I'm getting myself very confused over when earnings disregards can be applied to a person's HB calculation.
My client is a single parent and normally works over 16 hours a week. Gets Working Tax Credit (but not with 30hr element).
She has been off sick and getting both statutory and contractual sick pay, but the contractual sick pay has now stopped. Her income will now be just the SSP, CTC, WTC and CB.
Looking at the rules, she is treated as in full time work for WTC for up to 28 weeks, but treated as not in renumerative work for HB (Reg 6 (7)).
And according to sch 4, if she's not engaged in renumerative work she cannot have any earnings disregards applied (unless she's getting WTC with the 30hr element).
So it looks like she's in a position where she's getting less income than when she was working, but will also get less HB as she will get no disregards at all- so she's being penalised for being ill - but if she had been working for over 30 hours she would still be entitled to all the disregards.

Have I got this right or is there something I'm missing?

http://www.opsi.gov.uk/si/si2006/20060213.htm#35

See (i)

Thanks Bill

Having re-read sch 4 after a nights sleep, it appears that some disregards are dependant on being in remunerative work, whilst others apply as long as there are earnings. So she will get the standard £25 disregard for lone parents, but will lose the £16.85 additional disregard.

Which means that her income has dropped, but her HB will also decrease. And as her earnings were not much over SSP in the first place, she ends up worse off during any period when she is ill.