UC earnings and problems
David Simmons describes some of the issues when a claimant is paid twice during a universal credit (UC) monthly assessment period.
My client is a lone parent working part time while in receipt of UC in a ‘full service area’. She is paid her earnings approximately every four weeks. Her pay day varies depending on weekends and holidays. As a result, she sometimes gets paid twice during her UC assessment period and then receives no earnings in the following assessment period. When she receives ‘double pay’ in an assessment period, her UC stops because her earnings are too high (she is also only entitled to one ‘work allowance’) and she has to reclaim it.
When she receives no earnings in the next assessment period, the benefit cap is applied to reduce her UC and she also receives no ‘work allowance’. As well as losing money, the situation causes disruption, stress and budgeting difficulties. Is there any way round this? Could she, for example, close her UC claim and reclaim it in order to change the dates of her assessment periods?
The basic problem
This is not an uncommon scenario, some aspects of which can also arise where a claimant gets paid fortnightly or weekly, or has widely fluctuating patterns of earnings – eg, from a ‘zero hours’ contract.1 The difficulty stems from the inflexibility of the UC rules, which assess entitlement on the basis of earnings actually received in each assessment period, regardless of the period for which they are paid.2
Once a claimant’s earnings are too high in any assessment period, entitlement to UC ends and a claimant living in ‘full service area’ has to reclaim it to reinstate entitlement for the following assessment period.3 Reclaiming should, at least, be a relatively straightforward matter of making an online request to reclaim on the basis of unchanged underlying circumstances. Also, the normal seven-day ‘waiting period’ before entitlement recommences does not apply.4 The new award is based on the same assessment periods as the previous award, as long as the new claim is made within six months of the old award ending.5 This is meant to ensure that a claimant does not lose UC by only regaining entitlement from the date of a new claim.6
The work allowance
Only one ‘work allowance’ is allowed for each assessment period, regardless of the amount of earnings, and there is obviously no work allowance if there are no earnings in an assessment period.7
The benefit cap
The benefit cap applies in relation to each UC assessment period, and the exemption on the basis of work only applies where a claimant's earnings are at least £520, or have been for the previous 12 months.8 The reduction in the amounts of the cap from November 2016 means it is affecting more claimants whose earnings fall below the threshold.
So where does this leave the client?
Firstly, there is no possibility of changing the dates of her UC assessment periods by clos- ing her UC claim and reclaiming it, because of the six-month reclaim rule. The only possibility of avoiding the ‘double payment’ problem in future, therefore, would be to see if there is any scope for the claimant’s employer to change her pay days so that they fit more seamlessly with her UC assessment periods, or at least to avoid particular pay days which result in her getting paid twice in an assessment period.
Secondly, the rules, as drafted, leave little scope for her to challenge the termination of her award on the grounds of excess earnings and needing to reclaim, or the loss of work allowances. The problem has been raised as a policy issue but here is no indication that the government is willing to revisit the rules. The client could ask her MP to raise the issue again.
Thirdly, the client should challenge the decision to apply the benefit cap by arguing that she satisfies the earnings exemption set out in regulation 82 of the UC Regulations because her earnings exceed £520 per month. The difficulty is that the exemption applies to ‘an award of UC award in relation to an assessment period where a claimant’s earned income is at least £520’. This implies that only earnings actually received in that assessment period count. Arguably, however, there is no requirement for the earnings to have actually been received in an assessment period for the exemption to apply.9 Further, the claimant could secure an exemption if her earnings in each of the preceding 12 months were at least £520, regardless of when they were actually paid. There is no stated requirement that the earnings have been actually received in each assessment period for this to apply.10
If there is doubt about the meaning of a provision, it is permissible to consider its purpose, and the government has repeatedly stated that the aim of the benefit cap is to incentivise and penalise workless households. The exemptions in regulation 82 are clearly aimed at those in work and (arguably, at least) it would be irrational and discriminatory if the application of the cap could depend on the vagaries of an employer’s payment arrangements and the dates of a claimant’s assessment periods.
Unfortunately, there is no right of appeal against a decision to impose the benefit cap.11 The client can request a revision using these arguments. If this is ignored or the decision is not changed, there may be grounds for ‘judicial review’.12 CPAG is taking up the application of the benefit cap in these circumstances as a policy issue and any case examples you have would be helpful. We can also offer advice with any cases you have.
Please be aware that welfare rights law and guidance change frequently. Older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.
- 1. 1 See the DWP guidance in ‘Universal Credit: different earnings patterns and your payments’, (updated May 2017) at www.gov.uk/government/publications/universal-credit- different-earning-patterns-and-your-payments/universal- credit-different-earning-patterns-and-your-payments- payment-cycles
- 2. 2 Reg 54 The Universal Credit Regulations 2013, No.376 ('UC Regs 2013'). The way the system works was confirmed in PT v SSWP  UKUT 696 (AAC).
- 3. 3 The situation is different in a UC ‘live service’ (or ‘gateway’) area where UC can be reinstated without making a new claim.
- 4. 4 Reg 19A(3)(ii) UC Regs 2013
- 5. 5 Reg 21(3C) UC Regs 2013
- 6. 6 Regulation 26(5) Universal Credit, Personal Independence Payment, Jobseeker's Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013
- 7. 7 Reg 22 UC Regulations 2013, No.380
- 8. 8 Regs 79, 81 and 82 UC Regs 2013
- 9. 9 It is unclear whether the ‘assessment period’ referred to in reg 82(1)(a) relates only to the ‘award of UC’, or also to ‘the claimant’s earned income’, or to both. It is also unclear whether the definition of ‘earned income’ in reg 2 as ‘the meaning in Chapter 2 of Part 6’, refers to reg 52 only (which specifies what constitutes earnings), or to reg 54 as well (calculation of earnings on the basis of receipt in an assessment period). Arguably, reg 54 does not apply to reg 82 (benefit cap earnings exemption).
- 10. 10 Reg 82(3) UC Regs 2013
- 11. 11 para 8 Sch 2 Social Security Act 1998
- 12. 12 Note that there is a strict three-month time limit for commencing judicial review proceedings.