Transitional addition after ESA contribution-based time limit (365 days) expires

Where a claimant is migrated from Incapacity benefit to ESA contribution-based, and receives the transitional addition in with their ESA (cont), do they continue to receive a TA when they move on to income-related ESA after the time-limit of 365 days is up?

Being in the same period of LCW, would seem to suggest they would.  But the DM guidance appears to make a distinction between a TA paid with contribution-based and a TA paid with income-related, which if the same logic was applied would mean they would lose the TA (cont) when moving to income-related ESA. 

Could someone please clarify what the position is, and the legal authority for it?  Many thanks in anticipation..

I think the law supports the Department’s view.

Reg 21 of the ESA (TP, HB/CTB)(Existing Awards)(No2) Regs 2010 deals with the circumstances in which a Transitional Addition (TA) can be re-instated following the termination of the award of CESA of which the TA was part.  In particular cases 1 and 1A of Reg21.  However, each of those cases requires a new claim for ESA to be made subsequent to the termination of the CESA.  Whereas, my understanding is that where CESA is terminated by being time-limited, the claimant who qualifies for ESA-ir at that point does so via supersession not via a new claim. 

Even if a claimant refused a DM’s offer to transfer him, via supersession, onto ESA-ir following the time-limiting of CESA, ie with the effect that the ESA award would end altogether, and he then made a new ESA-ir claim a few weeks later, it seems he would still not get the contributory TA back despite case 1 of Reg 21 appearing to suggest he might.  That’s because the substantive award of CESA and its TA both appear to fall within the definition of “contributory allowance” in section 1(7) WRA 2007 as modified by para 2 to Schedule 2 of the No2 Regs above. As such, both the TA and substantive CESA would both be time-limited by section 1A WRA 2007 as modified by para 2A to Sch 2 of the above No2 Regs (para 2A was inserted by SI 2012/913).  Case 1 of Reg 21 does not help time-limited CESA claimants.  Only case 1A can assist them.

Case 1A of Reg 21 above, by re-instating the contributory TA upon the claimant subsequently being put in the support group, seems to do for the TA what section 1B WRA 2007 does for the substantive award of CESA, ie, re-instate it despite the previous time-limiting, except that with case 1A the deterioration needs to take place within 12 weeks of the time-limiting.

However, the new claim under case 1A can be either a new CESA or ESA-ir claim (sub-para (c) of Case 1A just asks for a new claim for ESA).  However, because case 1A requires support group status, any TA re-awarded under case 1A will probably be accompanied by a substantive award of CESA by virtue of section 1B WRA.  To the extent that it wasn’t, ie where there’d been a break in someone’s LCW status making section 1B n/a, I think any contributory TA awarded under case 1A would count as income for ESA-ir.

Many thanks for this Tom.

I am surprised that this issue has not been more widely highlighted, as it could amount to a large drop in income for some clients (e.g. on a high rate of IB with additions), once the 365 days time-limit ends….......

I agree.

I would just like to correct one thing.  I think that in the rare event that the contribution-based TA is re-instated and paid alongside ESA-ir, rather than re-instated as part of a substantive award of CESA, it would not count as income for the ESA-ir.

Eg, Client converted from IB to CESA which includes the WRAC and a TA of £15.  CESA (incl TA) is time-limited.  At that point he has £16.2k capital so no ESA-ir.  Instead he claims and is awarded contributory JSA.  However, after 6 weeks on JSA he feels he’s not fit for work and signs off.  His capital is now less than 6k (and let’s assume no deprivation issue).  So he re-applies for ESA.  It hasn’t been 12 weeks since his original CESA was time-limited.  He is paid assessment rate ESA-ir until undergoing new WCA.  Passes WCA and is put in support group.  His ESA doesn’t become CESA under section 1B WRA because he’d ceased to have LCW whilst receiving JSA.  Instead, his award remains one of ESA-ir which includes the above TA, except that its value is now £9 (ie reduced by £6 representing the difference between amount of support component and amount of WRAC).  His applicable amount for ESA-ir is: £71 + 34.05 + 14.80 (EDP) = 119.85.  The TA is CESA and does not form part of his applicable amount because it was awarded under Reg 10 of No2 Regs not Reg 11.  The TA was re-instated in accordance with Case 1A of Reg 21 of the No2 Regs and does not count as income (see below).  So total ESA is £119.85 ESA-ir plus £9 TA paid as CESA.

In my original post, I thought the above TA would count as income because I thought the new award of ESA-ir fell outside the definition of “income-related allowance” under the modified version of section 1(7) WRA and, therefore, the TA did not get the benefit of para 6(1B) to Sch1 of the WRA as inserted by para 4A(1B) to Sch 2 of the No2 Regs.  However, it now seems that the entitlement to ESA-ir in the above scenario would be determined under the No2 Regs after all by virtue of Reg 16(1A) of those regs, ie because it started within 12 weeks of the old CESA ending.

Edit: Sadly, looks like I was right first time around.  Of course, section 6 WRA 07 decides the amount of ESA-ir and CESA where client is entitled to both allowances.  And the No2 Regs don’t change that.  It would be £110.85 ESA-ir + £9 TA (CESA); total £119.85. 

So case 1A of Reg 21 is not worthwhile financially unless the person is re-awarded substantive CESA within 12 weeks of the time-limited award ending.