UK Social Security and Child Support Commissioners' Decisions

 


[2004] UKSSCSC CP_3017_2004 (05 November 2004)

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. The claimant's appeal to the Commissioner is allowed. The decision of the Birkenhead appeal tribunal dated 9 June 2004 is erroneous in point of law, for the reasons given below, and I set it aside. It is expedient for me to give a decision on the claimant's appeal against the Secretary of State's decision dated 3 March 2004 after making the necessary findings of fact (Social Security Act 1998, section 14(8)(a)(ii)). My decision is that the appeal is allowed and that the claimant is entitled to an increase of retirement pension in respect of his wife from and including 28 May 2004.

The background

2. On some date in early 2004 the claimant made a claim for an increase of his retirement pension in respect of his wife, stating that he wished to claim from 28 May 2004. I assume, as the details are not given in the papers before me, that that date was the claimant's 65th birthday, from which he would become entitled to his state retirement pension, and that the case fell within regulation 15(1) of the Social Security (Claims and Payments) Regulations 1987. That provision allows claims for retirement pensions and increases to be made up to four months before entitlement would begin and for awards to be made in advance.
3. On the claim form the claimant stated that his wife was employed by Ellert Field Marketing, with an address in London, and also received an occupational pension of £36.56 per month. He stated that his wife's average earnings before income tax were less than £30 per month and that she received a car mileage allowance. He enclosed his wife's last seven payslips, although the claim form only asked for the last five. Those covered payments received on 27 July 2003 (taxable pay, £33.50; non-taxable pay, £9.12), 24 August 2003 (£46.56; £40.80), 21 September 2003 (£27.50; £17.76), 19 October 2003 (£71.75; £17.52), 16 November 2003 (£170.13; £116.42), 14 December 2003 (£392.00; £445.50) and 11 January 2004 (£171.19; £102.32). An officer made a calculation of the average weekly amount of the wife's total earnings over that period, on the basis of being paid four-weekly. That came out at £59.21. Adding in the weekly amount of the occupational pension brought the total to £67.64. The view was taken that that was over the limit for entitlement to an increase of retirement pension and a decision that the claimant was not entitled to an increase from and including 28 May 2004 was given on 3 March 2004.
4. The relevant provision authorising payments of increases of category A or C retirement pension for a wife is section 83(2) of the Social Security Contributions and Benefits Act 1992 (not section 83A as cited in the Secretary of State's written submission to the appeal tribunal - that does not come into force until 2010). Section 83(2) provides for an increase in the amount payable to a man for any period during which he is residing with his wife (and in other circumstances not relevant here). But that is subject to subsection (3):

"(3) Regulations may provide that for any period during which the pensioner is residing with his wife and his wife has earnings--

(a) the increase of benefit under this section shall be subject to a reduction in respect of the wife's earnings; or

(b) there shall be no increase of benefit under this section."

Section 89(1) provides that the reference to earnings in section 82 (and in some other places) includes a reference to "payments by way of occupational or personal pension".

5. The regulations made under the power in a predecessor of section 82(3) are the Social Security Benefit (Dependency) Regulations 1977. Regulation 8(2) provides:

"(2) ... [T]here shall be no increase of benefit for any period during which the beneficiary is residing with his spouse and his spouse has earnings if the earnings of the spouse in the week in that period which falls immediately before the week in which the beneficiary is entitled to benefit under any provision specified in paragraph (1) exceed the amount for the time being specified in regulation 79(1)(c) of the Jobseeker's Allowance Regulations 1996 (age related amount for a claimant who has attained the age of 25)."

As at March 2004, the amount specified in the JSA Regulations was £54.65. As at May 2004, it was £55.65. So the amount of the wife's earnings as calculated by the officer were clearly over the limit for an increase of the claimant's retirement pension.

