UK Social Security and Child Support Commissioners' Decisions

[2001] UKSSCSC CFC_4067_2000 (22 August 2001)

THE SOCIAL SECURITY COMMISSIONERS

Commissioner's Case No: CFC/4067/2000

SOCIAL SECURITY ADMINISTRATION ACT 1992

SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS ACT 1992

SOCIAL SECURITY ACT 1998

APPEAL FROM A DECISION OF AN APPEAL TRIBUNAL

ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

COMMISSIONER: MR J MESHER


 


DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. The appeal of the claimant and her husband is allowed. The decision of the Harlow appeal tribunal dated 21 December 1999 is erroneous in point of law, for the reasons given below, and I set it aside. It is expedient for me to substitute a decision on the claimant's and her husband's appeal against the adjudication officer's decision issued on 23 July 1999 (Social Security Act 1998, section 14(8)(a)(i)). My decision is that the adjudication officer's decision awarding the claimant family credit from 27 April 1999 to 25 October 1999 falls to be reviewed on the ground that it was given in ignorance of material fact, but is not to be revised on review. Accordingly, there was no overpayment of benefit and no question of recoverability from any person arises.
2. This appeal stems from the claim for family credit received on 21 April 1999. The person whose work brought the claimant within the scope of the benefit was her husband. He filled in the claim form which was signed by her and, in accordance with the instructions, by him. He has taken care of communications with the authorities. The claim form mentioned his work for Manpower Services Ltd, and an odd week's work for another agency, Reliance. Payslips from Manpower were included dated 14 March 1999, 21 March 1999, 28 March 1999, 4 April 1999 and 11 April 1999. Family credit at the weekly rate of £53.43 was awarded from 27 April 1999 to 25 October 1999 on the basis of normal weekly earnings of £88.48, as calculated on the earnings from Manpower. The was further evidence of pay received on 12 March 1999 and that payment was made on the Friday following the date on each payslip.
3. When queries were raised about the calculation of family credit more enquiries were made. These revealed that the claimant's husband had worked for the Adecco Employment Agency for three weeks and was paid gross amounts of £232.50 on 16 April 1999, £152.10 on 23 April 1999 and £181.40 on 30 April 1999. The information that the claimant's husband had done this work was given by telephone on 17 June 1999 and the amounts paid were shown on a questionnaire signed on behalf of Adecco on 18 June 1999 and faxed back on that day. According to the record of a telephone call from the claimant's husband on 18 June 1999 (page 37) he was told that benefit would need to be suspended and was asked to return the order book. On 23 July 1999 the adjudication officer reviewed the decision awarding family credit on the ground of mistake of material fact regarding the employers that the claimant's husband was working for at the date of claim. The revised decision was that the claimant was not entitled to benefit from 27 April 1999. It was concluded that there had been an overpayment of family credit amounting to £587.73 for the period from 27 April 1999 to 12 July 1999, which was recoverable from the claimant and her husband because they had misrepresented the material fact of the husband's employers on the claim form. The original decision is copied on page 43 of the papers.
4. The claimant's husband appealed. The challenge was to the idea of averaging agency earnings and to taking into account the only three weeks for which he had ever worked for Adecco. The appeal was treated as the claimant's appeal, but since the decision under appeal made the overpayment recoverable from his as well as from the claimant, it seems to me that he had a right of appeal under section 22(5) of the Social Security Administration Act 1992 which should have been recognised. It may well be that the treatment by the Appeals Service of the appeal as the claimant's alone stemmed from the completely improper rewording of the decision when transcribed by the Tax Credit Office of the Inland Revenue onto the written submission to the appeal tribunal (page 1A of the papers). That transcription wrongly attributed the alleged misrepresentation to the claimant alone and said that the overpayment was recoverable from her alone.
5. The written submission to the appeal tribunal stated that the treatment of the earnings from Adecco was in accordance with regulation 14(5) and (6) of the Family Credit (General) Regulations 1987, which required those earnings to be determined by reference to the estimate of weekly earnings at £188.66 per week provided by Adecco.
6. The scheme of regulation 14 is that for people paid weekly in ordinary cases earnings are to calculated by averaging the amounts paid in the period of six weeks (Sunday to Saturday) immediately preceding the week in which the date of claim falls. In the present case those weeks, called the assessment period, would run from 7 March 1999 to 17 April 1999. But that is expressly made subject to paragraphs (5) and (6) of regulation 14:

"(5) Where at the date of claim--

(a) the claimant--

(i) has been in his employment, or

(ii) after a continuous period of interruption exceeding four weeks, has resumed his employment, or

(iii) has changed the number of hours for which he is contracted to work; and

(b) the period of his employment or the period since he resumed his employment or the period since the change in the number of hours took place, as the case may be, is less than the assessment period in paragraph (2) appropriate in his case,

his normal weekly earnings shall be determined in accordance with paragraph (6).

