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DECISION OF THE SOCIAL SECURITY COMMISSIONER
- The claimant's appeal to the Commissioner is disallowed. The decision of the Liverpool appeal tribunal dated 21 November 2002 is not erroneous in point of law, for the reasons given below, and therefore stands.
- The appeal tribunal was concerned with the claim for invalid care allowance (ICA) with effect from 20 June 2002 made on 8 July 2002. The claimant's mother had recently been diagnosed as terminally ill. His employer, the Department for Work and Pensions, had granted him special leave with pay from 6 June 2002 to 19 June 2002, immediately followed by special leave without pay from 20 June 2002 for an indefinite period. He had received his normal monthly salary payment into his bank account on 30 May 2002. He received the payment for the period from 1 June 2002 to 19 June 2002 into his bank account on 28 June 2002. The decision on the claim was that the claimant was entitled to ICA from 5 August 2002, but was not entitled from 20 June 2002 to 4 August 2002 because his earnings exceeded the statutory earnings limit.
- That decision for the period before 5 August 2002 was the result of the application of this chain of statutory provisions. One of the conditions of entitlement to ICA, under section 70(1)(b) of the Social Security Contributions and Benefits Act 1992, is that the claimant is not gainfully employed. Section 70(8) (as did the equivalent provision in the Social Security Act 1975) gives the power to make regulations prescribing the circumstances in which a person is or is not to be treated as gainfully employed. Regulation 8(1) of the Social Security (Invalid Care Allowance) Regulations 1976 (the ICA Regulations), as in force from April 2001, provides:
"(1) For the purposes of section 70(1)(b) of the Contributions and Benefits Act (conditions of a person being entitled to an invalid care allowance for any day that he is not gainfully employed) a person shall not be treated as gainfully employed on any day in a week unless his earnings in the immediately preceding week have exceeded an amount equal to the lower earnings limit in force by virtue of regulations under section 5 of the Contributions and Benefits Act on the last day of that week and, subject to paragraph (2) of this regulation, shall be treated as gainfully employed on every day in a week if his earnings in the immediately preceding week have exceeded an amount equal to the lower earnings limit in force by virtue of regulations under section 5 of the Contributions and Benefits Act on the last day of that week."
For these purposes a week runs from Sunday to Saturday (Contributions and Benefits Act, section 122(1)).
- It is then necessary to look at the Social Security (Computation of Earnings) Regulations 1996. These regulations, authorised in particular by section 3(2) of the Contributions and Benefits Act, apply for the purposes of that Act and any regulations made under it and provide rules for calculating the amount of a person's earnings "for any period" (regulation 3). Under regulation 6(2)(a), for employed earners, the period over which a payment of earnings is to be taken into account:
"in a case where it is payable in respect of a period, shall be a period equal to a benefit week or such number of benefit weeks as comprise the period commencing on the date on which earnings are treated as paid under regulation 7 (date on which earnings are treated as paid) and ending on the day before the date on which earnings of the same kind (excluding earnings of the kind mentioned at regulation 9(1)(a) to (j)) and from the same source would, or would if the employment was continuing, next be treated as paid under that regulation;"
Subparagraphs (a) to (j) of regulation 9(1) are not relevant in the present case. A "benefit week" is a period of seven days corresponding to the week in respect of which a relevant social security benefit is due to be paid (regulation 2(1)). ICA is payable weekly in advance on a Monday (Social Security (Claims and Payments) Regulations 1987, regulation 22 and Schedule 6, paragraph 4) and the benefit week for the purposes of the start of entitlement runs from Monday to Sunday (regulation 16(3)).
- Under regulation 7(b) of the Computation of Earnings Regulations earnings are, subject to exceptions which do not apply here, to be treated as paid on the first day of the benefit week in which the payment is due to be paid. Regulation 8 provides the mechanism for converting payments made in respect of periods other than a week into a weekly rate. Regulation 10 provides for earnings net of income tax, social security contributions, 50% of pension contributions and, in ICA cases, of care charges up to a prescribed limit to be taken into account.
