North Yorkshire Police & Anor v Revenue & Customs [2009] UKFTT 237 (TC)

FTT-Tax

North Yorkshire Police & Anor v Revenue & Customs

[2009] UKFTT 237 (TC)

1 This is an unusual case of first impression. It is the first case about statutory maternity pay to come before the new First-tier Tribunal Tax Chamber. It is also the first case on statutory maternity pay to come before a tribunal asked for a full decision. Indeed, it appears to be the first fully reasoned judicial decision on the interpretation of the statutory pay schemes since their administration was transferred to the Inland Revenue and their successors, the Respondents (in this decision “HMRC” ).

2 The question under appeal seems simple on the face of it. On what day should Mrs Wade, the second appellant, have started receiving her statutory maternity pay (“SMP”) in respect of the prospective births of her two children? And, at one level, the facts are very simple: she claimed SMP in respect of the pregnancies leading to the births of her two children in 2005 and then in 2007. There is clear documentation and a precise chronology for each claim. None of the facts are in dispute, and I do not need to turn to the details until later. While that sounds simple, it is now almost four years since she made the first claim. That four year period reflect the difficulties that the parties found with the issue.

3 One complicating factor is that there are two distinct appeals. Mrs Wade claimed SMP by reference to the birth of her first child in 2005. The dispute about when the SMP should start for that child was still continuing when her second child arrived in June 2007. And of course she claimed SMP for that. There are timing differences in the chronologies for the two claims. And some of the rules were rewritten between the two claims. So I must decide how the rules are interpreted and applied to Mrs Wade’s two claims for SMP separately.

4 I leave another complication aside. What lies behind the appeals is the issue of the interaction between SMP and police maternity pay (PMP). What appears to be a difference of views as to when SMP starts has a significant financial consequence to both appellants. That difference arises because SMP and PMP are payable from starting dates set by different sets of rules. The practical question behind this appeal is the extent to which those starting dates lead to an overlap between the payment of PMP and the payment of SMP. I have jurisdiction to decide only the period of entitlement for SMP. And it is agreed that I should decide the appeals in principle only. If a dispute arises within my jurisdiction about the amount to be paid to Mrs Wade, I give all parties leave to bring the matter before the tribunal to decide on the actual sums payable.

The parties

5 Another complicating factor is that there are three parties to the appeals. That is potentially so in any dispute about a statutory payment: the employer (or person said to be the employer), the employee (or person said to be the employee) and HMRC as the administering authority.

6 Tax tribunals are not used to three party disputes. If not before, the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 now give the tribunal all the powers and flexibility it needs to handle such appeals. I am grateful to all three members of counsel for dealing with the requirements of a hearing with three parties efficiently.

7 The first appellant, North Yorkshire Police, is the police authority that is the “employer” of the second appellant, a serving police officer. Police officers, it is common ground, are not employees. They are office holders. But a police officer is to be treated for statutory payment purposes as an employee of the police authority. The second appellant, Mrs Wade, was and is a serving police officer (aside from periods of maternity and other leave) who is - in this sense only - employed by the first Appellant. See section 171(1) of the Social Security Contributions and Benefits Act 1992 (“the 1992 Act”). The respondents are HMRC, the government department responsible for administering and in some cases paying statutory payments.

8 Under the standard procedure, it is for the employee to notify the employer of a claim for SMP. It is then for the employer to make a decision about the SMP it proposes to pay the employee. If the employee disagrees with this, then the employee may ask HMRC to make a decision. (The Secretary of State for Work and Pensions may also ask, presumably to deal with issues involving entitlement to state maternity allowance.) The employer may not ask for a decision but may seek guidance from HMRC. See the Statutory Sick Pay and Statutory Maternity Pay (Decisions) Regulations 1999. The powers of HMRC to make those decisions are given by section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999. Both employer and employee have the right to appeal against any decision made under that section by section 11 of that Act. In this case, both have exercised that right.

9 Nonetheless, to call the first two parties the appellants and the third of the parties the respondent is in some ways misleading. As the appeals came before me, the first appellant had settled on one interpretation of the issue in dispute, while the second appellant and HMRC had both settled on another interpretation. This illustrates the fallacy of regarding the employer and employee as parties ranged against HMRC (as is usually the case in this tribunal). It can equally be the case – as it is here – that the employee and employer are the parties disagreeing with each other while HMRC find themselves “in the middle”.

