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DWP refusal to use Reg 61(3)

Charles
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I have recently had a number of cases where UC are refusing to change a decision when an employer has reported earnings late. These are cases where the claimant is worse off due to the loss of the work allowance in one AP (by having nil earnings in one month, and double earnings in the next).

Unfortunately, the cases I’ve had so far have not wanted to take it further than the MR stage. Is there any way for this to be taken up with the policy team in DWP?

The relevant case law is here:

https://assets.publishing.service.gov.uk/media/59ba6554e5274a561339d3a3/CUC_0166_2017-00.pdf

nevip
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The last I heard the DWP is not implementing this decision as it is considering appealing it but this was way before the Covid-19 outbreak which might have put the brake on things.

Charles
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I think you’re referring to the Johnson case? I think that appeal was actually heard last week. This is a different case, where DWP conceded before it got to the UT hearing.

nevip
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Thanks for the update Charles.  Has the appeal decision been handed down yet as it would affect a client of mine?

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nevip - 27 May 2020 10:43 AM

Thanks for the update Charles.  Has the appeal decision been handed down yet as it would affect a client of mine?

We’re probably still some time away from the Court of Appeal’s decision in Johnson. They can often take 2-3 months or more.

On reg 61(3), I agree there is a problem with persuading DWP that they even have this power. I think I have mentioned my case before - we could not get DWP to even deal with an MR until going through the complaints process. Once they had done so we got an MRN which said that nothing could be done even if we could establish an issue with the RTI. We appealed and got an appeal response which quoted the original version of reg 61 where the power which is now reg 61(3) did not exist (https://www.legislation.gov.uk/uksi/2013/376/regulation/61/made) and argued by reference to this that neither they nor the tribunal could do anything but follow the RTI, even if it could be shown to be wrong.

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Charles - 27 May 2020 02:23 AM

I have recently had a number of cases where UC are refusing to change a decision when an employer has reported earnings late. These are cases where the claimant is worse off due to the loss of the work allowance in one AP (by having nil earnings in one month, and double earnings in the next).

Unfortunately, the cases I’ve had so far have not wanted to take it further than the MR stage. Is there any way for this to be taken up with the policy team in DWP?

The relevant case law is here:

https://assets.publishing.service.gov.uk/media/59ba6554e5274a561339d3a3/CUC_0166_2017-00.pdf

I can feed it up Charles but DWP is so snowed under with COVID that I fear it will be put on the back burner. I’ll highlight how important it is to get it right with so many more people on UC due to COVID and not wanting to cause unnecessary hardship.

seand
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I’m just about to lodge an appeal on these grounds. I can update with the result in x months…

Tara CAC
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Charles - 27 May 2020 02:23 AM

I have recently had a number of cases where UC are refusing to change a decision when an employer has reported earnings late. These are cases where the claimant is worse off due to the loss of the work allowance in one AP (by having nil earnings in one month, and double earnings in the next).

Unfortunately, the cases I’ve had so far have not wanted to take it further than the MR stage. Is there any way for this to be taken up with the policy team in DWP?

The relevant case law is here:

https://assets.publishing.service.gov.uk/media/59ba6554e5274a561339d3a3/CUC_0166_2017-00.pdf

This has been an ongoing issue with UC and the inconsistencies with how cases are handled nationwide - with some DMs refusing to even entertain the idea and others amending awards without issue or delay!

In the case of incorrect reporting I’ve found where the employer sends an amended FPS report (see link) a RTI dispute will rectify the award (as when they look again the RTI will show it was paid in a different assessment)

https://www.gov.uk/payroll-errors/correcting-your-fps-or-eps

An amended FPS may not even be needed if the employer has reported the correct date paid (this is the crucial bit for UC purposes) but sent the earnings report late (and after the clients AP has ended)

Obviously a key issue here is whether the employer is willing/able to do this. It’s unfair to clients to be held to the mercy of employers and UC to get their correct award - especially where they can evidence the info they are using is incorrect

There’s also no enforcement or repercussion from HMRC for employers who don’t report correctly (whether reporting early without the correct date paid or simply reporting late) - their website says something along the lines of potential fines from persistently reporting late (3days late) without good reason!

As is the case of late reporting (opposed to reporting date paid as the earlier date rather than their usual payday where this falls on a non-working day) the client has the first AP with 0 earnings so they can effectively self-report then and raise a RTI dispute the following month which will tally with the late HMRC report and can then be disregarded from AP2 as already used from the self-report in AP1.

