UK Social Security and Child Support Commissioners' Decisions

[2001] UKSSCSC CJSA_1039_1999 (30 April 2001)

 


THE SOCIAL SECURITY COMMISSIONERS

Commissioner's Case no: CJSA 1039 1999

SOCIAL SECURITY ACTS 1992 - 1998

JOBSEEKERS ACT 1995

APPEAL FROM A DECISION OF AN APPEAL TRIBUNAL

ON A QUESTION OF LAW

DECISION OF THE SOCIAL SECURITY COMMISSIONER

Commissioner David Williams

Commissioners' case no: CJSA 1039 1999

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. I allow the appeal, but I do so on grounds that may not be to the claimant's advantage.
2. The claimant is appealing, with permission of the Commissioner, against the decision of the Sunderland appeal tribunal on 25 September 1998. The tribunal decided that earnings from the claimant's self-employment fell to be taken into account in assessing his entitlement to income support. This was an error (corrected by the full statement) as the benefit under appeal was income-based jobseeker's allowance.
3. For the reasons below, the decision of the tribunal was erroneous in law. I therefore set it aside. I refer the case to a freshly constituted tribunal to determine the appeal in accordance with this decision. The case involves disputes about the claimant's profit and loss accounts and the regional chairman may wish to consider if a financially qualified panel member should be appointed as a member of the new tribunal.

Background to the appeal

4. The claimant has been self-employed as a travelling showman for several past summers. He made a claim for jobseeker's allowance from and including 7 July 1998 following the cancellation of shows during that part of the summer due to heavy rains. Jobseeker's allowance was awarded, but subject to an offset for earnings of £56 a week. The claimant formally stated that he had ceased his last period of self-employment on 6 July 1998, and would be resuming it again in August 1998. He produced accounts for the showman's season 1997 (the period ending in September 1996), and considerable supporting information. He attended and was represented at the oral hearing by the tribunal. The tribunal found as a fact that the claimant was at all material times gainfully employed, and that his earnings fell to be taken into account in assessing his entitlement. The only available figures were those for 1996, so those were the ones taken into account.

Grounds of appeal

5. The representatives acting for the claimant requested leave to appeal on the grounds that the tribunal had reached inadequate findings both as regards the fact that the claimant continued to be self-employed, and as to the use of the 1996 earnings in calculating the amount of benefit to be awarded. They also referred to Commissioners decision CIS 166 1994. The Secretary of State's representative supported the appeal because the tribunal should have considered CIS 166 1994, and had not done so. In that decision, the Commissioner, having considered the decision in Vandyck, also considered the requirements of regulation 30 of the Income Support (General) Regulations 1987, dealing with the income to be taken into account. I refer to that decision, and the other decision cited in submissions, below.

Did the tribunal err?

6. I agree with the parties that a muddle has developed in this case between different issues. One issue is whether the claimant was available for, and actively seeking, employment at the relevant times. A second issue was whether he was engaged in remunerative work at the relevant times. A third question is whether the claimant has earnings as a self-employed person at the relevant times. A fourth question is whether the claimant was in gainful self-employment at the time. I agree with the parties that the tribunal has not made adequately clear in its decision how it handled the relevant issues. It gave a short decision in effect adopting the submission to it. But that submission contained errors (including arithmetical errors) which the tribunal did not identify. In particular, the adjudication officer making the submission to the tribunal misled both himself and the tribunal by introducing the question whether the claimant was a self-employed earner, that is, whether he was gainfully employed other than in employed earner's employment in the meaning of section 2 of the Social Security Contributions and Benefits Act 1992. I must set aside the decision of the tribunal. As it is not expedient for me to make my own decisions (as I do not have enough facts), I must refer the matter to a new tribunal with directions.

Directions to the new tribunal

7. The new tribunal has to consider a number of interrelated issues about the claimant's claim. First, was he, throughout the period under consideration, in remunerative work or not? If he was not, did he meet the other conditions of section 1 of the Jobseekers Act 1995? If he met those conditions, did he meet the separate condition for income-base jobseeker's allowance that his income did not exceed the applicable amount, as required by section 3 of that Act? The tribunal is not concerned with the question whether in any general way the claimant is self-employed save in so far as it relates to these questions. It was not in dispute that, in the general sense, the claimant was self-employed when at work. The relevant question in this case is the period when that applied. Some of the labour market conditions also do not appear to be in dispute, and I leave them to be considered by the new tribunal, if necessary with a fresh submission from the Secretary of State. I give the tribunal the following directions about calculating the claimant's income.

