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Forum Home  →  Discussion  →  Universal credit administration  →  Thread

UC pay periods and their effect

Gareth Morgan
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There’s a lot of public Universal Credit talk at the moment but the official line is still that it’s a simple and effective benefit that’s meant to mirror the way in which people in work get paid, and have to budget, every month.

It doesn’t.

I’ve just put up a blog post looking at how different pay periods affect UC payments, month by month. 
Unless you’re paid on a calendar month basis, you will find the benefit varying during the year as the pay cycle is out of step with the UC monthly dates.  The article shows how difficult, if not impossible, it can be to budget for the wild swings in income that can follow the results.

For a lot of these cases where UC stops in one month, because the rules take more earnings than usual into account, they’ll then have to reclaim in the following month and may fall into the bizarre new surplus earnings rules as well. http://blog.cix.co.uk/gmorgan/

Ianb
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Macmillan benefits team, Citizens Advice Bristol

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I do think it’s explained quite well in the government site you have referred to https://www.gov.uk/government/publications/universal-credit-different-earning-patterns-and-your-payments/universal-credit-different-earning-patterns-and-your-payments-payment-cycles

Even highlights that if earnings pattern results in a nil award for an assessment period claimant has to do a reclaim via journal to get a payment the following month. This despite DWP having access to RTI! Anyone in their right mind would think this is ridiculous and it’s a good example of one of the UC problems which could be fixed quite easily if there was a will to do so. Wouldn’t, of course, help with the impact of the monthly assessment period but would remove the risk of claimants losing out on benefit because they have failed to reapply.

You have certainly highlighted a lot of the nonsense.

[ Edited: 13 Oct 2018 at 09:26 am by Ianb ]
Daphne
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Report from the Resolution Foundation that looks at how earnings volatility interacts with universal credit.

One of the recommendations is that claimants should be able to have flexibility to move their assessment period ‘to reflect the dates on which they’re paid’. But I’m not sure claimants will know how to choose the best date - avoiding an assessment date near payment date would seem to be a good idea for those that are monthly paid but that seems to be the opposite of what the article is recommending…

Gareth Morgan
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There’s a degre of misunderstanding in the RF report and I can’t see how moving assessment dates would help many people.  They also believe that paydays moved because of weekends and holidays cause some of the problems when it’s employers putting the wrong paydays in their HMRC returns that cause the difficulties.  They should use the normal date rather than the actual date paid but many don’t.

Peter Turville
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Arguably there are three solutions to this issue (crudely):

Introduce rules that allow variable earnings / non-monthly pay periods to be averaged over a longer period.

Make the assessment period weekly (or annual).

Change employment law to make all wages payable monthly (and on a specified day of the month).

That’s excluding the more likely option of doing nothing until the reality finally forces yet another UC policy U-turn further down the line.

Ros
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In case you haven’t seen, this CPAG/Leigh Day JR on issue being heard on 28 and 29 November -

http://www.cpag.org.uk/content/universal-credit-assessment-period-inflexibility

Jeremy Barker
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Ianb - 12 October 2018 11:21 PM

I do think it’s explained quite well in the government site you have referred to https://www.gov.uk/government/publications/universal-credit-different-earning-patterns-and-your-payments/universal-credit-different-earning-patterns-and-your-payments-payment-cycles

Even highlights that if earnings pattern results in a nil award for an assessment period claimant has to do a reclaim via journal to get a payment the following month. This despite DWP having access to RTI! Anyone in their right mind would think this is ridiculous and it’s a good example of one of the UC problems which could be fixed quite easily if there was a will to do so. Wouldn’t, of course, help with the impact of the monthly assessment period but would remove the risk of claimants losing out on benefit because they have failed to reapply.

You have certainly highlighted a lot of the nonsense.

What is particularly baffling about this need to reclaim is that with UC “live” service automatic resumption of UC payment is exactly what happened. I find it impossible to see any sense in why this process was not rolled forward to the UC “full” service.

Ros
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Justin Tomlinson was just asked about this by Work and Pensions Committee and said that the DWP was aware of issue and questioner was ‘knocking at an open door’....