10 Moreover, before the parties adopted their final arguments before me, other interpretations were also in play. Indeed, I cannot but notice that all three parties have changed their views about the correct answer to the question at issue – in the case of HMRC, twice – as the case proceeded towards a hearing.

The law

11 SMP is one of four forms of statutory payment that employers are required to pay to those of their employees who have entitlement to claim the payments under the 1992 Act. The others are statutory sick pay, statutory paternity pay, and statutory adoption pay. There is separate legislation for each form of payment. The provisions for SMP are in Part 12, sections 164 to 171, of the 1992 Act. These sections consolidated measures originating in the Social Security Act 1986. The main regulations, originally made under the 1986 Act and still in force, are the Statutory Maternity Pay (General) Regulations 1986 (“the SMP Regulations”).

SMP conditions of entitlement

12 The conditions of entitlement for SMP are set out in section 164(1) to (5) of the 1992 Act:

“ Statutory maternity pay – entitlement and liability to pay

(1) Where a woman who is or has been an employee satisfies the conditions set out in this section, she shall be entitled, in accordance with the following provisions of this Part of this Act, to payments to be known as “statutory maternity pay”.

(2) The conditions mentioned in subsection (1) above are –

(a) that she has been in employed earner’s employment with an employer for a continuous period of at least 26 weeks ending with the week immediately preceding the 14 th week before the expected week of confinement but has ceased to work for him;

(b) that her normal earnings for the period of 8 weeks ending in the week immediately preceding the 14 th week before the expected week of confinement

are not less than the lower earnings limit in force under section 5(1)(a) above immediately before the commencement of the 14 th week before the expected week of confinement; and (c) that she has become pregnant and has reached, or been confined before reaching, the commencement of the 11 th week before the expected week of confinement.

(3) The liability to make payments of statutory maternity pay to a woman is a liability of any person of whom she has been an employee as mentioned in subsection (2)(a) above.

(4) A woman shall be entitled to payments of statutory maternity pay only if –

(a) she gives the person who will be liable to pay it notice of the date from which she expects his liability to pay her statutory maternity pay to begin; and

(b) the notice is given at least 28 days before that date or, if that is not reasonably practicable, as soon as is reasonably practicable.

(5) The notice shall be in writing if the person who is liable to pay the woman statutory maternity pay so requests.”

13 Section 165 defines “the maternity pay period”. In respect of the pregnancy leading to, and the birth of, Mrs Wade’s first child, the relevant provisions in the section were:

“(1) Statutory maternity pay shall be payable, subject to the provisions of this Part of this Act, in respect of each week during a prescribed period (“the maternity pay period”) of a duration not exceeding [26 weeks].

(2) Subject to subsections (3) and (7) below, the first week of the maternity pay period shall be the 11 th week before the expected week of confinement.

(3) Cases may be prescribed in which the first week of the period is to be a prescribed week later than the 11 th week before the expected week of confinement, but not later than the week immediately following the week in which she is confined.

(4) Statutory maternity pay shall not be payable to a woman by a person in respect of any week during any part of which she works under a contact of service for him.

(5) It is immaterial for the purposes of subsection (4) above whether the work referred to in that subsection is work under a contract of service which existed immediately before the maternity pay period or a contract of service which did not so exist.”

Subsections (6) and (7) were not relevant to the facts of this appeal.

14 In respect of the pregnancy leading to, and the birth of, Mrs Wade’s second child, the period in subsection (1) had become 52 weeks. Subsections (2) and (3) had been redrafted to read:

“(2) Subject to subsections (3) and (7), the maternity pay period shall begin with the 11 th week before the expected week of confinement.

(3) Cases may be prescribed in which the first day of the period is to be a prescribed day after the beginning of the 11 th week before the expected week of confinement, but not later than the day immediately following the day on which she was confined.2

Subsections (6) and (7) were again not relevant.

15 Mrs Wade met these conditions. In particular, she was exemplary in first enquiring about her entitlement, and then in informing and giving notice to all concerned of her pregnancies and of her claims to both SMP and PMP in respect of both births. I do not need to explore the conditions further.

The Maternity Pay Period

16 Further provision for the maternity pay period, and in particular the day on which payment starts for a claimant, is made by regulation 2 of the SMP Regulations.

