Re-claiming Contributory ESA

I am trying to get my head around the options for (the many) people whose contributory ESA is stopping next month.  My understanding is that someone can re-claim if they satisfy the NI contributions, which arguable most people will? But they need to wait 12 weeks in order to ‘break’ the claims. 

I have yet to see a decision letter informing someone their claim will be stopping as they have so far just been phoning people round here but I understand that after payment of Contributory ESA stops the claim will automatically convert to credits only.  So therefore someone would need to act to formally terminate the credits in order to break the claims by 12 weeks? 

And also the 12 week required break would prevent someone satisfying the second contribution condition where it occured in one of the last two tax years before the benefit year in which they claim.  i.e. so someone could not claim break and re-claim more than once?

Am I right??

Thanks

Sara

A further thought following my last post, if someone signed on during their 12 week break this would plug the gap on the second contribution condition and enable them to re-claim Contributory ESA each year.

I am waiting for someone to tell me this is wrong as I find it difficult to believe the government would have created such a situation!

I agree that the DWP practice will be to automatically convert an award of CESA to credits-only after the CESA stops due to time-limiting.  The caselaw suggests that such a practice is incorrect because a person would never know whether they needed to be topped up with any credits until, at the very earliest, the end of the tax year.  However, at least the DWP practice, which is very unlikely to change, will make it easier for someone to demonstrate that they have not ceased having limited capability for work for the purposes of the section 1B(1)(a) WRA 2007, as inserted by section 52 WRA 2012.  However, section 1B will only benefit the few who subsequently deteriorate to the extent that they qualify for the support group.

For the others who cannot get into the support group, I disagree that the award of credits-only to which the CESA will default as above would itself need to be ended by 12 weeks, eg by claiming JSA or by formally requesting that the LCW credits be stopped, in order to break the link with the old CESA. Only periods of limited capability for work (pLCW) link.  And any period when you receive credits only is not a pLCW.

The confusion has been caused by the failure of the ESA legislation to define “a day of limited capability for work”.  That is partly due I think to ESA being a weekly benefit (see section 1(5) WRA 2007) as opposed to IB which was a daily benefit.  In IB, a day of incapacity for work was defined (see section 30C(1)(a) Contributions and Benefits Act).  A period of incapacity for work (pIFW) consisted only of days of incapacity and only pIFWs could link under linking rules to form a single pIFW (section 30C(1)(c)). 

Reg 8B of the Credits Regulations 1975 allowed credits based on incapacity for work for any day that either was or WOULD HAVE BEEN a day of incapacity for work.  This made it clear that someone receiving credits-only could never be in a pIFW.  That’s because by definition a pIFW only included, as mentioned above, actual days of IFW, not days that would have been days of IFW had the person been entitled to IB.  Consequently, a person’s award of credits could not link with an award of IB.

Now, I would submit that exactly the same principle applies to ESA despite “day of limited capability for work” not being defined.  The Credits Regs again make a distinction between actual days of LCW and days that WOULD HAVE BEEN such days had the person qualified for ESA.  SI 913/2012 has amended the Credits Regs as I predicted in post 11 of this thread http://www.rightsnet.org.uk/forums/viewthread/1857/ , as follows:

“2.  After regulation 8B(2)(a)(iv) of the Social Security (Credits) Regulations 1975 (credits for incapacity for work or limited capability for work) insert—

“(iva)would have been a day of limited capability for work for the purposes of Part 1 of the Welfare Reform Act (limited capability for work) where the person concerned would have been entitled to an employment and support allowance but for the application of section 1A of that Act;..”.

In other words a person can be awarded credits for any day which would have been a day of LCW had the time-limiting rules not ended their ESA.  But, as with IB above, credits awarded on that basis can never, by definition, form a pLCW (defined by reg 2(1) ESA Regs).  And only pLCWs can link under Reg 145(1) ESA Regs. 

Therefore, a person can happily claim credits-only based on having LCW without it keeping alive his old award of CESA.

sara lewis - 29 March 2012 01:29 PM

“... My understanding is that someone can re-claim if they satisfy the NI contributions, which arguable most people will? But they need to wait 12 weeks in order to ‘break’ the claims…”

I think most people will actually struggle to re-qualify even after 12 weeks.  Not because they’ll have diffiuculty finding a later tax year in order to satisfy the SECOND contribution condition.  They will after all have been receiving credits right up to the date their CESA stops and, consequently, they’re likely to satisfy the 2nd contribution condition for tax year 2010/11, which is probably not one of the tax years that was originally used in support of their CESA award.

