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Two payments of earnings in one assessment period?
Today’s WRAC meeting wants to check the treatment of someone on a 4 week payment cycle who has two payments of earnings in one period and none in the next.
Not encountered this myself but a colleague from an area further down the UC rollout told me that the regs are being applied strictly and that the money paid to you in the month is the only thing that matters - even if that creates those sorts of arbitrary glitches.
Edit: that said, if your client is paid four-weekly, they will never go a full month without a paycheck - they will just double up once each year.
ADM E2161
for weekly paid earned income some assessment periods will contain 4 payments and others 5 payments. Similarly if a person is paid earned income 4 weekly an assessment period may contain two 4 weekly payments.
Example
Bella is aged 26, single and lives with her parents, she works as a shop assistant for eight hours per week receiving earnings of £50 per week every Thursday. Bella has a UC award with an assessment period that runs from the 1st of each month. For the assessment period that covers 1st Oct 2014 to 31st Oct 2014 Bella will receive 5 weekly payments of earned income. For October Bella has a UC award of £221.20 calculated by deducting £90.35 earnings from her £311.55 maximum amount (full calculation is 311.55 standard allowance – 65% x (50 + 50 + 50 + 50 + 50 earned incomes – 111 higher work allowance)
In CUC/2888/2015 Judge Jacobs reminds us of the overriding relevance and simplicity of UC Reg 54…
“54 Calculation of earned income – general principles
(1) The calculation of a person’s earned income in respect of an assessment period is, unless otherwise provided in this Chapter, to be based on the actual amounts received in that period. “
That case concerned the treatment of pay earned in an earlier period prior to termination of employment, but paid during the first AP of a UC claim. From para 11…
“...Despite the claimant’s attempts to argue otherwise, it clearly was. It was money received in that period, even if it was earned earlier. As such, it was part of the claimant’s earned income (regulation 54(1)). It does not matter that the employment from which it was derived had ceased to exist by the time of payment.”
I realise that this case differs from the scenario of this thread, in that the issue is about 4 weekly pay cycles etc.
However, the commonality is that Reg 54 takes no prisoners. The timing of claims (as well as changes of circumstances in relation to the AP date) is a big deal in UC.
I am drafting a simple leaflet on the importance of the AP date for claimants. I really do need to get out more.
Steve
Today’s WRAC meeting wants to check the treatment of someone on a 4 week payment cycle who has two payments of earnings in one period and none in the next.
I was wondering whether zero-earnings APs could happen during regular employment ( Either for 4-weekly-paid employees because of bank holidays ) or for monthly- paid (due to bank holidays and/or week-ends.)
I don’t think that should happen. Although there may be APs where there’s no actual payment made by the employer (because the payday falls on a non-banking day) the employer should still file the regular pay day (which could be a non-banking day) in their RTI submission and it’s the RTI that drives the UC earnings in the AP.
Have a case where we have an APA in place, first full month Housing Element paid, then a very small amount paid on the following month. We are aware that the customer may have earnings but not that high that it would reduce it so dramatically, the discussion above seems to show why this would happen. Makes APA arrangement difficult to manage. Certainly we are concerned that customer has income paid weekly with no idea of how this will impact on the UC paid at the end and of course unless they seek advice on how much they need to allow for reduced help with rent, the chances of being able to make up any shortfall on the APA paid to Landlord is unlikely.
I have been reading the posts on this with interest, it is Something we are aware of here. As I was reading it however a question popped into my head, [and I confess I haven’t even attempted to do a case study]
At the moment for all its complexities a person paid four weekly, overall gets, assuming their income remains constant, the same amount of UC as a person paid monthly. But with the introduction of the surplus earnings rules, might someone paid four weekly, artificially generate surplus earnings in that particular month?
... with the introduction of the surplus earnings rules, might someone paid four weekly, artificially generate surplus earnings in that particular month?
I think that’s possible that surplus earnings could make things more complicated for 4-weekly paid workers. ( I’ve only just started looking at the surplus earnings rules so I could have got this wrong.)
Single claimant age 25+
Rent £300pm
Earns £800 (net) every 4 weeks.
1-payday-per-AP gives: UC = £317.82+£300-(65% x £800) = £97.82
In a 2-payday AP the net earnings are £1600 so the award is nil
The nil UC threshold is (M-U)*(100/65) + WA where M (max UC) = £617.82, U (unearned income) = £0, WA (work allowance) = £0
So the nil-UC threshold is £950.49 and the relevant threshold is £950.49+£300 = £1250.49
That means “the original surplus” is £1600-£1250.49 = £349.51 in the 2-payment AP.
In the AP following the 2-payday AP their earnings are £800(actual) +£349.51 (surplus) = £1149.51 so the award is nil (again).
Earnings + surplus= £1149.51 in this AP = that is less relevant threshold (£1250.49) so there are no further surplus earnings to be taken into account.
So that’s nil UC for 2 APs.
that is a very good point lost in Granite and Jon - I hadn’t considered that - your workings look perfect to me jon
I thought UC was supposed to be simpler.. don’t fancy explaining that to an irate client!
Yes I’m sure you are right someone paid 4 weekly could easily be hit by 2 months with no UC.