(5) When the Secretary of State makes a decision in accordance with paragraph (4) the Secretary of State may—

(a)treat a payment of employed earnings received by the person in one assessment period as received in a later assessment period (for example where the Secretary of State has received the information in that later period or would, if paragraph (2) applied, have expected to receive information about that payment from HMRC in that later period); or
(b)where a payment of employed earnings has been taken into account in that decision, disregard information about the same payment which is received from HMRC.

[ Edited: 27 May 2020 at 04:41 pm by Tara CAC ]
Tara CAC
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Elliot Kent - 27 May 2020 10:49 AM
nevip - 27 May 2020 10:43 AM

Thanks for the update Charles.  Has the appeal decision been handed down yet as it would affect a client of mine?

We’re probably still some time away from the Court of Appeal’s decision in Johnson. They can often take 2-3 months or more.

On reg 61(3), I agree there is a problem with persuading DWP that they even have this power. I think I have mentioned my case before - we could not get DWP to even deal with an MR until going through the complaints process. Once they had done so we got an MRN which said that nothing could be done even if we could establish an issue with the RTI. We appealed and got an appeal response which quoted the original version of reg 61 where the power which is now reg 61(3) did not exist (https://www.legislation.gov.uk/uksi/2013/376/regulation/61/made) and argued by reference to this that neither they nor the tribunal could do anything but follow the RTI, even if it could be shown to be wrong.

did you appeal the decision?

Elliot Kent
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There was an appeal but the client withdrew it and there was never really a proper outcome in that case.

Tara CAC
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Understandable when they feel like they’re hitting their head against a brick wall but disappointing there wasn’t a resolution!

Scutter
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I had success at the FtT in the last fortnight on a similar set of facts to Johnson, with the Judge seemingly completely unswayed by my point that it may be simpler to keep it held until the CoA delivered judgment. The Decision Notice specifies the new dates for the purposes of calculating an Assessment Period, and the amounts of earnings to be considered as falling within those Assessment Periods.

I would suspect this won’t be the end of it for my client, and am waiting keenly for the outcome in Johnson…

Tara CAC
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Scutter - 27 May 2020 04:14 PM

I had success at the FtT in the last fortnight on a similar set of facts to Johnson, with the Judge seemingly completely unswayed by my point that it may be simpler to keep it held until the CoA delivered judgment. The Decision Notice specifies the new dates for the purposes of calculating an Assessment Period, and the amounts of earnings to be considered as falling within those Assessment Periods.

I would suspect this won’t be the end of it for my client, and am waiting keenly for the outcome in Johnson…

excellent news! what was your clients circumstances? was it last day of the month type pay clashing with their assessment?

How did the judge attribute the pay to an assessment? did they just move them forward/back so that one fell in each from the start of the claim?

[ Edited: 27 May 2020 at 04:42 pm by Tara CAC ]
Scutter
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Tara CAC - 27 May 2020 04:36 PM

excellent news! what was your clients circumstances? was it last day of the month type pay clashing with their assessment?

How did the judge attribute the pay to an assessment? did they just move them forward/back so that one fell in each from the start of the claim?

AP running from 29th of each month, and salary payments *generally* on the 28th of each month. Inevitable chaos, notwithstanding the problem of leap years!

That’s not quite what they did - they only made a finding on the single occasion under appeal, rather than the whole claim. For the APs in question they rearranged the date that you could properly interpret the RTI as showing payment as being for. This means that problems will continue to arise, and need to be challenged, for the claimant.

I also went on a frolic of my own under 61(3)(b)(ii) about whether you could realistically say someone’s general earnings could ever be properly interpreted as being twice for one period of work, and none for another period, but to no comment in the decision. I’d perhaps revisit that depending on the outcome in Johnson.

Tara CAC
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Scutter - 27 May 2020 04:58 PM
Tara CAC - 27 May 2020 04:36 PM

excellent news! what was your clients circumstances? was it last day of the month type pay clashing with their assessment?

How did the judge attribute the pay to an assessment? did they just move them forward/back so that one fell in each from the start of the claim?

AP running from 29th of each month, and salary payments *generally* on the 28th of each month. Inevitable chaos, notwithstanding the problem of leap years!

That’s not quite what they did - they only made a finding on the single occasion under appeal, rather than the whole claim. For the APs in question they rearranged the date that you could properly interpret the RTI as showing payment as being for. This means that problems will continue to arise, and need to be challenged, for the claimant.

I also went on a frolic of my own under 61(3)(b)(ii) about whether you could realistically say someone’s general earnings could ever be properly interpreted as being twice for one period of work, and none for another period, but to no comment in the decision. I’d perhaps revisit that depending on the outcome in Johnson.