For the first claim made by Mrs Wade, the relevant provisions in regulation 2 were:

“(1) Subject to paragraphs (3) to (6), where a women gives notice to her employer of the date from which she expects his liability to pay her statutory maternity pay to begin and in conformity with that notice ceases to work for him in a week which is later than the 12 th week before the expected week of confinement, then the first week in the maternity pay period shall be the week following the week in which she ceased to work, or the week immediately following the week in which she is confined, whichever is the earlier.

(2) The maternity pay period shall be a period of 26 consecutive weeks.

(3) Where –

(a) a woman is confined before the 11 th week before the expected week of confinement; or

(b) is confined after the 12 th week before the expected week of confinement and the confinement occurs in a week which precedes that mentioned in a notice given to her employer as being the week she intends to give up work,

the first week in the maternity pay period shall be the week commencing on the day after the day on which she was confined.

(4) Subject to paragraph (6) where a woman is absent from work wholly or partly because of pregnancy or confinement on any day which falls on or after the beginning of the 4 th week before the expected week of confinement, but not later than the week immediately following the week in which she is confined, the first week of the maternity pay period shall be the week beginning on the day following the day on which she is so absent.”

17 When Mrs Wade made her second claim, the relevant parts of that regulation had been redrafted as follows:

“(1) Subject to paragraphs (3) to (5), where –

(a) a woman gives notice to her employer of the date from which she expects his liability to pay her statutory maternity pay to begin; and

(b) in conformity with that notice ceases to work for him in a week which is later than the 12 th week before the expected week of confinement,

the first day of the maternity pay period shall be the day on which she expects his liability to pay her statutory maternity pay to begin in conformity with that notice provided that day is not later than the day immediately following the day on which she is confined.

…

(4) In a case where a woman is absent from work wholly or partly because of pregnancy or confinement on any day –

(a) which falls on or after the beginning of the 4 th week before the expected week of confinement; but

(b) not later than the day immediately following the day on which she is confined,

the first day of the maternity period shall be the day following the day on which she is confined.”

18 Mrs Wade had separate entitlements to maternity leave from her police duties, and to PMP, under the Police Regulations 2003, regulations 29 and 33. I need not set out those provisions as they do not affect the operation of the SMP provisions. They were relevant to Mrs Wade’s chosen dates for taking leave and making her SMP claims, and to the view taken by North Yorkshire Police to her claims.

When should the maternity pay periods start?

19 Mrs Wade took advice about her dates of claim for both PMP and SMP as she wished to maximise the separate periods for which she received them without overlap. What emerged from Mrs Wade’s enquiry was that there was no consistent view about how the rules I have set out applied to her. In particular, I was told that she discovered from enquiries made by the Police Federation on her behalf that different interpretations of these provisions appeared to be operating under different employers. As the papers show, HMRC did not have a consistent view either.

20 The starting point for any normal advance claim for SMP is the issue by the doctor (or midwife) of a certificate indicating the expected week of confinement of her or his patient. This should not be issued more than 20 weeks before that week. See the SMP (Medical Evidence) Regulations 1987 (SI 1987/235). Having made enquiries and obtained the certificate, Mrs Wade initially asked that her SMP to start on 18 12 2005, that is, the start of the expected week of confinement. In reply, North Yorkshire Police stated that on legal advice her SMP would start at the start of the 11 th week before the expected week of confinement.

21 Correspondence led to HMRC issuing a decision on 18 04 2006 that the maternity pay period was to be started on 2 10 2005. This was the start of the 11 th week before the expected week of confinement. On 18 12 2006 HMRC varied that decision to start the maternity pay period on 21 11 2005, the start of the 4 th week before the expected week of confinement. Other differences, and decisions, emerged about her second claim.

The arguments of the parties

22 At the hearing Mr Maurici for HMRC maintained that the second decision varying the date when the maternity pay period began was the correct decision, and not the first decision. And a similar view should be taken for the second claim. Miss Robertson, for Mrs Wade, agreed with this. Mr Arnold, for the North Yorkshire Police, agreed with the first decision of HMRC and took the position that it should not have been varied. And this view applied to both claims. It was not argued on any side that the period could commence with the start of the expected week of confinement, the date that Mrs Wade (acting, I accept, on advice) first requested.

What is the starting date?