(6) In a case to which this paragraph applies, the Secretary of State shall require the claimant's employer to furnish him with an estimate of the claimant's likely earnings for the pay period for which he is or will normally be paid and the claimant's normal weekly earnings shall be determined by [taking account of] that estimate."

The words in square brackets in paragraph (6) were substituted as from 7 January 1997 for the words "reference to".

7. The claimant's husband attended the hearing on 21 December 1999. The appeal tribunal dismissed the appeal and confirmed the decision of 23 July 1999. In its statement of reasons the appeal tribunal said that as he had not been employed by Adecco for six weeks the earnings were to be determined by reference to an estimate of his likely earnings. The estimate of £188.66 and the deductions were in accordance with the law.
8. I granted the claimant leave to appeal against that decision. At that stage the Commissioners' office was treating the claimant as the proper party to the proceedings and her husband as her representative, and I took the same view. I was consulted by the legal officer before she wrote the letter of 23 March 2001 to the claimant's husband saying that the claimant was the appellant and that he could act as her representative. However, I was wrong. Closer examination of the adjudication officer's decision under appeal (see paragraphs 3 and 4 above) shows that the overpayment was sought to be made recoverable from both the claimant and her husband, who had both signed declarations on the claim form which were said to be misrepresentations of material fact. The appeal tribunal confirmed the adjudication officer's decision, which must mean the actual decision and not the misstatement of it on page 1A. Therefore, the only proper conclusion is that the appeal to the Commissioner should be regarded as having been made on behalf of both the claimant and her husband.
9. The appeal was not supported in the submission dated 25 April 2001 on behalf of the Board of Inland Revenue. The claimant's husband has made no comments on that submission. It was said in the submission that the relevant legislation was adequately described to the appeal tribunal. It was recognised that employment agencies had great difficulties in supplying estimates under regulation 14(6) due to the temporary and unpredictable nature of such employment, but there was no discretion in the application of that provision. It was submitted that the provision of details of actual pay by Adecco was sufficient as the basis of an estimate.
10. I do not accept the Board's submission. It is true that regulation 14(6) must be applied when a person has not been in an employment for as long as the assessment period, but there are several difficult questions about how it is to be applied.
11. First, it is plain that the Secretary of State did not ask Adecco for an estimate at all, only for details of wages paid for the three weeks worked. Thus, Adecco did not have difficulties in making an estimate, because they were not asked to make one. They simply answered the questions asked in the letter on page 40. There was no estimate provided by the employer. The question then arises of what effect that has on the operation of regulation 14.
12. It might be argued that in the absence of an estimate under regulation 14(6) there was nothing for the ordinary scheme of regulation 14 to be made subject to, so that that scheme should still apply. Then amounts received from Adecco in the ordinary six-week assessment period should be added in the relevant weeks to the totals from which the average weekly figure was to be calculated. In the present case, that would mean adding the payment received on 16 April 1999 to the amount received from Manpower in that week. However, I have concluded that that argument cannot work. When its conditions are met regulation 14(5) requires the use of regulation 14(6). The general scheme of regulation 14, together with regulation 20 on the averaging process, is that the production of a figure for normal weekly earnings in the week of claim by taking an average of earnings in past weeks is to be operated only where the period for averaging is at least six weeks. The provisions in regulation 20 for eliminating from the calculation figures which are abnormally high or low make sense only where the period is of that sort of length. It is significant that those provisions do not apply where normal weekly earnings are determined under regulation 14(6). The general scheme also appears to operate on the basis that, where a person has a number of different employments, the earnings from each employment are to be looked at separately. The argument which I am considering would involve putting earnings from different employments together in a way which is either not compatible with the general scheme or likely to cause severe problems.
13. Therefore, regulation 14(6) must be applied so far as it can be when the conditions of regulation 14(5) are met. The objective must be to reach some kind of acceptable figure for normal weekly earnings as at the date of claim. Thus I do not think that it is acceptable simply to say that, if the employer does not provide an estimate in relation to an employment to which the conditions of regulation 14(5) apply, then no earnings from that employment can be counted at all. At least where the employer has provided some actual figures, the decision-making authority should do its best to make a reasonable estimate of the person's likely earnings in the relevant pay period (week, month etc) based on those figures.