However, the new section 1A of the WRA 2007 still requires the FIRST contribution condition to be satisfied.  And I think many people will fail to satisfy it.  They would need to have earned at least the LEL in at least 26 weeks in either 2009/10 or 2010/11 if they are re-applying for CESA anytime again in 2012.  That means anyone who has been on CESA continuously since 28/9/09 will not be able to satisfy the 1st condition because there were only 25 weeks in the period April 5 2009 - 28/9/09.  A person in that situation could still satisfy the 1st condition if they could rely on the relaxation rule in Reg 8 ESA.  However, the ability to rely on that rule has been severely curtailed by the removal of para 2(d) of Reg 8 from 1/5/12 by SI 2012/757.

The memo DMG 13/12 seems to adopt contradictory positions on the question of LCW during a credits only period. In relation to breaking a period of LCW it adopts the position Tom refers to: that a period on credits is not a PLCW and credits are instead awarded on the basis that it would have been a PLCW had the person concerned been able to get ESA. However in relation to requalification via the deterioration route and the condition that “the person has not at any subsequent time ceased to have (or to be treated as having) limited capability for work” the memo seems to see the period on credits as a period when the claimant continues to have LCW. The two do not seem to be reconcilable.
The bit from the credits regs that Tom has quoted seems to presuppose that a credits only period is not a PLCW but does not itself provide that it is not a PLCW. The definition in the WRA doesn’t say much at all. Reg 2(1) of the ESA Regs defines PLCW as “a period throughout which a person has, or is treated as having, LCW” – nothing there making it contingent on receipt of ESA. However when the credits regs were amended they clearly thought that a PLCW would not continue without ESA – why did they think this? The only possibility I can see is that the terms of part 5 of the ESA regs which sets out the LCW test refers consistently to the “claimant” (defined by the WRA as an ESA claimant). However to take this as meaning that only a person on ESA can have LCW would not make sense looking at the issue of LCW more widely – the JSAct for example makes a condition of entitlement that someone does not have LCW. It would also seem to scupper the deterioration route to requalification. Anyone know the answer to this one?

Also note that the HB Regs at Reg 56(ea) are said in guidance to mean a person has LCW even when not on ESA….

See here: http://www.rightsnet.org.uk/news/story/changes-to-contributory-employment-and-support-allowance1/

I can’t see that having LCW is anything to do with having credits or not. That was the position with whether a person was IFW- Remember CIS/3781/2002. The tribunal there had refused to accept claimant was IFW as no claim to IB had been filled in…. Commissioner junked that argument.

Note also Reg 10 of SS&CS;(D&A) Regs 1999 (SI 1999 No. 991)- once they decide a person has LCW then they have LCW unless or until they decide they don’t….

Martin.

Damian - 02 May 2012 06:35 AM

“...However in relation to requalification via the deterioration route and the condition that “the person has not at any subsequent time ceased to have (or to be treated as having) limited capability for work” the memo seems to see the period on credits as a period when the claimant continues to have LCW. The two do not seem to be reconcilable….

...Reg 2(1) of the ESA Regs defines PLCW as “a period throughout which a person has, or is treated as having, LCW” – nothing there making it contingent on receipt of ESA…”

Hi Damian

It’s a good point. Section 1B applies as long as you have not ceased to have LCW.  But having LCW means you are still, by definition, within a pLCW.  That would inevitably mean that you are also in a pLCW when you receive credits only.  Martin, with respect, having LCW must be a crucial condition to having credits.  Otherwise the heading to Reg8B Credits Regs would not read Credits for Limited Capability for Work.

I think it is possible to have LCW for the purposes of section 1B WRA, the HB Regs and the Credits Regs but nevertheless not be in a pLCW.  The full definition of Reg 2(1) is:

“ period of limited capability for work” means except in paragraph (5), a period
throughout which a person has, or is treated as having, limited capability for
work, and does not include a period which is outside the prescribed time for
claiming as specified in regulation 19 of the Social Security (Claims and Payments)
Regulations 1987;”

The reference to “claiming” arguably implicitly makes a pLCW contingent upon entitlement to ESA proper.

Interesting one Tom.

I didn’t mean to suggest that there was no connection between LCW credits and LCW - sorry.

I think the correct position with credits in any event is they are only awarded when a person needs them to be awarded for the purposes of meeting an NI condition on a claim. That would mean people have LCW but no credits in reality.

That is a nice distinction between having LCW and being in a PLCW. If right it would make sense of the provisions.

Martin Williams - 02 May 2012 12:39 PM

...I think the correct position with credits in any event is they are only awarded when a person needs them to be awarded for the purposes of meeting an NI condition on a claim. That would mean people have LCW but no credits in reality…

I agree Martin. I was trying to make a similar point at the start of post 2 above. But yes, having LCW independently of credits - that makes sense too. Take care.

I’m just wondering if Regulation 13 of the Employment and Support Allowance Regulations 2008 mitigates against the need to for someone to wait 12 weeks to make a further CBESA claim?

