Question: is it right that, (notice having been worked) for IB JSA purposes, statutory redundancy payments count as capital whilst contractual redundancy payments do not. Local BDC say both count..not what we understand to be the case. Should be glad of others' views.

JSA Regs Reg 98 states
(1) earnings include (b) any compensation payment which is defined at (3) (a ) to include any payment made at termination of employment other than…
(2) earnings do not include (f) any statutory redundancy pay

This suggests·(1) statutory redundancy is not counted as earnings (ie income), so counts as capital (2) contractual redundancy counts as income (earnings) BUT then see Sched 6 para 2 which states that there is a disregard of earnings relating to employment which ended prior to JSA claim

So it would seem that statutory redundancy counts as capital whilst contractual redundancy counts as income but is totally disregarded for ib JSA purposes.

See also Bonner’s notes at 3.371 to Vol 2 of the Security Legislation which states from Oct 2007 such earnings is disregarded . The consequence of a different definition of compensation payment for JSA is that contractual redundancy payments and other kinds of compensation …are ignored (for IS they count as capital) .

I think it works like this.

JSA Regs 98 ensures that any compensation payemnt is treated as earnings, but not a statutory redundancy payment. Reg 94 relates to the period to which any payemnts have to be taken into account as income, which can never be for more than 52 weeks.

Sch 6 then treats all such compensation payments as disregarded income, but they are still income.- for the period for which they fall to be taken into account. Because the same money cannot be both income and capital AT THE SAME TIME (caps for emphasis 'cos I can't do bold)

However, as we all know, one common source of capital is unspent income (well, assuming anyone ever has such a thing; though accumulating child benefit or DLA for a child's future education is not at all uncommon). The commentary on Reg 23 of the IS regs is worth reading for some case law on when unspent income becomes capital. It used to be said that it was "at the end of the period for which it was paid" - so after a week for weekly income, a month for monthly income and so on, but later CDS suggest that's a bit simplistic and you need to look at longer-term trends, such as does the average amount of money held in a current account go up? Is money being saved up for a specific purpose - a capital expense?
So: semble (as the old lawyers used to say in italics), the effect of reg 94 is that a compensation payment is possibly income for as long as it would fall to be taken into account as income if it were not disregarded as a result of Sch 6, and after that (ie a maximum of one year) it becomes capital.

It would all be too easy other wise.

Many thanks. One would have thought the issue would be easy to advise on but it clearly isn't! And to what period does one attribute contractual redundancy which has nothing to do with a notice period nor a FIXED term contract under Reg 94...arguably as you say, the full 52 weeks .

Then there are possible deprivation issues. But can you deprive yourself of disregarded income...assuming not, then presumably claimants are best advised to keep the contractual amount separately and to use/spend that sum for "out of the normal" expenditure/ pay off debts whilst it is disregarded income: this will reduce the figure ultimately to be taken into account as capital at the end of the income disregard period, and deprivation of capital can't apply as it wasnt capital when it was got rid of??

Does anyone have experience as to how the DWP operate in practice on this whole issue? Altogether perplexing and must be an area in which advice is commonly sought. So what advice do folk give?!