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Forum Home  →  Discussion  →  Other benefit issues  →  Thread

Carer’s Allowance calculation of earnings

Sue Sowerby
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Allerdale Citizens Advice Bureau

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Total Posts: 36

Joined: 17 September 2010

I have a client who is paid monthly but is not on salary so the amount of her earnings varies depending on how many days are in the month. She has received CA for a number of years and has always thought that she has remained below the weekly earnings threshold, based on her weekly earnings, but was not aware that monthly earnings are multiplied by 12 and divided by 52 to get this weekly earnings figure, regardless of how many weeks are in the month. She has now received a decision to advise that she is not entitled to CA for several periods between 2014 and 2020 (but hasn’t been notified of the amount of the overpayment yet).
If earnings fluctuate, there is provision for earnings to be averaged over a recognisable cycle, or over 5 weeks or whatever other period enables the average weekly earnings to be assessed more accurately. Can anyone advise what the definition of fluctuating earnings is for this purpose? Could my clients earnings be said to meet this definition as they vary each month? She had been advised by CA several years ago that her earnings could be averaged over a longer period of time, but has no evidence of this and they now deny that this phone call took place. Her earnings for most weeks in question are only over the limit by a couple of pounds but the subsequent overpayment is likely to be in the thousands. She has had an unsuccessful MR so now intends to appeal.

Peter Turville
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Welfare rights worker - Oxford Community Work Agency

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Joined: 18 June 2010

The ‘gainfully employed’ rule requires conversion of earnings into a weekly figure as CA is a ‘weekly benefit’. A person is treated as ‘gainfully employed’ if their earnings in the immediately proceeding week have exceeded £128 (current figure) [ICA Reg. 8(1)] - see CPAG p553. As note there are complex rules for converting earnings paid other than weekly into a weekly figure. These are set out in the Social Security (Computation of Earnings) Reg. 8. CPAG p555-6. Note particularly the date from when earnings are treated as paid. There are a number of Commissioners and Upper Tribunal decisions on this issue including CG/4941/2003 - see the commentary in Sweet & Maxwell Vol. 1 Non-means Tested Benefits 20-21 at p664-6 on SS(CE) Reg. 8

The Decision Makers Guide (DMG) provides guidance on this issue at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/893673/dmgch15.pdf - although the examples provided tend to illustrate ‘simple’ cases where the appropriate approach is rather obvious rather than potentially more complex cases like the one you have!

I suggest the difficulty is always for someone paid monthly (whether by salary or for actual days worked) to what number of ‘benefit weeks’ are the average earnings then attributed. In practice that is going to be a period of either 4 or 5 weeks depending on the persons payday and the calendar.

To give an example, a well known local educational establishment pays its ‘domestic’ staff monthly but based on weekly time sheets. So some months they are paid for 4 weeks work and others 5 weeks. Add in enhanced pay for anti-social and weekend working etc. = a nightmare for calculating weekly paid benefits inc. CA

I have dealt with similar overpayment cases in the past (though not recently) and found that whichever way the calculation is done if one is dealing with a long period of time it tends to even itself out in terms of the number of weeks in which the persons earnings exceeded the limit and, therefore, the sum of the overpayment. Of course that may not be the case if the persons earnings also fluctuate between each pay periods for other reasons such as overtime.

What I have found is that is it always worth checking the DWPs sums carefully for basic arithmetical errors and whether they have used the same period over which to average earnings when doing their calculation. I’ve had cases where they would average the earnings over different periods rather than use a consistent period throughout (for example, of one month or three months). There can also be issues where the information available is variable - recent years using monthly pay details but older periods reliant on P60 or similar annual amounts.

It probably means you have to do many calculations to test different potential methods to see whether it would make any / much difference to the sum of the overpayment. I have found that, at least at the appeal stage, both CA and tribunals are open to using the calculation method that results in the lowest possible overpayment figure.

I suggest a quiet corner, strong coffee and many happy hours with a calculator!