23 It is first necessary to repeat a point made above. The provisions in the 1992 Act and the SMP Regulations apply to all employees and office holders as part of the system of employer-paid statutory payments that has been a feature of the British social security system for over 20 years. Individual provisions made for some employees or office holders, even when made by legislation as in the case of the Police Regulations, are of no relevance to the proper interpretation of the statutory payment schemes unless Parliament has expressly so provided. Parliament has made no such provision for police officers. Entitlement to PMP is irrelevant to these appeals.

24 A second point is that in the normal case the rules combine an element of mandatory provision with an element of choice given to the claimant. I leave out of account those unusual cases where the baby is born very prematurely or where the mother is not aware of her pregnancy until her confinement starts or shortly before that. Aside from those cases, the element of choice arises because the operation of some of the rules is dependent on the woman concerned giving notice to the employer. She will normally be in a position to decide about that 20 weeks before the expected week of confinement. If she chooses to delay giving the required notice, then the maternity pay period may be affected. In addition, she must also give up work with her employer. If she does not do so, then that also affects her maternity pay period. And when giving notice she may choose, within limits, when she first wants the SMP to be paid to her. Mrs Wade, like many claimants, had some choice in the period of her maternity leave. Her choice is relevant to her maternity pay period.

25 A third point is that there can only be one maternity pay period, and therefore one starting date, for a particular pregnancy and confinement. Regulation 2(2) of the SMP Regulations requires that the period be a period of consecutive weeks.

26 A fourth point is that there are limits placed on the earliest and latest dates at which the maternity pay period starts. Again, I am concerned only with the normal case where the claimant is given a certificate of the expected week of confinement well in advance of that week. That is Mrs Wade’s case in both her appeals.

27 In the normal case, section 165(2) of the 1992 Act provides a “default rule” for the start of the maternity pay period. In common with other areas of social legislation, the section adopts the sound, practical approach of setting a general rule and then providing for regulations to deal with special cases to which the default rule does not apply. If none of the regulations about special cases apply, then the default rule applies. That ensures that there is always an answer to the question posed. It is a practical requirement of any benefit system that there be no gaps in the rules for essential questions such as the starting date for a benefit. It must follow in a normal case that if no other rule applies then the rule is that in section 165(2). That rule is that:

“the maternity pay period shall begin with the 11 th week before the expected week of confinement.”

28 North Yorkshire Police contends that no other rule applies to Mrs Wade. The other parties take the view that another rule does apply. Section 165(2) is subject to both subsection (3) and subsection (7) of that section. It is common ground that subsection (7) is not relevant here. Subsection (3) is relevant. It empowers regulations to be made allowing the maternity pay period to start after the date set by section 165(2). Regulation 2 of the SMP Regulations makes a series of such provisions. And in the view of the second appellant and the respondents it is regulation 2(4) that applies here.

Regulation 2

29 Regulation 2 also appears at first sight to adopt a “default” approach, presenting a number of different answers with the answer in regulation 2(1) being subject to the other answers. I need not examine the full regulation because it is again common ground that only paragraphs (1) and (4) are relevant for a normal case such as Mrs Wade’s claims.

30 Paragraph (1) states that it is subject to paragraph (4). In Mr Arnold’s submission the relationship between paragraphs (1) and (4) means that the general conditions in paragraph 2(1) must apply before either paragraph can be applied to a claim. In Mr Maurici’s submission the link between regulation 2(1) and 2(4) is chronological and not hierarchical. Where Regulation 2(1) applies, it displaces section 164(2). It is itself displaced if the circumstances in regulation 2(4) occur before the circumstances in regulation 2(1). The requirement that regulation 2(1) be “subject to” regulation 2(4) is to be understood properly as a sequential requirement not a general displacement. The question to be asked in connection with any claim is: which if any of the prescribed cases was satisfied first on the facts in connection with a claim?

31 That question identifies the difference resulting from the arguments of the parties. One is that where on the facts paragraph (4) applies then that is the rule to be applied notwithstanding either paragraph (1) or the underlying statutory default rule in section 165(2). The other is that paragraph (4) is to be read as applying to a subset of the circumstances covered by paragraph (1). Together they form a special rule under section 165(3). Unless both sets of conditions are met, then paragraph (4) does not apply and the statutory default rule must apply.

The necessary conditions for a claim

32 Both analyses must be considered in the context of the main statutory framework of the conditions laid down in sections 164 and 165 of the 1992 Act. Those sections contain two kinds of conditions: those to be met before a woman can make any claim for SMP (for example her earnings must be above the set level), and those to be met for a specific claim for SMP.