In the research carried out by 16 bureaux for the report ‘Waiting for Credit’ we came across several clients who were paid 4 weekly and were very thrown by suddenly being faced by a month when they were entitled to no money. Having no money for 2 months and a very reduced income the third month. Noone from JCPlus had warned them about the impact. People in this situation don’t actually lose financially when total income over the year and total receipt of UC is looked at - in fact some will gain (compared to averaging income) but for someone who has been getting the same payment each month from UC and thinks it will carry on like that the result is devastating.
Even more worrying is the impact on people who get normally get their wages monthly but their employer makes one payment slightly early or late (think Christmas!) so they get 2 wages in one UC period and none the next - not only do they have the same sudden unexpected loss of UC – they can also actually lose a significant amount of money if they are entitled to a work allowance. Their earnings are pushed into 11 UC periods instead of 12 so they lose the use of one of their work allowances – if they have the higher work allowance that could be a loss of about £258 as a result of their employer paying them early.
People in this situation don’t actually lose financially when total income over the year and total receipt of UC is looked at - in fact some will gain (compared to averaging income) but for someone who has been getting the same payment each month from UC and thinks it will carry on like that the result is devastating.
Yes - it’s the complexity/unpredictability and budgeting round large gaps in payment that’s going to lead to problems with this. I think you’re correct that 4-weekly paid workers could actually still get more UC over the whole year. Following the example upthread, in a typical year they’d get 10 x £97.82 = £978.2 UC. A monthly-paid earner on the same annual earnings ( £866.67pm ) would get £317.82+£300-(65% x £866.67) = £54.49 x 12 = £653.88 UC over the same period.
Even more worrying is the impact on people who get normally get their wages monthly but their employer makes one payment slightly early or late (think Christmas!) so they get 2 wages in one UC period and none the next - not only do they have the same sudden unexpected loss of UC – they can also actually lose a significant amount of money if they are entitled to a work allowance. Their earnings are pushed into 11 UC periods instead of 12 so they lose the use of one of their work allowances – if they have the higher work allowance that could be a loss of about £258 as a result of their employer paying them early.
Employers can report the regular payday (if that falls on a weekend/bank holiday) rather than the actual payday; that should hopefully avoid Christmas,etc problems - at least for monthly-paid workers who have a regular payday.
See: Employer Further Guide to PAYE and NICs
The Guidance on RTI payment date field (which presumably feeds directly into UC) explicitly says payroll staff should “Enter the payment date for your employee. If the payment date falls on a ‘non-banking day’ show the payment as having been made on the regular payday”
Unfortunately http://www.hmrc.gov.uk/paye/payroll/paydays/non-banking-day.htm which might have had a bit more info has been vanished as part of the descent into uselessness that is .gov.uk
Those who get paid weekly will have an extra week 5 times through the year. For those who are paid monthly/4 weekly we take this extra week to budget for into consideration but will prove difficult for those to budget for the impact on UC when 5 pays are in assessment. Particularly when they may depend on it for help with rent.
Thanks - employers being able to report the regular payday rather than the actual payday will help but what we found is that some employers were not reporting the date they should have been paid. One bureau saw someone who had actually been paid in the earlier period but the employer had reported that he had been paid a few days later in the following period. When the client had told UC this he was told that it was up to him to challenge his employer but he didn’t want to do this.
Self employed people with an irregular income stream are going to need a great deal of support if they are not to lose out massively compared to people with a regular monthly payment
Just bringing this issue back to see if anyone has had any success in getting DWP to accept that they should take the “intended” pay date rather than the date paid early because it fell on a non banking day?
We advised someone who had 2 payments falling in one MAP 4 times a year (and lost out about £1000 overall) to use this argument:
“Regulation 54 of the Universal Credit Regulations 2013 states:
“(1) The calculation of a person’s earned income in respect of an assessment period is, unless otherwise provided in this Chapter, to be based on the actual amounts received in that period”.
and
Regulation 61 of the Universal Credit Regulations 2013 allows the DWP to treat earnings reported or paid in one MAP as paid in another.
“(3) The Secretary of State may determine that paragraph (2) does not apply—
(a)in respect of a particular employment, where the Secretary of State considers that the information from the employer is unlikely to be sufficiently accurate or timely;
(b)in respect of a particular assessment period where—
….
(ii)the Secretary of State considers that the information received from HMRC is incorrect, or fails to reflect the definition of employed earnings in regulation 55, in some material respect.”
In SSWP v RW (rule 17) (UC) [2017] UKUT 347 (AAC) CUC/166/2017 the Secretary of State withdrew his appeal and accepted the First Tier Tribunal’s decision that Regulation 61 because the information received in respect of the assessment period did not ‘reflect reality’.
I would therefore be grateful if you could use the date this payment was intended to be paid, and would have been paid, where it not for the non banking days.
I would be grateful if you could apply this rule to all the previous monthly assessment periods in which this has occurred and in all future monthly assessment periods, and adjust my UC award paying me the underpayment accordingly.”
- but we haven’t yet heard. And we keep hearing the same issue time and again.
Anyone had any success and if so how did you do it?!!