6. Before going on to mention the legislative provisions that set out rules for calculating earnings for the purposes of benefits including retirement pension, there is one oddity arising from regulation 8(2) of the Dependency Regulations to be examined. Regulation 8(2) lays down a test to be applied week by week for each week of payment of retirement pension (see the definition in regulation 8(7)(a)), which test depends on the spouse's earnings in the previous week. The application of a week by week test seems to be reinforced by section 92 of the Social Security Contributions and Benefits Act 1992, which applies where an award of an increase has been made and causes the award to continue in force even though entitlement is interrupted by a week or weeks in which the spouse's earnings exceed the limit. In the present case, the first week of payment of retirement pension to the claimant would have been that beginning on Monday 31 May 2004. It might be said that at the date of the decision in question there could have been absolutely no evidence of what the wife's earnings would be in the week commencing Monday 24 May 2004 or in any subsequent week. How therefore could a decision be given disallowing an increase?
7. The main answer stems from regulation 15(1) of the Claims and Payments Regulations and the decision of the Tribunal of Commissioners in CDLA/2751/2003 and others, about advance renewal claims for disability living allowance (DLA). It was held there that the legislative power to make an award of DLA in advance of the start date of the period of the award carried with it the power to disallow the claim in advance. The same must also apply to regulation 15(1), so that there is a power to disallow a claim for an increase of retirement pension for a wife up to four months before a claimant might become entitled to the pension. Then, in accordance with section 8(2) of the Social Security Act 1998 as explained by the Tribunal of Commissioners, in making such a decision the Secretary of State would be prohibited from taking into account any changes of circumstances anticipated to occur after the date of the decision. Equally, on appeal, an appeal tribunal would be prohibited from taking into account any actual changes of circumstances after that date (Social Security Act 1998, section 12(8)(b)). The Tribunal of Commissioners seems to have thought that if there was change of circumstances in favour of a claimant between the date of the decision and the date from which the disallowance of the claim took effect, there could be a supersession on the ground of relevant change of circumstances (Social Security and Child Support (Decisions and Appeals) Regulations 1999, regulation 6(2)(a)(i)). However, there is a problem with that view because regulation 6(2)(a)(i), as amended with effect from 5 May 2003, allows supersession only where there has been a relevant change of circumstances since the decision to be superseded "had effect". That seems to rule out a supersession for a change occurring between the date of an advance decision and its effective date. A claimant would thus be restricted to making a fresh claim, on the basis of the changed circumstances, from some date after the effective date of the disallowing decision.
8. In paragraph 24 of CDLA/2751/2003 and others, the Tribunal of Commissioners did suggest that, in some cases where there was likely to be a significant change of circumstances before the start date of the period covered by a claim, it might well be good practice to defer making a decision until it was known whether that change had actually materialised. It seems to me that the present case is one where that course should have been taken. It was plain from the evidence provided that the claimant's wife's earnings fluctuated a great deal from one pay period to another. And the nature of the case is different from that of a person suffering some potentially disabling or incapacitating condition, where in most cases there can be a sensible prediction about how the condition might progress in the future. It was simply unknown on 3 March 2004 what the claimant's wife's earnings might be in the week prior to 31 May 2004. Quite apart from the doubts that I explain below about the averaging process carried out by the officer, it would have been better to have waited until close to 28 May 2004 and then considered the current evidence about the wife's earnings. I do not think that there would have been any difficulty in making an advance decision on the claimant's own retirement pension entitlement, but deferring the decision on the increase. However, that did not happen. A decision disallowing the increase was made on 3 March 2004 and I must deal with the consequences.

The claimant's appeal to the appeal tribunal

9. The claimant appealed against the decision of 3 March 2004, saying that a substantial part of his wife's pay included mileage allowance for her journeys between supermarkets where she carried out merchandising activities, up to 70 miles a day. The Secretary of State's written submission to the appeal tribunal, made after no attempt to obtain further information as to the nature of the claimant's wife's employment or of what was comprised in her non-taxable pay, supported the decision under appeal. There was reference to the Social Security (Conditions of Entitlement) Regulations, which do not exist. The intended reference was obviously (to someone familiar with the system, but not to the claimant) to the Social Security (Computation of Earnings) Regulations 1996. The submission relied on provisions in regulations 8(3) and 9 allowing an averaging if earnings fluctuated and including in earnings to be counted payments made by the employer for expenses not wholly, exclusively and necessarily incurred in the carrying out of the job, including travel expenses to work.
10. I shall come back later to regulation 8 of the Computation of Earnings Regulations, but set out here the relevant parts of regulation 9:

"(1) Subject to paragraphs (2) and (3), "earnings", in the case of employment as an employed earner, means any remuneration or profit derived from that employment and includes--

...

(f) any payment made by the claimant's employer in respect of expenses not wholly, exclusively and necessarily incurred in the performance of the duties of the employment, including any payment made by the claimant's employer in respect of--

(i) travelling expenses incurred by the claimant between his home and place of employment;

(ii) expenses incurred by the claimant under arrangements made for the care of a member of his family owing to the claimant's absence from home;

(3) "Earnings" shall not include any payment in respect of expenses wholly, exclusively and necessarily incurred in the performance of the duties of the employment."