33 The specific conditions are that a claimant:

(a) Must have ceased to work for her employer (section 164(2)(a)) - if she works for the employer in any week after the start of the maternity pay period, then SMP is not payable for that week (section 165(4))

(b) Must have reached the start of the 11 th week before the expected week of her confinement (section 164(2)(c))

(c) Must have given her employer notice (28 days in advance if possible and in writing if required) of the date on which she expects her SMP to begin (section 164(4) and (5)).

34 It is not necessary that the claimant cease work on the day that she notifies to her employer as the day from which she expects to be paid SMP. In practice, she will also need to give notice to start any maternity leave. It may be that she gives notice that the leave will start either before or after the day from which she expects her SMP to start. Or it may be that she ceases work on a day other than the day on which she gives either notice.

35 There are three possible situations that may apply when the claimant has reached the 11 th week before the expected week of confinement and has given notice of the date on which she wishes the SMP to start, so meeting two of the three statutory conditions set out at [33]:

(A) She stops work in that or a later week at the time that she asked that the SMP start. In that case, she satisfies all three conditions in the Act.

(B) She carries on working after the 11 th week and after the day on which she expected to start her SMP. If so, the Act stops entitlement until she does stop work. Only then does she satisfy all three conditions.

(C) She stops work before the date on which she asks that the SMP start. That could occur in two separate circumstances. The first is that she stops work before the 11 th week. In that case, under the Act she cannot in any event receive SMP until the start of the 11 th week. The second is that she stops work on or after the 11 th week. In that case, the Act entitles her to SMP from the start of the following week after she stops work. Again, this is because of the point at which all three statutory conditions first apply together.

36 The rules must also take into account other cases such as that where the woman does not give her employer notice although she is aware of her pregnancy and of the expected date of confinement. Until she gives notice, section 164(4) stops her entitlement to SMP and therefore must stop her maternity pay period starting.

37 The purpose of regulation 2 is to modify those rules. I need examine only paragraphs (1) and (4) for the purpose of these appeals because paragraphs (3) and (5) apply only to special cases and not to cases such as Mrs Wade’s claims. However, the full regulation needs to be in mind for the interpretation of each part of it.

Regulation 2 paragraph 4

38 Paragraph (4) imposes a general rule that stops a woman postponing the start of the maternity pay period, and of her SMP, beyond the start of the 4 th week before her expected week of confinement if from the start of that week she “is absent from work wholly or partly because of pregnancy…” on any day (emboldening mine). In my judgment, that applies to any woman who carries on working until the 4 th week before her expected week of confinement whether or not she has given her employer the required notice. Of course, she is expected in any event to give 28 days notice of the day on which she wishes her SMP to start (section 164(4)). So if she is aware of it, as will be the situation in normal cases, she should notify her employer of her expected week of confinement at the fourth week before that week. This rule operates to trigger the start of her maternity pay period even if she has not done so.

39 The rule operates when the woman is absent from work for the reason stated. Whether absence from work is wholly or partly from pregnancy is a question of fact. The parties did not agree about whether this condition applies where the woman has started maternity leave. I find it difficult to identify how on any set of facts a woman who is absent from employed earner’s employment on maternity leave in connection with a medically certified expected week of confinement could be regarded as not absent from work wholly or partly because of her pregnancy. There may of course be other sets of facts, for example where notice has not been given by the woman and no maternity leave has been claimed, where the issue may not be clear. I see no scope for such arguments here.

40 The effect of the paragraph (4) rule is that it overrides any other rule that would otherwise allow the claimant to postpone the day on which she wants her SMP to start beyond the beginning of that 4 th week. It is a rule that applies to any pregnant woman who has stopped working wholly or partly for a pregnancy-related reason even for a single day if she does so within 4 weeks of the expected week of the birth. A single day’s absence is clearly expressed by paragraph (4) as triggering the start of the maternity pay period the following day even if there is no further absence. If she goes back to work, then section 165(4) stops her being paid SMP, but it does not stop the maternity pay period.

