are paid within one assessment period. The method adopted by the DWP to calculate the amount of an award of UC for that assessment period is to treat both salaries as earned income for that assessment period and to apply the method of deduction set out in regulation 22 of the 2013 Regulations to the combined income from the salaries for the two months that were received in that assessment period. Mr Brown, for the DWP, submitted that the method of calculation applied is correct. He argued that regulation 54 of the 2013 Regulations means that the DWP must calculate the amount of an award of UC by reference to the actual amounts of earned income received in an assessment period. If, therefore, salaries for two different months are paid within the same assessment period, the calculation of UC must be based on the combined amount of those two months’ salary as the salary for each month was actually received in that assessment period. Further, Mr Brown submitted that the aim underlying the provisions governing calculation of UC was intended to enable an automated system to be established and that would preclude adjustments to take account of occasions when two monthly salaries were received in one assessment period. Mr Brown argued that it is not irrational to base a method of calculation on amounts actually received in a particular period, and that such a method of calculation does not involve any failure to give effect to the statutory purposes underlying the 2012 Act notwithstanding the problems
that may arise when a claimant receives salaries for two months in one assessment period. The High Court, however, noted that the precise words of regulation 54 need to be considered carefully, observing that two features appear from them: first, the exercise is the calculation of a person’s earned income “in respect of an assessment period”; and, second, that calculation is “to be based on the actual amounts received in that period”. ...it is the employer not the employee who determines the date and method of payment... Regulation 54 does not provide that the amount of earned income “is to be the actual amounts” received “in” the assessment period. Rather, the amount of earned income is to be “based on” the actual amounts received. Furthermore, the purpose of the calculation is, as appears from the opening words of the regulation, to calculate the amount of a person’s income “in respect of an assessment period”. Similarly, where information is supplied by the employer in accordance with regulation 61, the amount of “the person’s employed earnings from that employment for each assessment period is to be based on the information
provided”. Again, the amount is not to be, for example, “the amount specified in the information provided”, but, rather, is “to be based” on the information provided. That, again, reinforces the view that the amount of earned income to be deducted is not necessarily the amount actually received in an assessment period but is to be based on those amounts. There is intended to be some other factor, not the mere mechanical addition of monies received in a particular period, which the calculation has to address. That other factor is the period in respect of which the earned income is earned. It is the earned income in respect of the period of time included within the assessment period that is to be calculated. That is to be based on the actual amounts received in the assessment period. There may, however, need to be an adjustment where it is clear that the amounts received in an assessment period do not, in fact, reflect the amounts of earned income received in respect of the period of time included within that assessment period On a proper interpretation of regulation 54, read in context, the earned income of a claimant is the earned income he or she receives in respect of the assessment period, that is in respect of periods of time comprising the assessment period. The calculation will be based upon the actual amounts received. That will be the starting point and in many, perhaps in the vast majority of cases, may well be the finishing point of the enquiry that the legislation requires. However, there may need to be an adjustment where 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. Mr Brown further relied on the fact that the system of UC was intended to be automated. He referred to the evidence in particular of Ms McMahon indicating the importance of automation in the design of the system of UC and indicating that it would not be possible to make an automated change to address the issue that has arisen in this case. Ms McMahon indicates that any solution would have to involve a manual calculation of the amount of the award. The High Court judgment says that there are a number of answers to that. First, this is a question of statutory interpretation. If the regulations, properly
| Professional in Payroll, Pensions and Reward | March 2019 | Issue 48 44
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