Interesting!
Do you have the tribunals reasoning for the decision? Did they use 61(3) too?
What is the clients contractual pay date?

Charles
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Daphne - 27 May 2020 11:19 AM
Charles - 27 May 2020 02:23 AM

I have recently had a number of cases where UC are refusing to change a decision when an employer has reported earnings late. These are cases where the claimant is worse off due to the loss of the work allowance in one AP (by having nil earnings in one month, and double earnings in the next).

Unfortunately, the cases I’ve had so far have not wanted to take it further than the MR stage. Is there any way for this to be taken up with the policy team in DWP?

The relevant case law is here:

https://assets.publishing.service.gov.uk/media/59ba6554e5274a561339d3a3/CUC_0166_2017-00.pdf

I can feed it up Charles but DWP is so snowed under with COVID that I fear it will be put on the back burner. I’ll highlight how important it is to get it right with so many more people on UC due to COVID and not wanting to cause unnecessary hardship.

Thank you!

Daphne
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Daphne - 27 May 2020 11:19 AM
Charles - 27 May 2020 02:23 AM

I have recently had a number of cases where UC are refusing to change a decision when an employer has reported earnings late. These are cases where the claimant is worse off due to the loss of the work allowance in one AP (by having nil earnings in one month, and double earnings in the next).

Unfortunately, the cases I’ve had so far have not wanted to take it further than the MR stage. Is there any way for this to be taken up with the policy team in DWP?

The relevant case law is here:

https://assets.publishing.service.gov.uk/media/59ba6554e5274a561339d3a3/CUC_0166_2017-00.pdf

I can feed it up Charles but DWP is so snowed under with COVID that I fear it will be put on the back burner. I’ll highlight how important it is to get it right with so many more people on UC due to COVID and not wanting to cause unnecessary hardship.

I have had a reply (don’t get excited…)

The Department has been working closely with HMRC since Universal Credit went live in 2013 to support and inform employers who report earnings to emphasise the importance of timely reporting via the Real Time Information (RTI) system.

·    HMRC have guidance to reiterate to employers the importance of reporting accurate dates and the impact on payment cycles; the Financial Secretary to the Treasury is also working closely with HMRC and employers to encourage accurate reporting dates.

I’ve emailed them back pointing out this doesn’t address the issue of staff not applying reg 61…

Mairi
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I had a Tribunal in March which hung on whether the DWP used the date the earnings were received or the date they were reported.  This was a case where payment was made in the middle of the month but reported at the end of the month.

Despite making the argument that the DWP had used both the paid date and the reported date as it suited them within a 6 month period we lost the appeal.  Requested permission to go to UT due to the inconsistency.

Charles
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Daphne - 16 June 2020 02:54 PM
Daphne - 27 May 2020 11:19 AM
Charles - 27 May 2020 02:23 AM

I have recently had a number of cases where UC are refusing to change a decision when an employer has reported earnings late. These are cases where the claimant is worse off due to the loss of the work allowance in one AP (by having nil earnings in one month, and double earnings in the next).

Unfortunately, the cases I’ve had so far have not wanted to take it further than the MR stage. Is there any way for this to be taken up with the policy team in DWP?

The relevant case law is here:

https://assets.publishing.service.gov.uk/media/59ba6554e5274a561339d3a3/CUC_0166_2017-00.pdf

I can feed it up Charles but DWP is so snowed under with COVID that I fear it will be put on the back burner. I’ll highlight how important it is to get it right with so many more people on UC due to COVID and not wanting to cause unnecessary hardship.

I have had a reply (don’t get excited…)

The Department has been working closely with HMRC since Universal Credit went live in 2013 to support and inform employers who report earnings to emphasise the importance of timely reporting via the Real Time Information (RTI) system.

·    HMRC have guidance to reiterate to employers the importance of reporting accurate dates and the impact on payment cycles; the Financial Secretary to the Treasury is also working closely with HMRC and employers to encourage accurate reporting dates.

I’ve emailed them back pointing out this doesn’t address the issue of staff not applying reg 61…

Just noticed this. Thanks Daphne.

Daphne
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DWP lost Johnson case at Court of Appeal - https://www.leighday.co.uk/News/Press-releases-2020/June-2020/Four-single-mums-win-Court-of-Appeal-universal-cre

Three judges at the Court of Appeal have unanimously dismissed the Government’s appeal and ruled that the Secretary of State for Work and Pensions (SSWP) has acted irrationally and unlawfully by making universal credit regulations which fail to take into account that the date monthly salaries are paid can vary because of weekends and bank holidays.

