on 27–28 November 2018, with Helen Hargreaves MSc ChFCIPPdip, CIPP associate director of policy, providing, via written witness statements, expert testimony about the payroll practices around pay dates falling on non-banking days. The High Court’s judgment was handed down on 11 January 2019. The claimants Materially similar circumstances apply to the four claimants: Ms Johnson, Ms Woods, Ms Barrett and Ms Stewart. Ms Johnson is employed by a large local authority and contractually paid on the last banking day of each month. She was paid salary on Thursday 30 November 2017 and on Friday 29 December 2017. As two months’ salary had been received in the assessment period 30 November to 29 December the UC for this period had been calculated as if she had received two months’ salary in that period. In the next assessment period, running from 31 December to 30 January, Ms Johnson was treated as having no earnings, which meant she lost the right to retain £192 of
her earnings when the UC amount was calculated. The DWP declined her request to reconsider the calculations. Ms Woods, who works for a county council, is paid monthly on the last working day of each month. In 2017, Ms Woods was paid her November salary on 30 November 2017 and her December salary on 29 December 2017, both of which fell in her UC assessment period to 29 December. ...severe cash flow problems for them living as they do on low incomes with little or no savings Ms Barrett, a health care assistant, has an assessment period that runs from 28th of one month to 27th of the next. There have been occasions when two months’ salary have been paid to her during one assessment period.
Ms Stewart, who works as a service adviser, has an assessment period that runs from 28th of one month to 27th of the next. She was paid salary on 28 September and then on Friday 27 October 2017 as the 28th was a Saturday. All four claimants periodically suffer real financial loss by reason of the way in which UC is being calculated. There are times when they are not able to retain part of a month’s salary (the work allowance of £192) before any reductions in UC to reflect earned income. The claimants also referred to another difficulty that arises out of the method of calculation: the way in which UC is calculated in their cases leads to fluctuations in the amounts they receive which creates severe cash flow problems for them living as they do on low incomes with little or no savings. Arguments The essential factual difficulty that arises is that because the claimants are paid their salaries monthly on or around either the last banking day or the last working day of the month there will be occasions when salaries for two different months
Extracts of the 2013 Regulations Regulation 54 of the 2013 Regulations, which is headed ‘Calculation of earned income – general principles’ provides that: (1) The calculation of a person’s earned income in respect of an assessment period is, unless otherwise provided in this Chapter, to be based on the actual amounts received in that period. (2) Where the Secretary of State (SoS): (a) makes a determination as to whether the financial conditions in section 5 of the Act are met before the expiry of the first assessment period in relation to a claim for universal credit; or (b) makes a determination as to the amount of a person’s earned income in relation to an assessment period where a person has failed to report information in relation to that earned income – that determination may be based on an estimate of the amounts received or expected to be received in that assessment period. Regulation 61, which is headed ‘Information for calculating earned income – real time information etc’ provides that: (2) Where a person is, or has been, engaged in an employment in respect of which their employer is a RTI employer: (a) the amount of the person’s employed earnings from that employment for each assessment period is to be based on the information which is reported to HM Revenue & Customs (HMRC) under the PAYE Regulations and is received by the SoS from HMRC in that assessment period; and (b) for an assessment period in which no information is received from HMRC, the amount of employed earnings in relation to that employment is to be taken to be nil. (3) The SoS may determine that paragraph (2) does not apply: (a) in respect of a particular employment, where the SoS considers that the information from the employer is unlikely to be sufficiently accurate or timely; or (b) in respect of a particular assessment period where: (i) no information is received from HMRC and the SoS considers that this is likely to be because of a failure to report information (which includes the failure of a computer system operated by HMRC, the employer or any other person); or (ii) the SoS considers that the information received from HMRC is incorrect, or fails to reflect the definition of employed earnings in regulation 55, in some material respect. (4) Where the SoS determines that paragraph (2) does not apply, the SoS must make a decision as to the amount of the person’s employed earnings for the assessment period in accordance with regulation 55 (employed earnings) using such information or evidence as the SoS thinks fit. (5) When the SoS makes a decision in accordance with paragraph (4) the SoS 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 SoS 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.
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Issue 48 | March 2019
| Professional in Payroll, Pensions and Reward |
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