41 It is because the rule in paragraph (4) is expressed to operate both from a single day’s absence and regardless of any notice given by the claimant that I interpret the rule as being a general rule and not as providing a rule only for a subset of the circumstances covered by paragraph (1). I cannot see any practical reason why the rule in regulation 2(4) would operate from a single day’s absence for the reason stated only when the circumstances in regulation 2(1) are also met and not when they are not met. On that interpretation, regulation 2(1) is subject to regulation 2(4). But it does not require that the other conditions of regulation 2(1) must be in place before regulation 2(4) applies.

42 Mr Arnold sought to support his argument by drawing attention to the different wording used in the different provisions with regard to the cessation of work. Section 164 makes it a precondition of a claim that the claimant “has ceased to work…”. Regulation 2(1) sets a test that the claimant “in conformity with that notice ceases to work…”. Regulation 2(3) talks of notice from a claimant about “the week she intends to give up work”. Regulation 2(4) refers to “absence from work wholly or partly because of pregnancy…”. I agree that the wording varies, but I do not see that this assists his argument. In my view it confirms that this is a different rule to the other rules, including regulation 2(1). It applies whether or not the day in question is an isolated day or is the first day on which the claimant stops work. That confirms my view that the rule acts to stop someone delaying her maternity pay period right up to the actual confinement if her pregnancy is a cause of any day’s absence from work in the period set by paragraph (4).

43 I therefore agree with Mr Maurici and Miss Robertson that paragraph (4) is freestanding. It applies if the conditions in the paragraph, plus the more general conditions of entitlement to SMP that are not replaced by these conditions, are met.

44 In summary, paragraph (4) applies in precedence to any other rule to start Mrs Wade’s maternity pay period if her maternity pay period has not otherwise started and on any day at or after the beginning of the 4 th week before her expected week of confinement she is absent from work wholly or partly by reason of her pregnancy.

Regulation 2 paragraph 1

45 Mr Maurici submitted that the logic of the schemes in regulation 2 is that the maternity pay period starts when the first of any of the paragraphs of that regulation is satisfied. Paragraph (1) may apply before paragraph (4) if the conditions of that paragraph apply. Miss Robertson supported that view. As I have disagreed with Mr Arnold’s approach on this point in considering paragraph (4), I must now consider this paragraph and the issue of interaction.

46 Paragraph 1 operates if two conditions are met. First, the claimant must have given her employer notice of the date from which she wishes her SMP to start. She cannot under the general rules become entitled to SMP until she has given her employer that notice: section 164(2)(a) of the 1992 Act. The significance of that is that a claimant may choose to delay giving her notice for as long as she wishes, subject to the rule in paragraph (4) examined above and provided that she realises that this prevents her claiming SMP. This rule applies to those who have given notice, not those who have not done so. That, in my judgment, is the key difference between this rule and that in paragraph 2(4).

47 The second condition is that the claimant “in conformity with that notice ceases to work for him in a week that is later than the 12 th week before the expected week of confinement”. I noted in [35] that a claimant might either stop work on the date when she gave notice that she wanted her SMP to start or either before or after that date. This paragraph sets a special rule for the woman who gives notice of when she wants her SMP to start and then stops work at the time she stated, so triggering her entitlement to SMP on that date. If she both gives the notice and complies with her own notice, then this paragraph postpones the start of the maternity pay period from the beginning of the 11 th week before the expected week of confinement until the beginning of the week after the week in which she stops work. That gives the claimant a choice of starting date subject to the rule in paragraph (4) if she has told her employer of her choice. It also only applies where the claimant stops work after the 12 th week. If she has stopped before that and has given an appropriate notice, then the default rule starting the maternity pay period at the 11 th week applies in any event.

48 Paragraph (1) does not deal with the person who has not given notice, or the person who has given notice but does not – for any reason – comply with her own notice. That appears to me to be a sound, practical rule. An employer can be expected to plan and make specific provision for the start of SMP for its employee only if the employee gives the employer proper notice of her intentions and then carries out her intentions.

49 It follows that paragraph (1) and paragraph (4) are both free-standing rules save that a claimant cannot postpone the start of her SMP into the last month before the expected birth if she is stopped by paragraph (4).

Interaction with the default rule in section 165(2)

50 The facts of Mrs Wade’s claims test another aspect of the rules not argued before me. What happens if on a particular set of facts regulation 2(1) does not apply, and the choice is between the application of regulation 2(4) and the default rule? Mr Arnold did not deal with this because of the link he saw between the paragraphs in regulation 2. Mr Maurici put an argument to me that appears internally inconsistent when viewed against this subset of possible circumstances. He argued that the statutory default rule was always subject to the rules in regulation 2, but at the same time the relationship between the rules in regulation 2 was chronological. His argument about regulation 2 deals with the practical question about “which comes first” within that regulation. He did not deal with the same practical question with regard to the interaction of the regulation 2 rules with the default rule.

