, section 30C(5) of the Social Security Contributions and Benefits Act 1992 provides:

"Where-

(a) a person who is engaged and normally engaged in remunerative work ceases to be so engaged, and

(b) he is entitled to disability working allowance for the week in which there falls the last day on which he is so engaged, and

(c) he qualified for a disability working allowance for that week by virtue of the higher rate of short-term incapacity benefit, or long-term incapacity benefit under section 30A above, having been payable to him, and

(d) the first day after he ceases to be engaged as mentioned in paragraph (a) above is for him a day of incapacity for work and falls not later than the end of the period of two years beginning with the last day for which he was entitled to such benefit,

any day since that day which fell within a week for which he was entitled to a disability working allowance shall be treated for the purposes of any claim for such benefit for a period commencing after he ceases to be engaged as mentioned in paragraph (a) above as having been a day of incapacity for work."

In relation to severe disablement allowance, section 68(10) provides:

"Where-

(a) a person who is engaged and normally engaged in remunerative work ceases to be so engaged, and

(b) he is entitled to disability working allowance for the week in which there falls the last day on which he is so engaged, and

(c) he qualified for a disability working allowance for that week by virtue of a severe disablement allowance having been payable to him, and

(d) the first day after he ceases to be engaged as mentioned in paragraph (a) above is a day on which he is incapable of work and falls not later than the end of the period of two years beginning with the last day for which he was entitled to a severe disablement allowance,

any day since that day which fell within a week for which he was entitled to a disability working allowance shall be treated for the purposes of any claim for a severe disablement allowance for a period commencing after he ceases to be engaged as mentioned in paragraph (a) above as having been a day on which he was both incapable of work and disabled."

5. The claimant in CS/4300/1999 was in receipt of severe disablement allowance until 8 April 1998. He started work on 9 April 1998 as a groundsman for a fixed period ending on 1 November 1998. On 9 April 1998, he was awarded disability working allowance for twenty-six weeks from Tuesday, 14 April 1998 to Monday, 12 October 1998. On the last day of that period, he was issued with a medical certificate by his doctor, advising him to refrain from work for 13 weeks on the ground that he was suffering from agoraphobic anxiety and on 29 October he was formally advised that his contract of employment would not be extended. He was paid statutory sick pay until the contract ended. A claim for income support made on 13 October 1998 was unsuccessful because the amount of statutory sick pay exceeded the claimant's applicable amount. However, he claimed both severe disablement allowance and income support on 2 November 1998. His claim for severe disablement allowance was rejected by an adjudication officer on the ground that he did not satisfy the 196-day qualifying condition and that he was not assisted by section 68(10) because severe disablement allowance could not be paid from the date when entitlement to disability working allowance ended because he had been entitled to statutory sick pay instead (see Schedule 12 to the 1992 Act). Consequently, income support was awarded on the basis that the claimant was not entitled to include a disability premium in his applicable amount. The claimant appealed. The Blackpool social security appeal tribunal allowed his appeal, awarding severe disablement allowance from 13 October 1998 on the basis that section 171B(4)(b) of the Social Security Contributions and Benefits Act 1992 provided that a day in respect of which a person was entitled to statutory sick pay was a day of incapacity for work for the purposes of the "own occupation test" so that the claimant was incapable of work the day after entitlement to disability working allowance ended. The adjudication officer, now replaced by the Secretary of State, appeals against the tribunal's decision with the leave of a full-time chairman.
6. The claimant in CIB/6904/1999 was in receipt of long-term incapacity benefit until 1 April 1997. On 2 April 1997, he started work and claimed disability working allowance which was paid from 25 April 1997 to 17 August 1998. No-one has been able to explain why that period is not a multiple of 26 weeks but that does not matter for the purposes of this appeal. The claimant had become incapable of work on 6 May 1998 and statutory sick pay was paid to 18 August 1998. The claimant had then asked his employer to stop paying him statutory sick pay in the belief that that would enable him to claim the long-term rate of incapacity benefit, which he did on 26 August 1998. However, the adjudication officer awarded only the lower rate of short-term incapacity benefit. The claimant appealed but the adjudication officer submitted to the tribunal that incapacity benefit should not be awarded at all until 22 November 1998 because the claimant's contract of employment was still subsisting and he remained entitled to statutory sick pay until 21 November 1998. However, he or she also submitted that the claimant was entitled to the higher rate of short-term incapacity benefit from 22 November 1998 and the tribunal were informed that that benefit was already in payment. As the claimant was plainly not satisfied with the new award, the appeal appears sensibly to have been treated as an appeal against the new award (presumably made on a new claim) as well as an appeal in respect of the period up to 21 November 1998. Although Schedule 12 to the 1992 Act is mentioned in the written submission to the tribunal, it appears to have been argued on the adjudication officer's behalf at the hearing simply that section 30C(5) could not assist the claimant because paragraph (b) required that the claimant be entitled to disability working allowance when the contract of employment was terminated, which was not the case here. The Burnley social security appeal tribunal accepted that submission and the claimant now appeals, with the leave of a Commissioner, on the ground that it is sufficient that he was entitled to disability working allowance on the day he ceased work. and that he should be entitled to long-term incapacity benefit.
7. Two arguments are now advanced on behalf of the Secretary of State in both these cases. Reference is first made to R(U) 4/60 and R(U) 5/83 in which Commissioners held that a person was "engaged in a gainful occupation" or "engaged in employment" during any period when a contract of employment subsisted and it is submitted, without further reasoning, that the same approach should be applied to the phrase "engaged … in remunerative employment". Secondly, reference is made to regulation 4(2)(b) of the Social Security (Incapacity for Work) (General) Regulations 1995. Regulation 4(1) defines "remunerative work" for the purposes of the "own occupation test" in relation to the period of 21 weeks mentioned in section 171B of the 1992 Act as:

"work-

(a) in one occupation in which a person was engaged for more than 16 hours or more hours a week for more than 8 weeks; and

(b) for which payment was made or which as done in expectation of payment."

Regulation 4(2)(b) then provides that, for the purposes of that regulation and regulation 5:

"a person who was normally engaged in one occupation for 16 or more hours a week shall be treated as if he had been engaged in that occupation in any week when he was on paid or unpaid leave from that occupation."

It is then said that section 4(1) of the 1992 Act "refers to statutory sick pay as 'remuneration'" and the Secretary of State's representative draws support from those provisions for the proposition that, for as long as a contract of service exists and a person is on sick leave, he is to be regarded as being still engaged in remunerative work.

8. So far as the first argument is concerned, Mr. Lingard submitted that the statutory context of R(U) 4/60 and R(U) 5/83 was very different. I agree. In R(U) 4/60 the tribunal of Commissioners were considering whether the claimant's wife was engaged in a gainful occupation or occupations from which her weekly earnings exceed[ed] forty shillings" on the days in respect of which the claimant was claiming benefit. Although it was held that she was engaged in a gainful occupation on days when she was not working, it was also held that the amount of her earnings had to be considered week by week. Similarly, in R(U) 5/83, it was held that the claimant was "engaged in employment" throughout the period during which he held office but the main issue in the case was whether his expenses could be attributed to the days in respect of which he received remuneration. In neither case did the legislation have the effect of disentitling a claimant from benefit during a period to which no actual earnings were attributable. So far as the second argument is concerned, the statutory provisions to which reference is made are expressly limited as to their effect. Regulation 4 of the 1995 Regulations applies only for the purpose of section 171B of the 1992 Act and section 4 of that Act provides that statutory sick pay shall be treated as remuneration solely for the purpose of section 3 of the Act. The statutory contexts are so different from that in the present case that I do not consider they give any indication as to how the phrase "engaged and normally engaged in remunerative work" in sections 30C(5)(a) and 68(10)(a) should be construed.
9. However, that phrase is precisely the same phrase that appears in section 129(1)(a) and I do not consider that to be an accident. It seems plain that sections 30C(5) and 68(10) are designed to have effect when a person is no longer entitled to claim disability working allowance and that the phrase "engaged and normally engaged in remunerative work" is to be given much the same meaning in those sections as it has in section 129. In respect of section 129, regulation 6 of the Disability Working Allowance (General) Regulations 1991 provides, so far as is material:

"(1) For the purposes of Part VII of the Social Security Contributions and Benefits Act 1992 as it applies to disability working allowance and subject to paragraph (3), a person shall be treated as engaged in remunerative work where-

(a) the work he undertakes is for not less than 16 hours per week;

(b) the work is done for payment or in expectation of payment; and

(c) he is employed at the date of claim and satisfies the requirements of paragraph (5).

