Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No. CG/2659/2009

ADMINISTRATIVE APPEALS CHAMBER

Before: Upper Tribunal Judge Rowland

Attendances:

Mr Jeremy Heath of the Office of the Solicitor to the Department for Work and Pensions and the Department of Health represented the Secretary of State for Work and Pensions.

The claimant appeared in person, assisted by his brother.

Decision: The claimant’s appeal against the Secretary of State’s decision of 29 May 2008 is dismissed. He is not entitled to carer’s allowance.

REASONS FOR DECISION

1. This is a reference made by the First-tier Tribunal under section 9 of the Tribunals, Courts and Enforcement Act 2007 of a claimant’s appeal against a decision of the Secretary of State disallowing a claim for carer’s allowance. It is concerned with the assessment of earnings.

2. There is little dispute about the facts of the case. The claimant was employed as a civil servant, paid in respect of each calendar month on the last banking day of that month. His mother was seriously ill and he arranged to work part-time so as to be able to care for her. The number of hours he was to work from the beginning of March 2008 was calculated at 10.5 per week, with a view to ensuring that he would be able successfully to claim carer’s allowance, having regard to the amount of his earnings. Unfortunately, his employers put this into effect from the first working day of the month, which was 3 March 2008, and the combined effect of his being paid his full salary for the first two days of the month and getting a tax rebate due to the workings of the PAYE scheme, was that his net pay on 31 March 2008 was rather higher than anticipated. The payment on 30 April 2008 was much lower.

3. The claimant first submitted a claim for carer’s allowance on 29 February 2008 in anticipation of his change of circumstances. On 7 March 2008, it was decided that he would be entitled to carer’s allowance from 7 April 2008, subject to the amount of his earnings being confirmed, and so an award was made with the proviso that no payment would be made until the claimant’s March payslip was submitted. The claimant received his payslip before the date he was due to be paid and he submitted it on 26 March 2008 with the comment that, since his earnings had gone down from 3 March 2008, he should be entitled to carer’s allowance from that date. However, on or shortly before 29 April 2008, the decision of 7 March 2008 was revised and the claim disallowed. That decision was not challenged at the time.

4. On 3 May 2008, the claimant responded by sending in his April payslip. That letter was received on 9 April and was treated by the Secretary of State as a new claim. On 28 May 2008, the claimant was awarded carer’s allowance with effect from 5 May 2008. However, it was then realised that, sadly, the claimant’s mother had died on 4 May 2008. The award was therefore promptly revised on 29 May 2008 and it was decided that the claimant was not entitled to carer’s allowance at all. He appealed.

5. After an adjournment to obtain further submissions from the Secretary of State in the light of CG/607/2008 and a couple of postponements, the case came before the First-tier Tribunal on 29 March 2009. It decided that the claimant was entitled to carer’s allowance from 30 April 2008 to 1 June 2008 and, subject to confirmation of his earnings in May 2008, also from 2 June 2008 to 29 June 2008. The Secretary of State sought permission to appeal but, on 29 July 2009, a district tribunal judge reviewed the decision, set it aside under section 9(4)(c) of the 2007 Act and directed that the matter be re-decided by the First-tier Tribunal under section 9(5)(a). When the claimant objected, the district tribunal judge reconsidered her review decision and, on 5 October 2009, maintained the setting aside but referred the case to the Upper Tribunal under section 9(5)(b).

6. Under section 70(1) of the Social Security Contributions and Benefits Act 1992, a person is entitled to a carer’s allowance (formerly known as invalid care allowance) if he is engaged in caring for a severely disabled person and, among other conditions “is not gainfully employed”. Under section 70(1A) a person who is entitled to a carer’s allowance when the person for whom he is caring dies, remains entitled to the allowance for eight weeks from the date of death if, as in the present case, the death is on a Sunday. Hence the period for which the First-tier Tribunal made its award in the present case. The question that arises on this reference is whether the claimant was “gainfully employed” at the time of his mother’s death and during the weeks preceding it.

7. Regulation 8(1) of the Social Security (Invalid Care Allowance) Regulations 1976 (S.I. 1976/409, as amended), provides that, for the purposes of section 70(1)(b) of the 1992 Act –

“… a person shall not be treated as gainfully employed on any day in a week unless his earnings in the immediately preceding week have exceeded £95 and … shall be treated as gainfully employed on every day in a week if his earnings in the immediate preceding week have exceeded £95”.

Section 3(2) of the 1992 Act has the effect that the way the amount of earnings for any period is to be calculated, or the way the amount of earnings to be treated as comprised in any payment is to be calculated, is to be determined by reference to regulations. The relevant regulations are the Social Security Benefit (Computation of Earnings) Regulations 1996 (SI 1996/2745). These Regulations have attracted some adverse comment but the present case is relatively straightforward and the way the Regulations apply is correspondingly clear.