51 The question that arises as between regulation 2(4) and the statutory default rule may be posed this way. If the rules are intended to be practical rules to be operated by any employer, how can an employer operate the rules in paragraphs (1) as compared with (4) on a chronological basis, but not the rule in paragraph (4) as compared with the statutory default rule? It is implicit in the arguments of both Mr Maurici and Miss Robertson that paragraph (4) has full priority over the default rule, and not merely on a chronological basis, but neither stated why.

52 I look for the practical answer. I do so because, as I have noted above, the correct procedure in a dispute about SMP is that the employer must make the first decision. HMRC becomes involved only if the employee disagrees with the employer. So the interpretation I look for is one that can be operated by the employer when the employer has to make a decision. This is at the beginning of the 11 th week before the expected week of confinement of any employee. SMP cannot be paid at any earlier date, but the default rule is that it is payable on that date. So that is when the employer must decide when the maternity pay period is to start.

53 What is the situation facing an employer at the beginning of that 11 th week for one of its employees? It may not have been given any notice of her expected confinement. In that case, the employee has as yet no right to SMP. So the employer is not yet concerned with the point and has no decision to take. The question arises only when the notice is given.

54 If the employee has given notice, then the employer will have been informed by the employee of the date on which she wished her SMP to start. That could be the 11 th week or it could be some later week. If it is the 11 th week, then the employer can give effect to the notice and, at the same time, apply the default rule. If it is a later week, then in my view the employer must nonetheless at that time consider if regulation 2(1) may apply. Regulation 2(1) may apply to the employee’s claim if she sets a date for the start of her SMP after the start of the 11 th week and it appears at that time (that is, at the 11 th week) that she intends to comply with it. If she continues to work after the 11 th week, then the employer must wait to see whether regulation 2(1) applies or, if it comes first, whether regulation 2(4) applies.

55 There is another situation. This is where the employer, as at the 11 th week before the employee’s expected week of confinement, can already see that the employee will not be complying with the conditions in regulation 2(1) because she has already ceased work. In that case, the employer can decide at that time that regulation 2(1) is not going to apply.

56 In that case, the question facing the employer is whether there is any other rule to consider rather than applying the statutory default rule and starting the maternity pay period at the beginning of the 11 th week. My interpretation of regulation 2(4) is that it provides a limit at the 4 th week if there is any pregnancy-related absence after the 11 th week. But that rule, as a free-standing rule, does not operate prospectively to stop the statutory default rule operating. It applies only if that time limit is reached with no other rule having applied.

57 My conclusion is that when an employer decides the matter at the 11 th week, then as between regulation 2(4) and the statutory rule in section 165(2) it is the statutory rule that applies. This applies in any case if at that time an employer can establish that regulation 2(1) does not apply without having to wait and see if it does. And the same approach should be applied by HMRC.

The facts

58 I turn to the facts of the individual appeals. The facts have never been in dispute. I gratefully adopt the agreed facts and chronology put before me by counsel.

59 In relation to the first birth the chronology is:

29 07 2005 Form MAT B1 issued by Mrs Wade’sGP

giving an expected week of confinement (EWC)

starting 18 12 2005

1 08 2005 Mrs Wade gave notice asking for SMP from 18 12 2005

25 09 2005 Start of police maternity leave and police maternity

pay (PMP) in 12 th week before EWC

2 10 2005 Start of 11 th week before EWC

21 11 2005 Start of 4 th week before EWC

1 12 2005 Date of confinement

18 12 2005 Start of EWC.

60 In relation to the second birth the chronology is:

18 01 2007 Notice given asking for SMP from 28 05 2007

28 02 2007 Start of police maternity leave and police maternity

pay (PMP) in 18 th week before EWC

9 04 2007 Start of 11 th week before EWC

28 05 2007 Start of 4 th week before EWC

21 06 2007 Date of confinement

25 06 2007 Start of EWC.