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Not had time to read this fully yet - but the SSWP appears to have won on the construction point - i.e. the RTI system works as everybody thought it did before the High Court invented the alternative reading. The claimants have won on the alternative argument that the provisions, operating as intended, are irrational.

That is significant in terms of what happens next.

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If it’s irrational to take 2 months earnings into account, because of an assessment period’s date, is it not also irrational to take 2 4-weeks earnings into account because of an assessment period’s date?  ,,, or 3 2-weeks’ earnings ... or 5 1-week’s earnings?

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Gareth Morgan - 22 June 2020 01:43 PM

If it’s irrational to take 2 months earnings into account, because of an assessment period’s date, is it not also irrational to take 2 4-weeks earnings into account because of an assessment period’s date?  ,,, or 3 2-weeks’ earnings ... or 5 1-week’s earnings?

This actually gets a mention in paras 80-81 of the judgement.
There is a difference in that generally those cases will not lead to a loss of UC overall, so will only have the fluctuating income issue.

By the way, does anyone know more details about the “workaround” mentioned in para 66?

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Charles - 22 June 2020 02:40 PM

By the way, does anyone know more details about the “workaround” mentioned in para 66?

I’ve been trying to find out.  It’s why I didn’t apply the cap in my example of LWD pay in my video.

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Charles - 22 June 2020 02:40 PM
Gareth Morgan - 22 June 2020 01:43 PM

If it’s irrational to take 2 months earnings into account, because of an assessment period’s date, is it not also irrational to take 2 4-weeks earnings into account because of an assessment period’s date?  ,,, or 3 2-weeks’ earnings ... or 5 1-week’s earnings?

This actually gets a mention in paras 80-81 of the judgement.

Para. 80. ““There is no predictable way of identifying when a person is in receipt of monthly, weekly, biweekly or four weekly payments…”

They could look at field 42 of the RTI data. Pay frequency. This is

• W1 (Weekly)
• W2 (Fortnightly)
• W4 (4 Weekly)
• M1 (Calendar Monthly)
• M3 (Quarterly)
• M6 (Bi-annually)
• MA (Annually)

BC Welfare Rights
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Daphne - 22 June 2020 11:52 AM

DWP lost Johnson case at Court of Appeal - https://www.leighday.co.uk/News/Press-releases-2020/June-2020/Four-single-mums-win-Court-of-Appeal-universal-cre

Three judges at the Court of Appeal have unanimously dismissed the Government’s appeal and ruled that the Secretary of State for Work and Pensions (SSWP) has acted irrationally and unlawfully by making universal credit regulations which fail to take into account that the date monthly salaries are paid can vary because of weekends and bank holidays.

The Guardian is reporting that the DWP is not going to appeal this decision https://www.theguardian.com/society/2020/jun/25/dwp-abandons-legal-battle-to-avoid-fixing-universal-credit-design-flaw

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They will be pretty happy with the outcome I imagine. The High Court’s interpretation of the regs with its far-reaching consequences overturned and all they have to do is sit down and come up with a way to deal with the specific issue in this case. No human rights point or damages claim and no new “trawl”.

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There are some very easy ways to get round this specific issue (e.g. move all AP dates from end of month to 25th) but that doesn’t fix similar issues, like 2 4-weekly or 3 2-weekly APs plus the ancillary features like surplusearnings.  Now is the time to pushharder for a complete rethink on the way APs are assessed.

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Gareth Morgan - 25 June 2020 05:36 PM

There are some very easy ways to get round this specific issue (e.g. move all AP dates from end of month to 25th) but that doesn’t fix similar issues, like 2 4-weekly or 3 2-weekly APs plus the ancillary features like surplusearnings.  Now is the time to pushharder for a complete rethink on the way APs are assessed.

Moving to the 25th doesn’t quite cover it for people who are paid on the last Friday of the month - that could be as early as the 22nd.

I have a client who works for Whitbread and they pay on the last Friday. She has missed out on five work allowances in her first year of UC.

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I don’t think there is any date that is guaranteed never to be affected by end of month banking day variations and major public holidays.  Christmas bank holidays have a narrow range of dates but Easter can be as late as 25 April and as early as 22 March - so for example if you went back to 20 April to avoid Christmas and final Friday complications, you will hit Easter occasionally - but perhaps rarely enough to make this an attractive idea.

So Gareth are you thinking that everyone has an initial AP of varying length to bring them into line with the fixed date from AP2?

The weekly paid issue is less important because at least those people don’t lose out in cash terms, for them it is more of a budgeting inconvenience