R (Johnson, Woods, Barrett and Stewart) v SSWP  EWHC 23 (Admin)
This case concerns a judicial review challenging the rigidity of the assessment period regime under universal credit (UC) and the way that earned income is calculated. The strict application of the assessment period dates/ treatment of earned income as those wages earned in an assessment period even if they were earned in a different assessment period means that some people are treated as receiving two monthly wages in one assessment period, which affects the amount of their UC award and results in the loss of the benefit of the work allowance in respect of one month's salary. Judgment was given on 11 January 2019 finding in favour of the claimants, but the SSWP has now been given permission to appeal to the Court of Appeal.
The claim was brought on behalf of three single working mothers, represented by CPAG, and was joined with a similar case brought by Leigh Day solicitors representing another single working mother. Each claimant was paid towards the end of the month and their assessment periods ran from the end of one month to the end of the next. The UC assessment periods always ended on the same day, but the pay dates were occasionally brought forward if the usual payment date was a non-banking day. This meant that the claimants were sometimes paid twice in one assessment period (eg in Nov/Dec 2017 one claimant, whose assessment period ran from 30th of one month to 29th of the following, was paid on Thursday 30th November and Friday 29th December). Where this happened, the claimants would be treated as having earned twice their usual salary and so would receive a significantly reduced UC award, causing obvious cash flow problems for somebody managing on a very tightly balanced budget. Further, as the claimants are working parents, they are entitled to a work allowance. Where they are treated as receiving two months' wages in one assessment period, only one work allowance is applied. They therefore effectively lose out on the benefit of one work allowance against one month’s salary which is not compensated by the fact that the following assessment period they are treated as receiving no wages and so get the maximum UC allowance.
The claimants originally argued that DWP’s refusal to adjust the claimants' assessment periods to avoid this situation is discriminatory against working parents with children (one of the two groups who are entitled to a work allowance), as well as being irrational and undermining the legislative purpose of UC. Far from incentivising work, mirroring the world of work or ensuring consistency and predictability, the claimants' fluctuating UC award while their monthly salary remains unchanged meant that things would be much easier for them if they were not working and instead receiving, on a regular and entirely predictable basis, the maximum UC award.
The hearing took place on 27 to 28 November 2018 in the High Court. Judgment was given on 11 January 2019 finding in favour of the claimants, albeit on a different basis from that initially advanced by the claimants, that the SSWP had been incorrectly interpreting her own regulations regarding "earned income" (namely regulation 54 Universal Credit Regulations 2013), and "wrongly assumed that where salaries for two different months were received during the same assessment period, the combined salaries from the two months were to be treated as earned income in respect of that assessment period."
The Secretary of State now has permission to appeal to the Court of Appeal. Nevertheless, we would encourage advisers to request a mandatory reconsideration of such decisions and then appeal them (with any appeal likely to be stayed behind the outcome in Johnson), to protect their claimants should the SSWP be unsuccessful in her challenge in Johnson. A template letter to request MR is here
Where a client’s pay situation is similar to but not on all fours with that of the claimants in Johnson, eg paid fortnightly or paid four weekly rather than monthly, a mandatory reconsideration should still be sought on the basis that the reasoning in Johnson equally applies to such situations to the extent that: ‘There may however need to be an adjustment where it is clear that the amounts received in an assessment period do not, in fact, reflect, the amounts of earned income in respect of the period of time included within that assessment period (Johnson §52).