- The decision-maker's approach, as set out in the written submission to the appeal tribunal, was as follows. The claimant's May 2002 salary was paid when it was due, on the last working day of the month, 31 May 2002. So under regulation 7 of the Computation of Earnings Regulations the payment was treated as paid on Monday 27 May 2002. In fact the salary seems to have been paid on 30 May 2002, but I do not see how that makes any difference. The next payment of salary was made on the due date, 28 June 2002, and so was treated as paid on Monday 24 June 2002. The earnings from the May salary were therefore to be taken into account under regulation 6(2)(a) over the period from 27 May 2002 to 23 June 2002 and the weekly rate of net earnings easily exceeded the ICA limit. The next payment of earnings in the sequence would have been due to be made on 31 July 2002, so would have been treated as paid on Monday 29 July 2002. Therefore, the earnings from the June payment were to be taken into account over the period from 24 June 2002 to 28 July 2002. The weekly rate of net earnings still exceeded the ICA limit. Thus, it was said, the claimant was to be treated under regulation 8(1) of the ICA regulations as gainfully employed for all the weeks down to and including that starting on Monday 29 July 2002. It was not until the week starting on Monday 5 August 2002 that it could be said that the claimant had earnings in the previous week which were below the limit.
- In his appeal against the ICA decision the claimant argued that he had been unfairly treated as a monthly-paid employee as compared with a weekly-paid employee on the same annual salary, who would have become entitled from 8 July 2002. At the hearing on 21 November 2002 he is recorded as having said that he believed that the regulation was incorrect, not the interpretation of it by the Benefits Agency. The appeal tribunal dismissed the appeal. It accepted that the legislation had the effect given to it on behalf of the Secretary of State and stated that, even if it agreed that the relevant regulation was unfair, that did not entitle it to make a finding for the claimant.
- The claimant reiterated and expanded on his argument of unfair discrimination between the monthly-paid and the weekly-paid when applying for leave to appeal to the Commissioner. The regional chairman granted leave with the following note:
"The purpose of Reg 8(1) is to define `not gainfully employed'. Are the Computation of Earnings Regs of relevance for this purpose? Does Reg 8(1) not provide the time period at which you should look?"
I directed the Secretary of State to deal with those points in the submission to be made on the appeal, along with any argument that could be raised under the Human Rights Act 1998.
- The Secretary of State's submission dated 2 June 2003 did not support the claimant's appeal. There was some misunderstanding of the rather compressed note by the regional chairman. Indeed the meaning of the note only becomes clear on considering some points raised by him when sitting as a Deputy Commissioner in decision CG/6329/1997. That was an ICA case where a claimant who worked during school terms only and had been paid ICA after the first week of each school holiday was said to have become gainfully employed throughout the year because of the introduction of the 1996 Computation of Earnings Regulations. Mr Deputy Commissioner Warren said this in paragraph 8:
"I confess to some doubt as to whether these Regulations were originally intended to affect regulation 8(1) ICA Regulations at all. The introductory words refer to no less than 10 empowering sections of the Contributions and Benefits Act. But they omit section 70, which is the parent section for the ICA Regulations. I note also that the Regulations are actually made by the Secretary of State even though some of the regulation making powers referred to empower regulations to be made by the Treasury with the consent of the Secretary of State. However, for the purpose of this decision it is convenient for me to proceed on the basis that the AO is correct when submitting that the new Computation of Earnings Regulations affected the operation of the definition of `gainfully employed' for the purposes of ICA."
He went on in paragraph 9, after referring to the way in which regulation 6 of the Computation of Earnings Regulations allocated payments to benefit weeks, to say that it was not obvious how that meant that it also applied for the purposes of regulation 8(1) of the ICA Regulations.
- Neither of the parties in the present case has had the opportunity to comment on the significance of those statements in CG/6327/1997. However, as what was said there was no more than a raising of questions, it is not necessary to delay the present case to obtain such comments.
- I find that the doubts expressed about the power to make the 1996 Computation of Earnings Regulations in a way which had an effect on the operation of the ICA Regulations are unfounded. The Regulations were properly made by the Secretary of State. At the time that they were made, the main empowering provision (section 3(2) of the Contributions and Benefits Act) had not yet been amended to require any regulations to be made by the Treasury, and neither had any other relevant provisions. At the time regulations were to be made by the Secretary of State. Nor is it relevant that the empowering provisions listed excluded section 70 of the Contributions and Benefits Act. The predecessor of section 70 empowered the making of the ICA Regulations, including regulation 8(1) deeming a person to be gainfully employed or not on any day in a week according as the person's earnings in the previous week did or did not exceed a prescribed limit. The width of the power allowed the regulations to treat a person as gainfully employed in a week in which he was not actually gainfully employed. It is the point of powers to make deeming regulations not just to provide simple tests of whether conditions are met but also to allow what is not in fact the case to be treated as if it is. Then the question is the identification of earnings in particular weeks. The power to make regulations, for the purposes of benefits including ICA, on the calculation and estimation of earnings is contained in section 3(2). That section allows such regulations to be made although they will have important consequences on the effect of other regulations. And it allows regulations to provide that a payment of earnings is to be treated as for a forward period beginning on the date of payment (Commissioners' decisions CG/1768/2000 and CIB/1650/2002).