(2) A person who does not satisfy all the requirements of sub-paragraphs (a) to (c) of paragraph (1) shall not be treated as engaged in remunerative work.

(3) …

(4) …

(4A) …

(5) Subject to paragraph (6), the requirements of this paragraph are that the person-

(a) worked not less than 16 hours in either-

(i) the week of claim; or

(ii) either of the two weeks immediately preceding the week of claim; or

(b) is expected by his employer to work … not less than 16 hours in the week next following the week of claim; or

(c) cannot satisfy the requirements of sub-paragraph (a) or (b) above at the date of claim because he is or will be absent from work by reason of a recognised, customary or other holiday but is expected by his employer to work … not less than 16 hours in the week following his return to work …

(6) For the purposes of paragraph (5)-

(a) work which a person does only qualifies if-

(i) it is the work which he normally does, and

(ii) it is likely to last for a period of 5 weeks or more beginning with the week in which the claim is made; and

(b) a person shall be treated as not on a recognised, customary or other holiday on any day on which the person is on maternity leave or is absent from work because he is ill.

(7) Where a person is treated as engaged in remunerative work in accordance with the above paragraphs, he shall also be treated as normally engaged in remunerative work."

Two general observations can be made about that regulation. Firstly, it focuses on the actual performance of duties of employment and the exception for those on holiday does not apply to those absent through illness. Secondly, that approach is consistent with the approach taken with respect to other income-related benefits. In particular, as Mr. James accepted, a person absent from work due to sickness is not disentitled to income support merely because his or her contract of employment still subsists and statutory sick pay is in payment (although, of course, the statutory sick pay may reduce to nothing the amount of income support payable).

