UK Social Security and Child Support Commissioners' Decisions

 


[2007] UKSSCSC CG_4139_2006 (01 June 2007)

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. The claimant's appeal to the Commissioner is allowed. The decision of the Oxford appeal tribunal dated 24 July 2006 is erroneous in point of law, for the reason given below, and I set it aside. It is expedient for me to substitute a decision on the appeal against the Secretary of State's decision dated 16 March 2006, having made the necessary findings of fact (Social Security Act 1998, section 14(8)(a)(ii)). My decision is that the appeal is allowed and that, although there is a ground (relevant change of circumstances) to supersede the decision dated 6 December 2001 awarding the claimant carer's allowance from and including 7 January 2002, that decision does not fall to be superseded.
2. In this case, the Secretary of State supported the claimant's appeal to the Commissioner in a very fully argued submission and suggested that I should substitute a decision wholly in the claimant's favour. In view of that submission, my decision can be briefer than it otherwise would have been.
3. The claimant was awarded invalid care allowance, now re-named carer's allowance, in respect of caring for her mother (who has sadly died in the course of the present appeal) from and including 7 January 2002 by a decision dated 6 December 2001. At that time she was working as a part-time teacher. Towards the end of 2005 she was sent a periodical review form. On the form, signed on 15 December 2005, she said that there had been changes since 10 December 2003. In an attached letter she said that, as her mother could not be left unattended, she could not undertake even part-time work outside the home, but had secured employment as a GCSE examination marker. She had done that in summer 2004 and 2005, being paid gross amounts of £952 and £958 respectively. The claimant was sent a more detailed form appropriate for someone employed or recently employed on an ordinary periodical basis. The claimant filled in the form as best she could and explained in an accompanying letter the nature of the work, concentrated into two months (she later corrected this to one month) in the summer of each year, and that she paid no tax or national insurance on the annual payments. Copies of remittance advices from the examination board (OCR) were supplied. An officer telephoned the finance section of OCR on 16 March 2006 and was told that the claimant was employed on a piece-work basis rather than being self-employed or on a fixed contract. That information turns out to have been seriously misleading, but has been at the heart of the problems in this case.
4. The decision was then made on 16 March 2006 that the decision of 6 December 2001 was to be superseded by a decision that the claimant was not entitled to carer's allowance for the periods from 14 June 2004 to 11 July 2004, from 16 May 2005 to 22 May 2005 and from 4 July 2005 to 7 August 2005. This was on the basis that each payment from OCR was to be regarded as paid for the number of days in the periods for which the claimant said that she had worked and then attributed for a period of that length from the date of payment. For those periods the weekly earnings were calculated at £193.62, above the earnings limit for care's allowance (£79 from April 2004 and £82 from April 2005). That result followed the application of the rules found in the Social Security Benefit (Computation of Earnings) Regulations 1996 for employed earners.
5. The claimant appealed, saying that the method of calculation was inappropriate to her circumstances, that the periods of disentitlement did not relate to her periods of work and that her annual income was way below the earnings limit. The Secretary of State's written submission supported the decision under appeal, subject to substituting the period from 27 June 2005 to 31 July 2005 for the period of disentitlement from 4 July 2005 to 7 August 2005.
6. The claimant opted for a "paper hearing". The appeal tribunal of 24 July 2006 disallowed her appeal. The chairman's reasons were that the decision under appeal had effectively followed the statutory rules for employed earners. The claimant applied for leave to appeal to the Commissioner, saying that she was seeking a change in the rules or that her earnings should be calculated over a recognisable cycle of a year. I granted leave to appeal, making some highly technical points about the effect of the claimant's mother having been in hospital respite care for some of the periods of disentitlement and about the dates to which income was attributed.
7. The written submission dated 19 January 2007 on behalf of the Secretary of State, prepared by Mr Wayne Spencer, blew a hole in all that had gone before. He pointed out what no-one else had thought of until then, that the Social Security (Categorisation of Earners) Regulations 1978 appeared to deem someone in the claimant's circumstances to be a self-employed earner, for the purposes of benefits under the Social Security Contributions and Benefits Act 1992 as well as for the purposes of contributions. Under regulation 2(3), in respect of any employment listed in column (A) of Part II of Schedule 1 a gainfully employed person is to be treated as falling within the category of a self-employed earner. Paragraph 6 of Column (A) is as follows:

"6. Employment (not being employment described in paragraph 2 in column (A) of this Schedule) by any person responsible for the conduct or administration of any examination leading to any certificate, diploma, degree or professional qualification--

(a) as an examiner, moderator or invigilator or in any similar capacity; or

(b) in which the person employed is engaged to set questions or tests for any such examination,

under a contract where the whole of the work to be performed is to be performed in less than twelve months."

Paragraph 2 applies to workers supplied through agencies and so is not relevant in the present case. Mr Spencer submitted that, if the claimant were as a result to be treated as self-employed, that deeming would operate for the purposes of the definitions of "employed earner" and "self-employed earner" in regulation 2(1) of the Computation of Earnings Regulations and that her payments should, under the regime in regulations 11 to 14 of those regulations, be averaged over a year. The result would be that her weekly earnings would have been below the earnings limit throughout the periods in question.