- There remains the point made in paragraph 9 of CG/6329/1997 about the allocation of payments to benefit weeks and how that affects regulation 8(1) of the ICA Regulations. I think that that point must rest on the precise words of regulation 8(1), which make the test the amount of a person's earnings "in the immediately preceding week". That is a slightly peculiar phrase. It could perhaps be argued that to have earnings "in" any particular week a person must either receive a payment of earnings in that week or be entitled to receive a payment of earnings for work done in that week. Then what Mr Deputy Commissioner Warren was getting at could have been that the Computation of Earnings Regulations, defining a person's earnings "for any period", simply did not bite on the test for ICA purposes.
- I have considered that argument carefully, but conclude that it does not work. The ICA test of having earnings in a week cannot possibly be met only in weeks in which payment is actually received. That would mean that monthly-paid employees, say, would have earnings in the 12 weeks throughout the year in which they were paid, but not in the other weeks. That could not possibly be right. Once one expands the test to include weeks for which a person is entitled to receive a payment of earnings, or something similar, then it seems to me that in substance one is asking what earnings a person has "for" a week. Although looking at such a test in the abstract would point one to the weeks in relation to which the earnings were paid, regulations made under section 3(2) of the Contributions and Benefits Act may properly prescribe that actual earnings are to be treated as paid for a forward period. I conclude that the Computation of Earnings Regulations do apply to the question of whether a person is to be treated as gainfully employed in accordance with regulation 8(1) of the ICA Regulations.
- The claimant has in effect raised an argument of irrationality, although he put it in terms of unreasonableness and unfairness. He submitted that the purpose of the gainful employment test is to check that an ICA claimant has the time available to be able to be substantially engaged in caring for the disabled person, so that one should look at the weeks in which a person was actually working, so as to generate earnings above the level, not at weeks after work has ceased. However, that is not the sole purpose of the gainful employment test. ICA is regarded as an earnings-replacement benefit, although there is no condition that a claimant must have given up existing work. A further legitimate purpose of the gainful employment test is to provide a limit of earnings, exceeding which is taken to indicate that a claimant does not have a sufficient shortfall of earnings to justify payment of ICA. From that point of view it is rational for the ICA Regulations and the Computation of Earnings Regulations to make the test depend on earnings and to make it depend on earnings in the period for which payments of earnings are available on a forward basis.
- The claimant's much more specific argument of unreasonableness and unfairness is that a monthly-paid employee is discriminated against compared with a weekly-paid employee with the same level of annual earnings. I accept that a weekly-paid person granted special leave without pay from the same date at the claimant in the present case would, in the absence of any week-in-hand arrangements, only have been treated as having earnings for the week from 24 to 30 June 2002 and as being in gainful employment down to 7 July 2002. If the person concerned returned to work, the monthly-paid person would have an advantage, as the effect of receipt of earnings would not be felt until later. However, the claimant has pointed out that there is no advantage where the disabled person ceases to meet the condition of disability or ceases to be cared for by the ICA claimant or (as, sadly, in his case) the disabled person dies. In fact, section 70 of the Contributions and Benefits Act has been amended, but only with effect from 28 October 2002, a few days after the claimant's mother died, to extend entitlement to ICA for up to eight weeks after the death of the disabled person, subject to the satisfaction of conditions of entitlement including not being engaged in gainful employment. The claimant was not assisted by that amendment and in any case I must consider that state of the law as at 17 July 2002. Even if I accept that the making of the amendment from 28 October 2002 indicates that the state of the legislation before that date was unsatisfactory or harsh in its application, that is a good way short of showing that the regulations attacked by the claimant were irrational (see Auld LJ in O'Connor v Chief Adjudication Officer, R(IS) 7/99). It was well within the bounds of rationality for the Secretary of State to make regulations treating claimants as having earnings for the period from the date of payment to the date on which the next payment would usually be made, ie the period for which the earnings would usually have to stretch.