Regulation 13 provides - 

Modification of the relevant benefit year

“13.—(1) Where paragraph (2) applies, sub-paragraph (1)(f) of paragraph 3 of Schedule 1 to the Act has effect as if “relevant benefit year” is the benefit year which includes the day which would be the beginning of the period of limited capability for work if regulation 145 did not apply.

(2) This paragraph applies where a claimant does not satisfy-

(a)the first contribution condition;

(b)the second contribution condition; or

(c)both contribution conditions,

but would satisfy those conditions if the modified definition of “relevant benefit year” provided in paragraph (1) applied.”

If this regulation straightforwardly waives the linking rules if they act to someone’s disadvantage if two periods of LCW can be linked does this mean that it is possible to be claim and be entitled to CBESA immediately after the 52 time limit?

This would not apply to many people because without a seperate PLCW to shift the relevant benefit year most people would meet the contribution conditions (since that will be how they got on CBESA in the first place) and for reg 13 to apply the person has to fail on the basis of the contribution conditions rather than time limiting.

However becuase the contribution conditions were changed in November 2010 there are some people who would not meet the first condition on a claim now even though they did in respect of the same relevant benefit year when they first claimed (3 years could be looked at rather than 2). It seems to me that reg 13 would apply to these people and they could make use of more recent contributions. Don’t know how many of these there will be in practice.

My reading of Regulation 13 is that its aimed at modifying the contribution conditions in terms of tax years where this is in the claimant’s advantage.

So in considering a new ESA claim doesn’t this mean that it should be judged on tax years different to those considered for the previous claim to see if the the two tax years by reference relating to the second condition - “include at least one year which is later than the second of the two years by reference to which (under the second condition) his previous entitlement was established”?

Ken

I made the same point in post 4 of this thread: http://www.rightsnet.org.uk/forums/viewthread/2855/

I have thought about it since and, unfortunately, I don’t think Reg 13 does apply.

I agree if it did apply then it would present a major loophole in the time limiting rules allowing many people to successfully re-claim CESA provided they re-claimed within 12 weeks of their old award being time limited.  Reg 13 would allow them to designate a new “relevant benefit year” which would in turn allow a later tax year to be chosen for the purpose of the second contribution condition as required by section 1A.

However, Reg 13 is only triggered if you do not satisfy the first or second contribution condition, or both, which are defined by Reg 2(1) ESA Regs as the conditions found in, respectively, paras 1(1) and 2(1) of Schedule 1 to the WRA 2007.

The new CESA claim would have to be made within 12 weeks of the last CESA award, ie the one ended by time limiting, in order for the new pLCW to link with the old one to form a single pLCW.  However, the claimant would still satisfy paras 1(1) and 2(1) for that single pLCW’s “relevant benefit year” preventing the triggering of Reg 13.

The reason the new claim is unsuccessful is that it doesn’t satisfy section 1(2)(a) WRA which effectively requires that you satisfy all of the following:
(i) the other provisions of Part 1 WRA including, crucially, section 1A (ie time limiting),
(ii) the basic conditions, and
(iii) the contribution conditions

The new claimant would satisfy (ii) and (iii) but not (i).  That is the reason why the new claim fails not because it fails paras 1(1) and 2(1) of Schedule 1 above.

Damian - 02 May 2012 03:16 PM

..However becuase the contribution conditions were changed in November 2010 there are some people who would not meet the first condition on a claim now even though they did in respect of the same relevant benefit year when they first claimed (3 years could be looked at rather than 2). It seems to me that reg 13 would apply to these people and they could make use of more recent contributions. Don’t know how many of these there will be in practice.

I agree Damian that it might be possible.  However, your argument relies on the test for the first contribution condition being that in force at the date of the new CESA claim, rather than that in force at the start of the linked pLCW.  In other words, it relies on the Nov 2010 changes to the first contribution condition having retrospective effect.  For example:

i   I work 20 weeks each year, earning £500 p/w.  Assuming my weekly wage never changes (eg, local govt worker under the Coalition), my annual earnings for 2006/07, 2007/08 and 2008/09 are the same: £10k (ie 20 x £500).

ii   I start working 30 weeks per year in 2009/10, but am still a victim of the “we’re all in this together” mentality, ie I still earn £500 p/w.  My annual earnings for 2009/10 are therefore: £15k (ie, 30 x £500).

iii   I leave my job in May 2010 and immediately make my first ever claim for ESA.  My relevant benefit year is: 2010. 

iv   I am awarded CESA from May 2010 because the first contribution condition applicable at the time simply requires the value of my earnings to be no less than 25 x the weekly LEL in any one of the last 3 complete tax years before 2010, ie in any one of 2006/07, 2007/08 or 2008/09.  The LEL for 2006/07 was £84 p/w.  So 25 x 84 = £2100.  As my 2006/07 earnings of 10k were greater than £2100, I use that year to satisfy the first contribution condition.  (Alternatively, I could have used 2007/08 or 2008/09 as my earnings were the same in those years). 