14. The present case is unusual, because the issue was raised when looking backwards in the context of a possible review, but it seems to me that knowledge of what actually happened, which was in front of the adjudication officer on 23 July 1999, cannot be ignored. However, the steps required by regulation 14(6) must be carefully defined. First, the nature of an estimate of likely earnings is essentially forward-looking. Since by definition it can only be requested by the Secretary of State after a claim has been made, it must in my view be an estimate looking forward from and including the week of claim. It is a defect of the drafting of regulation 14(6) that it does not define the date from which the estimate is to be made, but I think that it would be unrealistic to conclude that an estimate has to be forward-looking from the date that it (or other information) is given by the employer. However, in the present case, regulation 14(6) does not authorise an automatic translation of the average of the three payments received from Adecco on 16 April 1999, 23 April 1999 and 30 April 1999 into an estimate of likely earnings. Some assessment of the relevance of each piece of information must take place. Although the first payment was made before the week of claim, it could in principle be relevant to likely earnings in future weeks. But the evidence of the amount of the other payments indicates that the first payment was out of line and not a guide to what was likely for the future. If the second and third payments were considered as the basis for an estimate, the average of the two would be somewhat lower than the average of all three payments: £166.75 gross, as against £188.66 gross.
15. Further, since its amendment in January 1997 regulation 14(6) requires only that normal weekly earnings are to be determined by "taking account of" the estimate. Under the previous form, where normal weekly earnings were to be determined "by reference to" the estimate, it seems to me that there was no option other than to accept whatever was the estimate as normal weekly earnings. The change in wording must have had some purpose. In my judgment it changes the situation, so that the estimate must be taken into account, but need not necessarily be adopted by the decision-making authority as normal weekly earnings. All the circumstances must be looked at, including that the object of the exercise is to reach a figure for earnings which represents what is normal as at the date of claim.
16. The appeal tribunal therefore erred in law in following a course which is inconsistent with the previous two paragraphs. It simply adopted the figure of £188.66 as the estimate of likely earnings (quite apart from its treatment of that as a genuine estimate by the employer). And it took the view, no doubt misled by the written submission to the appeal tribunal, that regulation 14(6) required normal weekly earnings to be determined by reference to the estimate. That goes back to the previous form of regulation 14(6) and ignores the significant change in January 1997.
17. There is an additional error of law. The final date of the period of the recoverable overpayment was said to be 12 July 1999. Yet on 18 June 1999 the relevant office of the Benefits Agency knew of the claimant's husband's work for Adecco and the amounts received. It may well be that he declined to send back the order book as requested and that orders continued to be cashed down to 12 July 1999. However, where payment of benefit is suspended by the Secretary of State there must be a procedure for putting a stop on the cashing of orders by the Post Office. In the circumstances there was at least a question mark over whether (on the assumption that there had been an overpayment as alleged) the overpayment incurred after 18 June 1999 was the result of misrepresentations by the claimant and her husband. It could have been argued that from that date the overpayment arose from the failure of the relevant office to take steps to prevent payment, when all the material facts were known, and so was not recoverable after that date. It was an error of law for the appeal tribunal not to deal with that issue.
18. Accordingly, the appeal tribunal's decision of 21 December 1999 must be set aside as erroneous in point of law. I have concluded that I can substitute the decision which should have been made on the claimant's and her husband's appeal against the adjudication officer's decision of 23 July 1999 on the undisputed facts.
19. My reasoning is as follows. There was on 23 July 1999 a ground to review the adjudication officer's decision awarding family credit from 27 April 1999 to 25 October 1999. That decision was given in ignorance of material facts, ie the claimant's husband's work for Adecco and the amounts received. Those are facts which might well have made a difference to the decision.
20. However, the adjudication officer/Board of Inland Revenue has not shown that that decision should be revised. Applying regulation 14(6) of the Family Credit (General) Regulations 1987 as explained in paragraphs 14 and 15 above, the estimate of likely weekly earnings of which account must be taken is the average of the two payments received on 23 April 1999 and 30 April 1999, as the amount of the payment received on 16 April 1999 is out of line and not a guide to the future. But I am not bound to take that as the figure of normal weekly earnings from Adecco to go into the family credit calculation. I must look at all the circumstances, and consider what was normal as at the date of claim. If regulation 14(6) can be used by looking at actual figures rather than a genuine forward-looking estimate from an employer, then one can also look at what actually happened in considering what was normal. As the claimant's husband had not done any work for Adecco before the week ending 16 April 1999 and did no work for them after week ending 30 April 1999 (the week following the week of claim), I have concluded that the estimate of likely earnings based on the payments received on 23 April 1999 and 30 April 1999 does not fairly represent normal weekly earnings as at the date of claim. The earnings from Adecco represent merely a temporary fluctuation from the normal. While I have taken account of the estimate as required by regulation 14(6), my conclusion is that the claimant has no normal weekly earnings from Adecco for the purposes of the family credit calculation. Accordingly, the adjudication officer's decision awarding family credit is not to be revised.
21. The result is that the claimant remains entitled to benefit under that award. There was no overpayment for the period from 27 April 1999 to 12 July 1999, so that no question of the recoverability of any overpayment arises. If any repayment of the overpayment previously found to be recoverable has been made, it must be returned. Payment of the benefit due to the claimant for the period from 13 July 1999 to 25 October 1999 will also fall to be made by the Secretary of State.

(Signed) J Mesher

Commissioner

Date: 22 August 2001