The rules for determining profits

8. If an individual earns money from self-employment, the rules for determining how those earnings are to be taken into account for benefit purposes require two questions to be answered:

•    over what period are the earnings to be calculated?

•    what sums are to be taken into account as income and expenditure over that period?


The earnings period

9. The regulation determining the relevant period for calculating the earnings of a self-employed earner for jobseeker's allowance purposes are in regulation 95 of the Jobseeker's Allowance Regulations 1996. This adopts a common approach for social security purposes following the format of regulation 30 of the Income Support (General) Regulations 1987 and of what is now regulation 11 of the Social Security Benefit (Computation of Earnings) Regulations 1996. These require the earnings normally to be established over the course of a year, but if either the claimant "has recently become engaged in that employment" or "there has been a change likely to affect the normal pattern of business, over such other period as may, in any particular case, enable the weekly amount of his earnings to be determined more accurately" (regulation 95(1)(b)).
10. Alternatively, or in addition, regulation 101(11) provides that, notwithstanding regulation 95, items of income or expenditure may be assessed over a period "such as may, in the particular case, enable the weekly amount of that item of income or expenditure to be determined more accurately". (There is also a similar override in the other regulations). As that paragraph must apply to more than one item in a set of accounts, I would regard it as appropriate to cover any number of items of income, or of expenditure, and therefore to give considerable flexibility to the operation of these rules provided that the flexibility is used to ensure overall accuracy.
11. The period relevant for working out a claimant's earnings under these rules is not the same period in law (though it may be in fact) as the period during which the claimant was in remunerative work, or the period during which he shows that he was, or was not, gainfully employed as a self-employed earner. This was decided in CIS 166 1994, a case about a self-employed builder (but not someone involved in seasonal working). In that case a tribunal calculated the builder's earnings and apportioned them over a full year. It was argued that this was wrong, and that the builder could not be regarded as receiving earnings during a period when he was not engaged in remunerative work. The Commissioner did not accept this argument. He held that the requirement that a claimant was not to be engaged in remunerative work was separate from the requirement that the income of the claimant did not exceed the stated amount for benefit. The Commissioner concluded (paragraph 14) that "the mere fact that a claimant may be able to show that he is "not engaged in remunerative work" 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".
12. The full reasoning of that case is not strictly applicable here. This is because the definition of self-employed earner in section 2 of the 1992 Act is not directly relevant to considering a claim to jobseeker's allowance. This has an added importance since this case arose, because questions about the employment status of an individual for most social security purposes are now within section 8 of the Social Security Contributions (Transfer of Functions) Act 1999 and are now to be made by the Inland Revenue. The decisions to be made in this case are not within the scope of the 1999 Act and remain with the social security authorities. Subject to that point, I agree with the reasoning of Commissioner in CIS 166 1994 and apply it to jobseeker's allowance. In this case, the question whether the claimant was or is was not in remunerative work at a particular time is to be kept separate from the question whether his earnings from self-employment are to be apportioned over a full year or some other period.

The earnings of the period

13. Once the period has been determined, the actual level of earnings for that period is to be calculated in accordance with regulations 100 to 102 of the Jobseeker's Allowance Regulations 1996. These regulations also follow a common format with other regulations. The other decision cited to me was CIS 371 1994, a decision about a self-employed carpenter, but again not a seasonal worker. I adopt the guidance in paragraph 19 of that decision (in the papers) so far as relevant for the full determination of this case, but the decision gives no guidance on the specific issue of the relevant period of account in a case such as this.