Application to the facts of the first appeal

61 Mrs Wade gave timely notice of the date on which she wished her SMP to start. It was in the expected week of her confinement, 18 12 2009. Having given that notice then, had she complied with it, that is the date that would have applied to her under regulation 2(1) in place of the default rule of the start of the 11 th week before that week. So, viewed at the 11 th week, the employer had notice, and had no reason to decide that regulation 2(1) would not apply. The maternity pay period therefore did not start at the 11 th week. But Mrs Wade did not comply with her notice. She started her police maternity leave on 25 09 2005. As a result, at the beginning of the 4 th week before her expected week of confinement she was in fact absent from work for a reason that I find must be considered to be wholly or partly because of her pregnancy. So her maternity pay period was started by regulation 2(4) at the beginning of that week.

62 Her plans were also not met for another reason – the baby arrived early. However, this was after the conditions in paragraph (4) applied to Mrs Wade and after her maternity pay period had started so is not relevant.

63 I therefore agree with Miss Robertson and with Mr Maurici that on these facts the maternity pay period in respect of this claim started at the beginning of the 4 th week before the expected week of confinement.

Application to the facts of the second appeal

64 Mrs Wade again gave timely notice, this time asking for SMP at the beginning of the 4 th week before her expected week of confinement, on 28 05 2007. But she stopped work, because of her police maternity leave, on 28 02 2007. That was before the 11 th week. So the employer, considering the matter at the beginning of the 11 th week, could see that regulation 2(1) could not apply. This was because she did not stop in compliance with her notice and because she stopped work before the 11 th week.

65 As at the beginning of the 11 th week before the expected week of Mrs Wade’s confinement, I find that the employer already knew that she had stopped work. And she had given her employer notice saying when she expected her SMP to start. I find therefore that the employer knew as at the start of the 11 th week before her expected week of confinement that she could not “in conformity with that notice cease to work” for the employer. It follows that in respect of her second claim it is the statutory default rule that applied and her maternity pay period started on the 11 th week before her expected week of confinement.

Conclusion

66 I therefore find, with I must confess considerable surprise, that I must dismiss the first appellant’s appeal against the first decision and allow it against the second decision, and the reverse with the second appellant.

67 Given the complexity of the issues, I formally state my decision as follows:

(a) in respect of the claim for SMP made by Mrs Wade following the notice to her employer given on 1 08 2005, Mrs Wade’s maternity pay period in respect of that claim starts on 21 11 2005;

(b) in respect of the claim for SMP made by Mrs Wade following the notice to her employer given on 18 01 2007, Mrs Wade’s maternity pay period in respect of that claim starts on 9 04 2007.

General comment

68 I commented at the start of this decision on the considerable length of time taken in getting these appeals before a tribunal. I accept that a significant part of that delay arose while reforms of the tribunal system occurred, replacing a choice about whether the appeals should go to the Special Commissioners or the General Commissioners with a referral to the First-tier Tribunal Tax Chamber. But that was only a contributing factor to the overall period. So is the complexity of the rules to be applied as a result of which I find myself unable to agree entirely with any of the three thorough and thoughtful arguments put before me by counsel for the three parties. But neither of those factors explains a four year delay in bringing a case to a tribunal when there are no facts in dispute.

69 For the future, all parties to cases such as this should be aware that the First-tier Tribunal has a duty to deal with appeals before it both fairly and effectively. It cannot in my view be fair, in any ordinary case, to allow a mother to wait for over three years after the birth of her child – or anything approaching that period - to see when her maternity pay period started before that birth. SMP is designed to make good earnings she lost while expecting the child, or following the birth. Any dispute needs to be decided promptly. These two appeals relate to ordinary cases in that there was no matter of fact in dispute and in both cases Mrs Wade had, as I have already observed, been exemplary in telling everyone what she wanted to do and giving the appropriate notices. Her employer also gave timely decisions as required.

70 HMRC then has to handle what is in effect an appeal. But it does so as an executive body, not as a judicial authority. That may be entirely appropriate and may take time if the dispute between employer and employee is about the facts or where the law is clear but an employer is accused of misapplying it or refusing to apply it. No facts were in dispute here. There was no question of the employer refusing to take a decision or taking a perverse decision. HMRC should have applied its view of the law to those agreed facts and passed the matter on, if either the employer or the employee did not agree, to the tribunal. If the rules are not clear, and these appeals illustrate only too well that they are not, then it is the task of the tribunals, and if necessary also the courts, to sort out the proper interpretation of those rules.