In addition to creating wildly fluctuating universal credit awards, when the mothers received two pay cheques in one assessment period, they lost the benefit of one month’s work allowance. The work allowance is the amount of earnings claimants with children or with limited capability for work can keep in full before universal credit is tapered away at a rate of 63p per pound, worth hundreds of pounds each year. This flaw in the system has denied working parents the additional financial support that they are entitled to so as to help them in work and ensure that work always pays. The severe fluctuations in their universal credit awards and therefore their total monthly income has also caused major cash flow difficulties for parents on very low incomes, leading to them falling into debt and, for some, having to choose between paying their rent or paying their childcare costs. The DWP refused to adjust the mothers’ assessment periods or to attribute monthly wages paid early to the actual assessment period in which they were earned, so as to enable them to avoid varying awards and cash losses. During the court proceedings the Secretary of State argued that despite the hardship being caused, the way in which income was being assessed was lawful, it made sense given the automated nature of Universal Credit and that this was an issue which employers should remedy rather than the DWP. All of these arguments were rejected by the Court who found that correctly interpreted, the regulations mean the DWP can and should adjust its calculation of universal credit awards when “it is clear that the actual amounts received in an assessment period do not, in fact, reflect the earned income payable in respect of that period” . In other words, wages are to be allocated to the month in which they were earned, rather than to the assessment period in which they were received. Although the DWP also sought to justify its lack of action on the basis that there would be extra costs involved in making adjustments to its systems, the court was clear that it must nevertheless comply with the regulations as correctly interpreted, stating: "If the regulations, properly interpreted, mean that the calculation must be done in a particular way, that is what the law requires. We do not belittle the administrative inconvenience, or the cost involved but the language of the regulations cannot be distorted to give effect to a design which may have proceeded on a basis which is wrong in law." “…It is extraordinary that when this issue was first raised, the Secretary of State did not act quickly to remedy the problem, instead choosing to fight these four women in court arguing that the system was fit for purpose despite the hardship being caused to working families. This is yet another demonstration of how broken Universal Credit is and why its roll out must be stopped.” “…In light of the judgment, Amber Rudd must take immediate steps to ensure that no other claimants are adversely affected and she should also ensure all those who have suffered because of this unlawful conduct are swiftly and fairly compensated.” Tessa Gregory, solicitor from Leigh Day said:
CIPP comment The CIPP provided expert testimony on this case about the payroll practices around pay dates falling on non- banking days and we welcome the outcome. Given that Amber Rudd, the Work and Pensions Secretary, has said that she will be looking into resolving many of the issues surrounding UC, we are hopeful that the DWP will amend their processes to make the system fit for purpose and workable around common payroll practices.
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Equal Pay: Asda suffers a further loss at the Court of Appeal 4 February 2019
Can female supermarket staff compare themselves for equal pay purposes with men working in a network of warehouses and distribution centres operating under a different management structure?
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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