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juliem
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Macmillan welfare rights advisor - Barnsley MBC, Barnsley

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Client has applied for ESA contribution based. There will be no entitlement to Income Based due to other income.

Been turned down due to insufficient contributions in 2013/14 (14/15 ok). I am confused by CPAG book. Can someone clarify if rule for 50 times lower earnings limit means:

a) 50 multiples of lower earnings limit e.g. if earned £6000 would qualify, no matter if earned £103 some weeks and £150 others or:

b) 50 actual payments above the lower earnings limit e.g. for 2016/17 it would be 50 payments of earnings above £112 per week.

Thanks

Tom H
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Newcastle Welfare Rights Service

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juliem - 26 September 2016 09:23 AM

Can someone clarify if rule for 50 times lower earnings limit means:

a) 50 multiples of lower earnings limit e.g. if earned £6000 would qualify, no matter if earned £103 some weeks and £150 others or:

b) 50 actual payments above the lower earnings limit e.g. for 2016/17 it would be 50 payments of earnings above £112 per week.

Neither (a) nor (b) in my view.  My understanding has always been that you do not count any earnings below the Lower Earnings Limit (LEL) for that year.  LEL for 2013/14 was £109, and Upper Earnings Limit for that year was £797.  These are weekly rates of LEL and UEL (see below where people are paid other than weekly).  So if someone earned £103 p/w in 6 weeks of that tax year and £150 p/w in the remaining 46 weeks, their earnings factor for that year would be: £6900, ie 46 x 150.  In order for 2013/14 to satisfy the 2nd contribution condition for ESA, the person’s earnings factor has to be at least 52 x £109 = £5668.  So in this example, the year would count.

As the above example shows, you don’t need to earn above £109 for at least 50 weeks.  All earnings in any week that do not exceed the UEL count, eg in the above example, if the person earned £103 for 44 weeks in 2013/14 but then earned £750 p/w for the remaining 8 weeks of that year, their earnings factor would be £6000, ie 8 x £750.  As £6000 is > £5668, the year would still count.  If in this same example, the person instead of earning £750 for the remaining 8 weeks, actually earned £1000 for each of those weeks, then their earnings factor would be £6376, ie 8 x £797 (ie each of the £1000 weekly payments would be capped at the rate of the UEL which for 2013/14 was £797).  Again, the year would count (£6376 > £5668).

When a person is paid monthly, the LEL is usually multiplied by 52 and divided by 12.  You then apply the resulting LEL (called the “prescribed equivalent” of the weekly LEL) to the monthly pay.  There are prescribed equivalents of the weekly LEL for other payment frequencies.

Edit: your statement in (a) above wasn’t right because the person wouldn’t necessarily qualify if they earned £6000.  Eg, if they earned £103 p/w in 46 weeks of 2013/14, and in the remaining 6 weeks earned £210.33 p/w.  Total earnings for the year would be: £6000 ie, (46 x 103) + (6 x £210.33).  But their earnings factor would only be £1262 (ie 6 x 210.33).

[ Edited: 26 Sep 2016 at 01:04 pm by Tom H ]
past caring
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Welfare Rights Adviser - Southwark Law Centre, Peckham

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Nothing to add directly to what Tom has said above - just an encouragement to pursue if you think there might be something to it…....it used to be that DWP decisions on contributions paid or credited were pretty reliable (to the extent I’d have said it was the one area where my default position was to trust the DWP’s decision) - but that’s no longer the case. See - http://www.rightsnet.org.uk/forums/viewthread/9373/

juliem
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Macmillan welfare rights advisor - Barnsley MBC, Barnsley

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Thanks Tom H and past caring that’s even more complicated than I feared.