8. The claimant in reply naturally adopted that reasoning. I agreed with Mr Spencer's submission almost entirely, which is why I have not needed to set out here all the relevant provisions of the Computation of Earnings Regulations. However, there was one question over which I hesitated, which was the application of the condition in paragraph 6 of Schedule 1 to the Categorisation of Earners Regulations that under the relevant contract the whole of the work to be performed is to be performed in less than 12 months. Although the existing evidence clearly showed that the claimant in the present case satisfied all the other conditions in paragraph 6, I was not sure that there was sufficient evidence of the contractual terms on which the claimant was engaged to do her examining. I therefore issued a direction giving the claimant time to say whether in relation to her duties in summer 2004 and summer 2005 she was employed on specific contracts for each year or whether she was employed under a contract for a longer term or on an indefinite basis. I asked her to supply the copies of the best supporting documents she could, such as letters of appointment or statements of terms and conditions.
9. The claimant replied on 25 March 2007, saying that her understanding of the documents was that she was employed on a specific contract for each year, with a possibility of re-employment the following year if there were enough candidates. The contracts and terms of employment were sent out on a yearly basis. She enclosed a number of documents. One was a letter to her from OCR dated 30 June 2003 that included the following:

"We are pleased to inform you that your application for examining/moderating work in French has been approved and that your name has been placed on the list of successful applicants awaiting appointment as vacancies occur.

Invitations to examine/moderate are normally sent between November and April for the June examinations and between August and October for the January examinations. It should be noted that examiners/moderators are not appointed on a permanent basis, each invitation being valid for one examination only. However, no subsequent application need be made."

Another document was a copy of a contract (version September 2004) relating to provision of services to OCR by assistant examiners. This contract made clear that it related to a specific examination session as notified in the accompanying invitation and terminated on completion of the services relating to that session (clause 1.3) and contained a declaration that it was the parties' intention not to create a relationship of employer and employee (clause 5). There was also a copy of a June 2007 contract, which had been reorganised in some ways, but contained the same declaration. In the light of the claimant's evidence I have no hesitation in accepting that a contract in the same form as the September 2004 version was in effect for her duties in summer 2004 and summer 2005.

10. I did not see any need to ask for further comments on behalf of the Secretary of State. The documents now produced make it absolutely clear that a separate contract was entered into for each examination session, so that the condition in paragraph 6 of Schedule 1 to the Categorisation of Earners Regulations that the whole of the work under a contract is to be performed within 12 months was satisfied. However, more fundamentally, the contract documents made clear that the claimant was being engaged for each examination session on a self-employed basis and not as an employee. The express declaration was consistent with the agreement for the provision of personal services. Although OCR exercised close control over how some aspects of the work was to be done, the relationship was one that could perfectly properly be arranged on a self-employed basis. Accordingly, the claimant is not merely deemed to be self-employed, but the evidence before me shows that that was her status regardless of the statutory deeming. I prefer the evidence contained in the documents now produced by the claimant to the evidence obtained in the telephone call to OCR on 16 March 2006. That evidence is inconsistent with the documents now produced. I can only think that either there was some misunderstanding of the questions being asked or the person in OCR was misled by the requirement of the income tax authorities to deduct standard rate income tax unless the examiner's earnings including the payment were below the lower personal allowance for the relevant tax year.
11. The upshot is this. The appeal tribunal of 24 July 2006 plainly erred in law. On the factual basis as it appeared at the time (that the claimant had a contract or contracts of employment with OCR), the appeal tribunal should have considered the effect of regulation 2(3) of and paragraph 6 of Schedule 1 to the Categorisation of Earnings Regulations, which might then have required it to seek further evidence. The failure to consider those provisions was an error of law. I set the appeal tribunal's decision aside for that reason. It is plainly expedient for me to substitute a decision on the claimant's appeal against the Secretary of State's decision of 16 March 2006, having made the necessary findings of fact. Having found that the claimant was actually self-employed in the periods in question (or, if I were wrong about that, was deemed to be self-employed), there is no doubt that her weekly earnings were to be calculated in the way described by Mr Spencer in his submission of 19 January 2007 and did not exceed the earnings limit for carer's allowance in any week. Accordingly, my substituted decision is as set out in paragraph 1 above. The claimant's starting work as an examiner was a relevant change of circumstances, as it was capable in general of having an effect on her entitlement to carer's allowance, but did not in fact lead to any change in the decision awarding her benefit.
12. I do not know what decisions were made on the claimant's entitlement to carer's allowance in summer 2006, on the assumption that she carried out examining duties then. However, it is obviously right that the Secretary of State should now take steps to ensure that the claimant receives any benefit due to her on the basis that her earnings from examining (in the absence of a vast and unlikely increase in their amount) did not affect her entitlement to carer's allowance. I also hope that the Secretary of State takes steps to ensure that the guidance given to officers dealing with carer's allowance and other benefits to which the Computation of Earnings Regulations are relevant takes account of the deeming in regulation 2(3) of and paragraph 6 of Schedule 1 to the Categorisation of Earners Regulations.

(Signed) J Mesher

Commissioner

Date: 1 June 2007