I note that the definition of "claimant" in regulation 2(1) includes a spouse for whom an increase has been claimed and that the Computation of Earnings Regulations were made under powers to prescribe how earnings are to be calculated or estimated for purposes including those of retirement pension.

11. The claimant opted for a "paper hearing". He included with the questionnaire a letter and a copy of his wife's payslip for 4 April 2004, showing taxable pay to date in the income tax year of £1,712.43, out of gross pay to date of £2,966.19. The letter said her expenses of £1,254 were for travel to supermarkets in Cheshire between Ellesmere Port and Macclesfield, covering petrol, car maintenance and parking.
12. The appeal tribunal of 9 June 2004 confirmed the Secretary of State's decision of 3 March 2004. The statement of reasons rejected the claimant's case that the payments for petrol, car maintenance and wear and tear should be excluded from his wife's earnings. The reasoning was in paragraph 8:

"I accept as a fact the calculations of the Secretary of State that the weekly earnings of [the claimant's wife] were £67.64. The calculations of [the claimant] do not reflect an accurate picture of his wife's earnings. Earnings are [net] earnings. Net earnings are gross earnings less any deductions made for income tax, national insurance contributions and half of any contribution made towards a personal or occupational scheme. It is inappropriate therefore to deduct motoring expenses which form part of gross earnings."

The claimant's appeal to the Commissioner

13. The claimant now appeals against the appeal tribunal's decision with my leave. What I said when granting leave included the following, after saying that the appeal tribunal did not seek to apply the test laid down in the Computation of Earnings Regulations at all:

"The claimant had stated in his letter of appeal that his wife's mileage allowance was for her journeys between supermarkets. It was not entirely clear on the various documents how far the allowance also covered travel from home to the first supermarket of the day (and from the last supermarket of the day to home). However, in so far as travel between supermarkets was concerned, there was plainly a strong argument that the expenses were incurred `in the performance of' the claimant's wife's duties. And there might be exceptional cases where a person's home is also a place of employment, so that travel from and to home can properly be regarded as `in the performance of the duties of the employment'. It is therefore arguable that without further investigation of the circumstances the appeal tribunal was unable to deal with the case adequately, and gave no adequate reasons for rejecting the case that could be made for the claimant under regulation 9(3) of the Computation of Earnings Regulations."

14. In the submission dated 8 October 2004, the representative of the Secretary of State supported the claimant's appeal. It was submitted that the appeal tribunal had simply looked at whether expenses could be deducted under the regulation on income tax and national insurance contributions etc and had not looked at whether the payments for expenses were within the definition of earnings. It was submitted that the appeal tribunal should have considered whether any part of the mileage allowances paid to the claimant's wife were in respect of travel carried out as an integral part of her duties as an employee, as distinguished from ordinary travel between home and a place of work. It was also accepted that if her employment included meeting clients at their places of work or other locations outside of a single premises of her employer, she could properly be regarded as employed to travel as a representative of her employer, with the result that all travel expenses necessarily attributable to such travel, including travel from and to home, would fall within the exclusion in regulation 9(3) of the Computation of Earnings Regulations. The suggestion was that the case should be referred to a new appeal tribunal for the necessary findings of fact to be made, including findings about what the claimant's wife was employed to do and in respect of what journeys the expenses were paid.
15. I agree that the appeal tribunal erred in law by failing to ask itself the right questions and to make the necessary findings of fact, for the reasons mentioned in paragraphs 13 and 14 above. I therefore set its decision aside.
16. However, in the light of the further information given by the claimant in his letter dated 29 September 2004 and on the OSSC3 form signed on 18 October 2004, it is not necessary to refer the case to another appeal tribunal. It is expedient for me to make the necessary findings of fact and to give the decision on the claimant's appeal against the decision of 3 March 2004.

The Commissioner's decision on the appeal against the decision of 3 March 2004

17. The claimant put forward the following information on form OSSC3:

"My wife's employer assists manufacturers of a variety of goods to increase sales by assisting in promoting these goods in supermarkets and large stores.

At least a week before action is required, my wife receives phone calls from her employer telling her briefly what she has to do. She then receives confirmation by post which gives precise details of activity and timing. Items for use in promoting products in store are also received by post/courier.

At the end of each week she reads through all the `briefs' and makes a work plan for the following week - each weekly plan is different - so that she optimises her travel arrangements.