- The Secretary of State's representative has very properly drawn attention, in paragraphs 7 and 8 of the submission of 2 June 2003, to an inconsistency between the wording of regulation 6(2)(a) and the wording of regulation 8(1) of the Computation of Earnings Regulations. I note that in the penultimate line of paragraph 7 the reference to regulation 6(1) must have been intended to be a reference to regulation 8(1) and in the last line the reference to regulation 8 have been intended to be to regulation 6(2)(a). If all the words were literally interpreted that could have some rough consequences on monthly-paid employees whose last payment of salary was for a period of less than a month, involving treating a claimant as having earnings of a greater amount than actually received. The submission suggested that such a consequence could not have been within the power to make regulations for the calculation or estimation of earnings, so that regulation 8(1) should be interpreted as requiring a payment to be spread at the weekly rate appropriate for the period to which it has to be attributed under regulation 6(2)(a). But that is what seems to have been done in the initial decision in the present case and the claimant's earnings were still over the limit. I agree that no legitimate process of interpretation could allow regulation 6(2)(a) to mean that a payment of earnings is to be taken account only for a period of equal length to that in respect of which it was paid. The words of regulation 6(2)(a) are too clear for that. And disregarding regulation 6(2)(a) as ultra vires, if that were possible, would not help the claimant. The fall-back provision in regulation 6(2)(b) requires the spreading of earnings on a basis which is much more unfavourable for those whose earnings are well over the limit.
- That leaves the case, so far as "ordinary" English law goes, just as it was found to be by the appeal tribunal. The terms of the relevant regulations were accurately applied in the decision under appeal.
- I directed the Secretary of State's representative to make a submission on the relevance of the Human Rights Act 1998. The submission was that the 1998 Act, and in particular Article 14 of the European Convention on Human Rights, did not help the claimant. It was submitted that being monthly-paid as opposed to weekly paid was not a personal characteristic on which an argument of discrimination under Article 14 could be based. And it was further submitted that Article 14 could not be engaged by the case falling within the ambit of Article 1 of Protocol 1 on the protection of possessions (as ICA was not a contributory benefit: Commissioner's decision CDLA/3908/2001) or within the ambit of Article 8 on respect for private and family life. The claimant has submitted in reply that the status of being monthly-paid, imposed on employees by the employer, is a sufficient personal characteristic for the purposes of Article 14 and that his case fell within the ambit of Article 8, as ICA, at least in part, provides an advantage to the private and family life of the recipient.
- I do not propose to go into the detailed discussion of case-law and principle which would be necessary in order to come to definite conclusions on all those issues, and would take up dozens of pages. I need say no more now than that I do not think that the points put forward for the Secretary of State are so obviously to be accepted as to exclude reliance on the 1998 Act. For instance, it seems to me at least arguable that a case falls within the ambit of Article 8 where ICA would be awarded to enable a claimant to care for a close family member, so that Article 14 on discrimination might thereby be engaged. It might be arguable also that Article 14 is engaged through Article 6 and the claimant's right to a fair hearing of an appeal in relation to a civil right, in the form of entitlement to ICA. And there remain many unanswered questions on the issue of personal characteristics and status in relation to discrimination (see most recently the decision of the Court of Appeal in R (on the application of Hooper) v Secretary of State for Work and Pensions  EWCA Civ 813  3 All E R 673, where both parties are seeking to appeal to the House of Lords). I would be reluctant to decide the human rights issue against the claimant here on the ground that being monthly-paid rather than weekly-paid was not a personal characteristic for the purposes of Article 14.
- However, on the assumption that Article 14 is engaged and that the question of discrimination can be examined, there would only be a breach of Article 14 if there was discrimination against the class with the relevant personal characteristic which was not objectively and reasonably justified. On the further assumption that the circumstances of monthly-paid and weekly-paid employees claiming ICA are sufficiently analogous that the difference in treatment amounts to discrimination, there remains the question of justification. I have dealt with the rationality of the combination of the Computation of Earnings Regulations rules and the ICA Regulations rules in paragraphs 14 and 15 above. In my judgment it is well within the discretionary area of judgment (see Lord Hope in R v Director of Public Prosecutions, ex parte Kebeline  2 AC 326 at 381) to be given to the government or to the Secretary of State in the making of regulations for those rules to be adopted for the legitimate purposes already mentioned, even though that involves some rough edges and some differences of treatment between different sorts of claimants. It was up to the government to decide to change the basis on which earnings were taken into account in relation to the benefits covered and to make the judgment that each payment should be attributed to a period extending to the next usual date of payment. This is not a case where any discrimination would have been on one of the suspect grounds (such as sex or race) which requires especially careful justification.
- For that reason I conclude that a breach of Article 14 has not been shown, because, if that Article was engaged and there was discrimination, it was objectively and reasonably justified. There is nothing else that indicates a contravention of a Convention rights. Therefore, the Human Rights Act 1998 cannot alter the conclusion which I have already reached. I do not then have to grapple with the very difficult question of the effect of a contravention of a Convention right on regulations (which cannot be interpreted so as not to contravene the Convention right) made before the 1998 Act came into force on 2 October 2000.
- For the reasons given above, the appeal tribunal's decision of 21 November 2002 was not erroneous in point of law. The claimant's appeal must accordingly be dismissed.
(Signed) J Mesher
Date: 18 September 2003
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