Daphne
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Challenge by CPAG and Leigh Day begins in High Court today about irrationality of UC in respect of pay periods - https://www.leighday.co.uk/News/News-2018/November-2018/?Legal-challenge-against-irrational-Universal-Cred

[ Edited: 27 Nov 2018 at 09:25 am by Daphne ]
Daphne
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House of Commons Library briefing looking -

the problems working Universal Credit claimants can experience because of the assessment period rules, and at the implications of a recent High Court judgment.

Also highlights that the DWP had 21 days from 26 February to apply for permission to appeal from the Court of Appeal (High Court rejected its application) so not long left if it plans to do so…

Stuart
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Daphne - 14 March 2019 12:49 PM

House of Commons Library briefing looking -

the problems working Universal Credit claimants can experience because of the assessment period rules, and at the implications of a recent High Court judgment.

Also highlights that the DWP had 21 days from 26 February to apply for permission to appeal from the Court of Appeal (High Court rejected its application) so not long left if it plans to do so…

Updated House of Commons Library briefing now confirms -

The Department has now applied directly to the Court of Appeal for permission to appeal…. and so this is subject to ongoing legal proceedings. In the meantime, the High Court’s judgment should be applied in cases where two monthly wages have been treated as earnings in a single assessment period.

CPAG has received reports that DWP is not applying the judgment in Johnson in some cases and has a template MR letter and pre-action judicial review letter to download.

[ Edited: 14 Jun 2019 at 04:34 pm by Stuart ]
Charles
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In a written answer yesterday, DWP said the judgement only affects “a small number of people ... with specific characteristics”. I assume they mean it only affects those whose monthly payday is close to the beginning/end of their AP and then only for months in which they are paid early/late. But I don’t understand - why does it not affect anyone paid weekly or 4-weekly too?

(I’m not going to talk about the assertion they make in the answer that their system is “fair”!)

https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2019-06-18/266261/

Peter Turville
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By coincidence our client has received the following response to an MR on journal today:

“Hello X Universal Credit is calculated on an Assessment Period (AP) and any income received in that AP is used to calculate the payment for that AP. Even if the income relates to another period, it is when the income is received that it is used to calculate payment. As you have requested and Mandatory Reconsideration of this, I have referred this to a Decision Maker for them to look at and make a decision. As soon as a decision has been made, you will be notified. Regards Maria”

A CPAG pre-action letter has also been served on DWP in our clients case.

Waiting with bated breath ........

HB Anorak
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Charles - 25 June 2019 12:05 PM

But I don’t understand - why does it not affect anyone paid weekly or 4-weekly too?

It affects those people in the sense that their UC fluctuates even though their income doesn’t,  which makes budgeting fiddly and maybe catches you unawares sometimes, but the only people who lose out in cash terms across the whole two months are those who:
- have anomalously high earnings in one of the months, and
- have a work allowance, and
- retain UC entitlement in that month, or only narrowly miss out, and
- have no or anomalously low earnings in the other month.

The combined effect of all those factors is that two months’  earnings are fully tapered with only one month’s work allowance.

Weekly and four weekly paid workers should always have a normal month’s earnings to use up the work allowance the month after a 5 or 8 week month.  People who lose UC altogether can be better off because some of their earnings will escape tapering.

Charles
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HB Anorak - 25 June 2019 05:21 PM

Weekly and four weekly paid workers should always have a normal month’s earnings to use up the work allowance the month after a 5 or 8 week month.  People who lose UC altogether can be better off because some of their earnings will escape tapering.

Good point. Although I have had a couple of cases where average monthly earnings were above the administrative earnings threshold, but most months their earnings were below it due to them being paid weekly. This led to them being subject to greater conditionality.

Stuart
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Stuart - 14 June 2019 04:24 PM

CPAG has received reports that DWP is not applying the judgment in Johnson in some cases and has a template MR letter and pre-action judicial review letter to download.

Updated House of Commons library briefing says DWP is not implementing High Court ruling while proceedings are ongoing (it’s applied directly for permission to appeal to the Court of Appeal) -

‘... the Department has informed the Commons Library that it is relying on section 25 of the Social Security Act 1998 which allows the Secretary of State to continue to apply the law as it stood before the High Court gave its ruling on 11 January, until the case is finally concluded. The Department therefore will not apply the judgment in any Mandatory Reconsiderations concerning the allocation of earnings for claimants coming within the scope of the judgment, although it also states that the details of such claims will be noted so that, if necessary, adjustments may be made once the case is finally concluded.’