But 2007/08 & 2008/09 are the years which have to satisfy the 2nd contribution condition, ie 50 x the LEL, which they both do.

v   My CESA ends on 30/4/12 under the time limiting rules.  Assume I have too much capital to claim income related ESA.

vi   I re-claim CESA on 2/5/12.  As there’s less than 12 weeks between this new claim and my old award ending (there’s barely 48 hours, let alone 12 weeks), the pLCWs in respect of the new and old awards link to form a singe pLCW.  The relevant benefit year for this single pLCW is still 2010 (see (iii) above).  In order for the relevant benefit year to be 2012 I would have had to wait more than 12 weeks before re-claiming.

vii   The first contribution condition changed from 1 Nov 2010 requiring earnings to be 26 (rather than 25) x the LEL in any one of the last 2 (rather than 3) complete tax years before the relevant benefit year, and also capping those earnings at the level of the LEL. 

Does this revised first contribution condition apply to my new CESA claim given that I’m making it on 2/5/12, ie after Nov 2010, or does the original version of the first contribution condition, ie the one in (iv) above, apply given that my “relevant benefit year” governing the new claim remains 2010?  In other words are the Nov 2010 changes retrospective?

If the answer to the last question is no, my new CESA claim still satisfies the first and second contribution conditions, ie the tax year 2006/07 for the first condition and 2007/08 and 2008/09 for the second condition.  Exactly as they did in (iv) above.  As a result, Reg 13 ESA Regs is not triggered.  The new claim is, therefore, unsuccessful because I do not satisfy section 1(2) WRA, ie my single pLCW remains time limited by virtue of section 1A WRA to which section 1(2) is subject, rather than my not satisfying the contribution conditions.

But if, as Damian suggests, the answer is yes, my new claim could be successful because the two complete tax years before 2010 are 2007/08 and 2008/09.  Neither of those years satisfies the revised first contribution condition because my weekly earnings of £500 during those years are now capped at the LEL, which for 2007/08 was £87 p/w.  So, despite my actual annual earnings being 10k in 2007/08, my deemed annual earnings for that tax year are only £1740 (ie £87 x the 20 weeks I worked that year).  The revised first contribution condition requires my deemed annual earnings to be no less than £2262 (ie 26 x £87).  The same is true of 2008/09 whose LEL was £90.

Consequently, Reg 13 above is triggered and I can now use any benefit year within my single pLCW, as my “relevant benefit year”.  I choose 2011.  I rely on 2009/10 (see point (ii) above) in order to satisfy the revised first contribution condition.  The LEL in 2009/10 was £95.  My deemed annual earnings are, therefore, £2850 (ie £95 x 30 weeks actually worked), which is greater than the threshold of £2470 (ie 26 x £95). 

And 2008/09 and 2009/10 also satisfy the 2nd contribution condition.  Crucially 2009/10 is a later tax year for the purposes of section 1A(3)(b) WRA.  That’s because 2009/10 is later than the last of the two tax years I’d previously used in (iv) above to satisfy the 2nd contribution condition, ie 2008/09.

The new CESA claim is successful form 2/5/12 because it satisfies section 1(2) WRA including section 1A to which section 1(2) is subject.

As well as requiring the changes to be retrospective, neither of the two tax years prior to the single pLCW’s “relevant benefit year” have to satisfy the first contribution condition as revised, so that Reg 13 can apply.  And even then, you still need to find a new tax year in which you’ve paid sufficient contributions (2009/10 in the above example).  Lots of “ifs” there, Damian.  That’s why I feel there’ll be few beneficiaries.

I don’t think it is about whether it is ’ retrospective’ exactly. The claim is made this year and the contribution conditions are as they are now. The fact that we look back to an ealier point to find a relevant benefit year and further back for the tax years is just the way the contribution conditions are applied. I also don’t expect that there will be tons of people using reg 13, but I do like the idea of using an earlier amendment aimed at devaluing peoples NI contributions to mitigate against a more recent one.

My understanding is that Tom H’s position in post 6 is the one which CPAG favours - colleagues in the Scottish office arrived at this view independently.

Basically if cESA stops for 12 weeks that breaks the pLCW. The person may continue to have LCW though (and so could also requalify on basis of deterioration or consider challenging the decision to stop their cESA as well).

This is because the definition of pLCW in Reg 2 provides that such a period excludes a period outside time for claiming etc.

That is what we are going to put in the Bulletin - it makes sense of the regs, agrees with the DWP memo and is favourable to claimants….. like it.

I now have to go and find all the advisors I have misadvised on this point…..