10. Mr. James recognised that the claimant in CIB/6904/1999 could not have made a continuation claim for disability working allowance when his award expired in August 1998 because the condition of regulation 6(1)(c) of the 1991 Regulations was not satisfied having regard to the terms of regulation 6(5). Whether the claimant in CS/4300/1999 could have made a continuation claim depends on whether "work" can be said to "last" while a contract of service exists but no duties are being performed under it. Mr. James conceded that, even if a renewal claim would have been possible in that case, that was only because the previous award fortuitously expired only just before the claimant became incapable of work. In any event, it is clear that most claimants who become ill while in receipt of disability working allowance are not able to make a further claim for that allowance. Mr. James accepted that, if the Secretary of State's construction of sections 30C(5) and 68(10) was correct and they applied only where the contract of employment had terminated when the award of disability working allowance expired, the advantage conferred by those subsections would be lost unless an employer sacked a sick employee, or a sick employee resigned, before the award terminated. That would be liable to defeat the purpose of the legislation.
11. Regulation 6 of the 1991 Regulations is expressed as being made only for the purposes of Part VII of the 1992 Act in which falls section 129. It does not, therefore, have direct application to sections 30C(5) and 68(10) and it is drafted on the assumption that there is a current claim for disability working allowance. Nevertheless, it is part of the statutory context in which I must determine the appeals before me.
12. Having regard to that context, I am satisfied that, for the purposes of sections 30C(5) and 68(10), a person who is incapable of work (which is, of course, a condition of entitlement to incapacity benefit or severe disablement allowance) and who is not actually working has ceased to be "engaged … in remunerative work". The legislation does not require that the claimants have ceased normally to be engaged in such work but, in any event, in the present cases, the cessation was permanent, even though the claimants and their employers may initially have hoped that it would not be, and so the claimants had also ceased to be "normally engaged in remunerative work".
13. Of course, during any period when a claimant is entitled to statutory sick pay, incapacity benefit is not payable (paragraph 1 of Schedule 12 to the 1992 Act), but days of entitlement to statutory sick pay may be taken into account for some purposes when calculating entitlement to incapacity benefit (section 30D(3) of the 1992 Act and regulation 7 of the Social Security (Incapacity Benefit) Regulations 1994). The same applies in the case of severe disablement allowance (section 68(5) of the 1992 Act). This means that a claimant may be able to take advantage of sections 30C(5) and 68(10) when entitlement to statutory sick pay expires.
14. I turn then to the application of this approach to the facts of CS/4300/1999. Section 171B(4)(b) of the 1992 Act, on which the tribunal relied, applies only for the purpose of calculating the 197 days mentioned in section 171B(3) and does not appear to me to be of direct relevance to the point in issue on this appeal. It is not in dispute that the claimant was incapable of work under the "own occupation" test from 12 October 1998, which was the last day in respect of which disability working allowance was paid. He had ceased to be engaged in employment when he became incapable of work on that date (or, possibly, a day or two earlier) and was entitled to disability working allowance for the week in which there fell the last day on which he was so engaged. I construe "week" in section 68(10) as being the week in respect of which disability working allowance was payable, which runs from Tuesday to Monday, rather than the conventional period running from Sunday to Saturday (see section 122(1) of the 1992 Act). He had qualified for disability working allowance by virtue of his previous award of severe disablement allowance and the day after he ceased to be engaged in employment was a day on which he was incapable of work falling within two years of the end of his previous entitlement to severe disablement allowance. Accordingly, section 68(10) of the 1992 Act applied and so the days in respect of which he was entitled to disability working allowance fell to be treated as days in respect of which the claimant was incapable of work and disabled for the purposes of a claim for severe disablement allowance for the period from 2 November 1998, which was a period "commencing after he ceases to be engaged [in remunerative work]" notwithstanding that it did not commence immediately after it. The days of entitlement to disability working allowance totalled 182 and, as the claimant was incapable of work under the "own occupation" test from then onwards, the claimant had been incapable of work for the requisite 196 day qualifying period by the date of claim on 2 November 1998. He was not entitled to severe disablement allowance before that date because he was entitled to statutory sick pay.
15. I therefore allow the Secretary of State's appeal in CS/4300/1999 in part only. The tribunal erred in awarding severe disablement allowance from 13 October 1998. However, the claimant was entitled to severe disablement allowance from 2 November 1998, provided he had been severely disabled from 13 October 1998. If severe disablement allowance is awarded, the claimant is entitled to income support calculated on the basis that his applicable amount includes a disability premium but that his income includes the severe disablement allowance. I substitute for the
     
    

tribunal's decision a decision to that effect and I leave to the Secretary of State the assessment of the claimant's disablement and the consequent decisions on the claims for incapacity benefit and income support.

16. In CIB/6904/1999, I allow the claimant's appeal in part only. Having regard to the terms of paragraph 1 of Schedule 12 to the 1992 Act, the tribunal were correct to hold that the claimant could not be entitled to incapacity benefit during the period when he was entitled to statutory sick pay, notwithstanding the fact that he had asked his employer to cease payments. However, the claimant had ceased to be engaged in employment in May 1998 when he fell ill and he was at that time entitled to disability working allowance by virtue of his previous award of incapacity benefit which had terminated less than two years earlier. Therefore, section 30C(5) applied and the days of entitlement to disability working allowance counted as days of incapacity for work for the purpose of the subsequent claim for incapacity benefit, notwithstanding that that claim was not made for a period commencing immediately after the claimant ceased to be engaged in remunerative work. Furthermore, by virtue of regulation 7 of the Social Security (Incapacity Benefit) Regulations 1994, the days of entitlement to (as opposed to payment of) statutory sick pay were also to be taken into account for the purposes calculating the number of days for which the claimant had been entitled to short-term incapacity benefit. Consequently, the claimant was entitled to long-term incapacity benefit from 22 November 1998. I substitute a decision to that effect for the decision given by the tribunal.

Date: 11 December 2000 (signed) Mr. M. Rowland

Commissioner