In formulating the plan she is required to make appointments to meet the relevant manager at the supermarket or store. Her employer insists that prior arrangements are made.

At each meeting she works with the client to agree the siting and display of the product. Her employer may specify the requirements, or it may be to her discretion.

At the end of the day she returns home to complete a report on each activity. The reports are fed into the employer's database by telephone, and on many occasions are supplemented by submission of additional information by post."

18. I accept that information entirely. No doubt there are other matters that could be pursued at a rehearing by a new appeal tribunal or by my asking further questions, but I am not prepared to delay this case to follow either course. The Secretary of State showed no inclination to ask for relevant information before either making a decision or making a submission to the appeal tribunal. I take it as implied from the claimant's statement above that his wife is not required to attend any premises of her employer in the ordinary course of her work and indeed has no permanent place of work, except perhaps her home. In those circumstances, I have no doubt whatsoever that, in accordance with the principles mentioned in the Secretary of State's submission of 8 October 2004, the expenses of all of the claimant's wife's car travel for which she received expenses payments from her employer, including travel from and to her home as well as travel between supermarkets and stores, were wholly, exclusively and necessarily incurred in the performance of the duties of her employment. Her home was a place of employment and her duties included travelling on behalf of her employer from the moment of leaving home to the moment of return at the end of the day. Any other minor expenses, such as parking would also fall within the same conclusion. From the figures involved, I am satisfied that the payments made by the employer were a genuine estimate of the costs incurred by the claimant's wife and did not contain any element of profit. I am certainly not going to seek any further confirmation of that or that the amounts of non-taxable pay did not contain elements other than expenses payments.
19. Accordingly, all the non-taxable payments shown on the payslips in evidence fall within regulation 9(3) of the Computation of Earnings Regulations and do not form part of the claimant's wife's earnings for the purposes of regulation 8(2) of the Dependency Regulations. As the whole of regulation 9(1) of the Computation of Earnings Regulations is subject to regulation 9(3), it does not matter that regulation 9(1)(f)(i) specifies a payment in respect of the expenses of travelling between home and place of employment as part of earnings. That is trumped by the effect of regulation 9(3) in the circumstances of the present case.
20. I am then left in the somewhat artificial position of substituting a decision on the appeal against the decision of 3 March 2004 when I think that no decision should have been made on that date. Yet by virtue of section 12(8)(b) of the Social Security Act 1998 I am compelled to make my decision in accordance with the circumstances obtaining on 3 March 2004.
21. If I adopt the same method as the officer who made the decision of 3 March 2004 and take an average of the seven payslips, counting only the taxable pay, the result is £32.59 per week. With the addition of the weekly amount of the wife's occupational pension, the total earnings are well below the limit in regulation 8(2) of the Dependency Regulations. I have doubts about the use of averaging under regulation 8(3) of the Computation of Earnings Regulations. That provision allows averaging over a recognisable cycle of work or some other period that will allow average weekly earnings to be identified more accurately. But, for the reasons given in paragraph 6 above, the Dependency Regulations may properly work on the amount of actual earnings received week by week (with payments received at other intervals spread according to the rules in regulation 8(1) and (2) of the Computation of Earnings Regulations). If so, the use of an average figure might not be appropriate at all. But I do not have to decide the issue. I have already shown that the result of averaging under regulation 8(3) is in favour of the claimant. If I do not apply regulation 8(3), the circumstances as at 3 March 2004 were that, for six of the payments in evidence, the weekly equivalent of the earnings received was below the limit, usually well below. It was only in respect of the payment received on 14 December 2003 that the weekly equivalent (£98) was over the limit. There might well have been unusual circumstances in the run-up to Christmas. Looking at that evidence, and not knowing what earnings had been received immediately before 3 March 2004, I have no difficulty in concluding that the level of the wife's earnings to be taken into account in respect of the period from 28 May 2004 onwards is below the limit in regulation 8(2) of the Dependency Regulations. Thus, on either approach, the claimant's appeal succeeds and he is to be awarded the increase of retirement pension.
22. Accordingly, my decision is as set out in paragraph 1 above. That decision will take practical effect from the first week in which retirement pension was payable to the claimant after 28 May 2004. It will be for the Secretary of State to take whatever steps are considered necessary to check on the level of the claimant's wife's earnings after 28 May 2004.

(Signed) J Mesher

Commissioner

Date: 5 November 2004