Calculating the claimant's profits

14. The adjudication officer considered these provisions, and reached the conclusion that the profits of the year to September 1997 were the figures to be used, and that these produced weekly earnings of £66.34, when spread over a full year of 52 weeks. The adjudication officer assumed (without considering it) that the period of one year was appropriate, and took the year to be the accounting year of the claimant. For that year, the papers show a certified profit for the year to 6 September 1996 of £3394.44. This appears from document 72 to have been erroneously transposed as £3449.44, from which the weekly figure of £66.34 is derived. I can see no basis for the figure of £3449.44, and the correct figure should be £3394.44. Regardless of the validity of the rest of the decision, that correction needs making. The adjudication officer points out that the calculation by reference to 52 weeks is also wrong and that it should be made by reference (as this was a leap year) to 366 days divided by 7. The correct weekly sum on this basis is £64.92 or £54.92 after deducting the £10 weekly disregard (and not £56.34). I draw those points to the new tribunal's attention.
15. I also draw to the tribunal's attention that, in appealing to the tribunal, the claimant stated that, following the normal pattern, he was receiving jobseeker's allowance without any deduction between September 1997 and May 1998 between two seasons of fairground activity. He is claiming to be a seasonal worker who has followed a seasonal pattern of employment, but he then claims, in addition, that the 1998 summer season ended early (to be followed, presumably, by a short autumn season). There used to be special rules for calculating the earnings of seasonal workers, but they were repealed and not replaced in 1989. The former rules provided a rough and ready way of apportioning earnings between the season and the off-season, but there are now no such rules. The claimant's weekly earnings are therefore to be calculated under the rules set out above. Nonetheless, the question whether the claimant's earnings should be attributed to a season rather than a full year (and if so, what season) must still be determined.
16. Regulation 95(1)(a) imposes the period of a full year for calculating earnings in most cases, but regulation 95(1)(b) provides two exceptions: "where the claimant has recently become engaged in that employment" and where "there has been a change which is likely to affect the normal pattern of business". In my view, the general rule operates on the assumption that someone who is self-employed is assumed to remain as such on a continuing basis. But that assumption does not apply to a seasonal worker. In the case of a seasonal worker, the status of being self-employed starts and then stops once or twice, at least, each year. In such cases, the engagement in self-employment will in many cases, in a broad sense, always be recent. Alternatively, as the claimant has argued, any change in the seasonal pattern will activate the other proviso in regulation 95(1)(b). Further, the flexibility given by regulation 101(11) must be borne in mind.
17. It is for the new tribunal to decide whether in this case the earnings period is the whole year or the summer season, and if so when that season started and ended. That is a question of fact. I direct the new tribunal to consider this matter concerning the summer of 1998. It is for the tribunal to decide whether a full year is appropriate under the general rule, or whether, by reason of either of the provisos in regulation 95(1)(b), or by reason of the requirements of accuracy under regulation 101(11), it should operate the discretions given to it in those regulations. If the tribunal considers that it should calculate the earnings by relation to the summer season only, it will note that the claimant told the officers that the self-employment started on 22 May 1998. Did it end on 6 July 1998, as contended, or did it end after the last fair for that season which was in Hartlepool in August? If it ended, as contended, on 6 July, when did it restart? The previous season had ended after the last fair, on 1 September 1997.
18. In considering this, the tribunal should have in mind that there is an inconsistency in the position of both parties in this case. The record shows that the claimant is claiming, and the Department is awarding, jobseeker's allowance in the off-season on the basis that the claimant has no earnings during the off-season. In other words, both sides assume that the earnings should be calculated by reference to the season worked, not the whole year. But the claimant is also claiming, and the Department is arguing for, the earnings to be spread over the whole year in calculating the amount to be taken into account in calculating jobseeker's allowance during the season. If it is right that the rule in regulation 95(1)(a) is to be applied, and the earnings are to be spread over the whole year, then they should be used as an offset for the off-season claims as well as the present claim. If regulation 95(1)(b) or regulation 101 applies, and the period is less than a year, then the earnings should be averaged over that lesser period, but not over the off-season.
19. What were the claimant's earnings for the year or season? The last full set of figures, produced in September 1997, was said to be for the 1997 season but was for the year to September 1996. There are various receipts for the 1998 season showing that these were down on the 1996 season, but no accounts (as the tribunal observed) for that year or for the previous year. While the 1998 figures could not be expected halfway through that season, the 1997 figures could be, but were not produced. I agree with the tribunal, the burden of proof being on the claimant, that it was reasonable to use the 1996 figures at that time. However, as the matter must now be reconsidered, it is open to the parties to produce the actual figures for 1998, as approved by the Revenue, or such other evidence as they wish to have considered in the light of the guidance noted above from CIS 371 1993. If the tribunal decides on a period of less than a year, then the earnings are to be apportioned to that shorter period only.

David Williams

Commissioner

30 April 2001