8. Regulations 6 to 10 of the 1996 Regulations deal with employed earners. It is, however, necessary first to note the definition of “benefit week” in regulation 2 which usually means “any period of 7 days corresponding to the week in respect of which the relevant social security benefit is due to be paid, and, where appropriate in respect of payments due to be paid before that week”. By virtue of regulation 29 of, and paragraph 4 of Schedule 6 to, the Social Security (Claims and Payments) Regulations 1987 (S.I. 1987/1968, as amended), a carer’s allowance is paid on Mondays (except where entitlement arises by virtue of payment of constant attendance allowance under an industrial injuries or war pensions scheme, in which case it is paid on Wednesdays). Therefore, in the present case, a “benefit week” begins on a Monday. A carer’s allowance, like other social security benefits, is a weekly benefit in the sense that it is calculated on a weekly basis, although it is usually paid at four-weekly intervals. One function of the 1996 Regulations is to enable earnings paid otherwise than weekly to be taken into account on the necessary weekly basis.

9. This is partly achieved by regulation 6(2)(a), which has the effect that, in a case where earnings are paid in respect of a period, the period over which the payment is taken into account –

“… shall be a period equal to a benefit week or such number of benefit weeks as comprise the period commencing on the date on which the earnings are treated as paid under regulation 7 (date on which earnings are treated as paid) and ending on the day before the date on which earnings of the same kind … and from the same source would, or would if the employment was continuing, next be treated as paid under that regulation”.

Regulation 7(b) has the effect that earnings are treated as paid “on the first day of the benefit week in which the payment is due to be paid”. Thus, monthly payments are taken into account for either four or five complete benefit weeks, depending on how the dates fall. If paid on the last banking day of the month, a February 2008 salary payment fell to be taken into account from 25 February to 30 March, a March payment fell to be taken into account from 31 March to 27 April and an April payment fell to be taken into account from 28 April to 25 May.

10. The rate at which the salary is to be taken into account is determined by regulation 8(1), which provides that, where the period in respect of which a payment is made is a month, the weekly amount is usually determined “by multiplying the amount of that payment by 12 and dividing the product by 52”. This has the effect that, where a salary is constant, it gives rise to a constant level of earnings for benefit purposes, even though the number of weeks to which it applies is variable. In the short term, there may be anomalies but they are ironed out over a longer period. Paragraph (3) provides some flexibility where “the amount of the claimant’s net earnings fluctuates and has changed more than once, or a claimant’s regular pattern of work is such that he does not work every week”.

11. Regulation 9 defines what may be taken into account as earnings and regulation 10 provides for the calculation of earnings. In particular, by regulation 10(3) and paragraph 10 of Schedule 1, there is disregarded –

“Any amount by way of refund of income tax deducted from profits or emoluments chargeable to income tax under Schedule D or E”.

Regulation 10(1) provides that it is a person’s net earnings that are to be taken into account and paragraph (4) has the effect that those are calculated by –

“… taking into account the gross earnings of the claimant from that employment less –

(a) any amount deducted from those earnings by way of –

(i) income tax;

(ii) primary Class 1 contributions under the Contributions and benefits Act; and

(b) one half of any sum paid by the claimant in respect of a pay period by way of a contribution towards an occupational or personal pension scheme”.

12. It is clear that the First-tier Tribunal sitting on 29 March 2009 shared the Secretary of State’s view that the payment received on 31 March 2008 was made in respect of a month and that the amount of earnings was sufficient to disqualify the claimant for the period for which they fell to be taken into account. It was the difference of view over the period for which the earnings affected entitlement to a carer’s allowance that led the Secretary of State to seek permission to appeal.

13. In my judgment, the Secretary of State’s approach was correct. For the reason I have given above, the 1996 Regulations had the effect that, if paid in respect of a month, the salary payment received by the claimant on 31 March 2008 was to be treated as earnings from that date until 27 April. The First-tier Tribunal erred in attributing it over a period of a month rather than four benefit weeks but, more importantly, it overlooked the fact that the earnings taken into account in each of those four weeks affected entitlement to a carer’s allowance in each of the following weeks, due to the language of regulation 8(1) of the 1976 Regulations. That is why the payment affected the claimant’s entitlement to carer’s allowance right up to the date his mother died on 4 May 2008.

14. The combined effect of the 1976 Regulations and the 1996 Regulations is that a salary is always taken into account so as to affect entitlement during a period following its payment. There are sound practical reasons for this, both because the payment is not available as a resource until it has actually been paid and because the Secretary of State needs to know what the claimant has received by way of earnings before determining whether a payment of benefit should be made.

15. The claimant has however argued, with some encouragement from the district tribunal judge, that the payments made in his case were in respect of periods of a week and that that makes a difference. Reference is made to CG/607/2008. In that case, the claimant was employed part-time by a charity under a fairly informal agreement. The precise payment date varied because she was paid by cheque at about the end of each month but it appears that, except in a few weeks, she worked the same number of hours each week with each month’s payments being based on the actual number of hours worked in that month. The Secretary of State treated the payments as monthly, but that produced an unsatisfactory result because the claimant’s earnings fluctuated principally because some months contained more working days than others, even though she had a regular pattern of work each week and her weekly earnings only occasionally exceeded the limit for entitlement to benefit. The Commissioner considered that resort could not be had to regulation 8(3) because he took the view that the claimant’s “net earnings” did not fluctuate, but he sought to get round that by treating the payments as each being a number of payments made in respect of single weeks.

16. The present case is distinguishable because, here, the claimant was salaried. It is true that his earnings each month were based on his working 37 hours a week when full-time and 10.5 hours per week when working part-time, but those figures were used to produce an annual salary that was divided into equal monthly portions payable irrespective of the number of days actually worked in any particular month. Treating these payments as monthly payments under the 1996 Regulations works perfectly satisfactorily, except, arguably, in March 2008 which was the month when the claimant changed from full-time to part-time working.

17. After the hearing, I invited written submissions as to whether the payment made on 31 March 2008 might be treated as being two separate payments, one of which was for two days and the other for 29 days. If the first of those payments were treated as being paid in respect of a week, then the reasoning in CG/607/2008 suggests that it would be taken into account under the 1996 Regulations in the week from 31 March 2008 to 6 April 2008 and the claimant would have become entitled to a carer’s allowance from 14 April 2008 because the balance of the earnings received on 31 March 2008 would have fallen to be taken into account at a rate of less than £95 per week.

18. The Secretary of State resists that approach and argues that the reasoning in CG/607/2008 should not be extended to cases where there is merely a change in the working hours of a salaried employee, because it is not sanctioned by the legislation and because there would be practical difficulties in its application. The claimant, however, argues that the approach taken in CG/607/2008 should always be applied in any case where a monthly salary is calculated on the basis of a duty to work a certain number of hours each week.

19. I do not accept the claimant’s argument. Contracts of employment of employees paid monthly nearly always refer to weekly hours of work merely because most employees have regular working days that are the same each week but the number of which varies from month to month simply because some months include more week-ends than others. However, monthly payments are also nearly always based on an average calculated over a year so that they remain the same every month if there is no irregular overtime. The 1996 Regulations provide a clear and fair way of dealing with such regular monthly earnings and it is inconceivable that it was intended that monthly paid employees should be treated differently depending on whether their contracts specified a number of hours to be worked in a week or a number of hours to be worked in a month CG/607/2008 was concerned only with monthly payments calculated on the basis of the number of hours actually worked in each month rather than on the basis of an average spread over the year. .

20. I am also not wholly convinced by the Secretary of State’s arguments. Given that there is no express requirement in the legislation for the approach taken in CG/607/2008 even in the type of case where the Secretary of State has not challenged its application, the lack of an express requirement is not necessarily a reason for not applying it in transitional months such as March 2008 in the present case. Nor am I convinced that its application would necessarily be particularly difficult and the present case is an example of one where it probably would not have been. However, I do accept that there are other cases where the Secretary of State would be obliged to investigate single fluctuations in salary and that, if monthly payments were too readily to be treated as composed of, or including, payments for shorter periods, the costs of investigating cases might become substantial in comparison to the amount of benefit in issue. Moreover, the benefits to which the 1996 Regulations apply are not income-related benefits of last resort and an element of “rough justice” is more readily to be expected in the legislation. Perhaps the most telling point is that the flexibility allowed by regulation 8(3) in cases where the amount of net earnings fluctuates is available only if the amount “has changed more than once”, which seems to me to be a clear indication that an anomaly due to a single variation is regarded as tolerable and is to be disregarded in the interests of administrative convenience. The claimant’s approach would undermine that.

21. I therefore accept the Secretary of State’s submission that the payment made in this case in respect of March 2008 was a single payment made in respect of a month and that the element attributable to the first two days of the month is not to be treated as a separate payment to be taken into account during only one week. The claimant’s appeal must be dismissed. This makes it unnecessary for me to consider whether, in any event, I could award benefit in respect of a date before 5 May 2008, given the lack of an express challenge to the decision of 29 April 2008.

MARK ROWLAND

Judge of the Upper Tribunal

29 June 2010