MC v Secretary of State for Work and Pensions (IS) [2013] UKUT 384 (AAC)

UKUT-AAC
MC v Secretary of State for Work and Pensions (IS)
[2013] UKUT 384 (AAC) · 2013-08-06
[1]This is an appeal by the claimant from a decision of the North Shields First-tier Tribunal (SEC) dated 4.09.12. I will refer to this from now on as “the tribunal” and the claimant as the “appellant”. The tribunal dismissed the appellant’s appeal from the Secretary of State for Work and Pension’s decision of 7.11.11. The Secretary of State’s decision of that date was to the effect that the appellant’s income support entitlement for the period 5.11.11 to 11.11.11 was reduced to £55.55 for that week due to an increase in his part-time earnings.[2]The background to the decision was that the appellant’s earnings arose from his work as a steward on match days at the ground of a Premier League football club. Typically these earnings would amount to £30.40 per match. Such earnings over the £20 earnings disregard were offset against his income support applicable amount with the consequence that in weeks to which the earnings were attributable the appellant’s income support would be reduced. The earnings relevant to this decision amounted to £60.80 (for two matches) and were received on 28.10.11. The Secretary of State argued that these earnings were attributable to the one week from 5.11.11 to 11.11.11.[3]The appellant’s main argument on appeal to the tribunal was that these earnings were not, so to speak, a one-off, but rather formed part of a 52 week cycle of his working for the football club, and thus his earnings over that 52 week period had to be totalled and then averaged out over 52 weeks. The key regulation relied on by the appellant was regulation 32(6)(a) of the Income Support (General) Regulations 1987 (the “IS Regs”). In response the Secretary of State argued that as the football season had started in August 2011 it could not be said that by November 2011 a 52 week work pattern had been established (i.e. there was no “recognisable cycle”). The CAB for the appellant then sought to rely on other client’s who worked as football stewards and whose earnings, the CAB said, were treated as accruing over 52 week recognisable cycle of the football season plus the summer break.[4]As the appeal progressed to a final hearing before the tribunal another issue arose as to whether – regardless of whether football stewards may or may not have a recognisable cycle of work of 52 weeks (per regulation 32(6) of the IS Regs) – any such cycle the appellant may previously have had was broken by his ceasing to work as a steward from February 2011 until he resumed such work in August 2011. In effect, the appellant’s argument against this seems to have been that even if this broke any past cycle, on starting work again as a steward in August 2011 he was starting a recognisable cycle of work of 52 weeks.[5]As I have said, the tribunal dismissed the appeal and confirmed the Secretary of State’s decision.[6]Permission to appeal to the Upper Tribunal was refused in the first instance by District Tribunal Judge Moss on 7 November 2011. However, I gave permission to appeal on the renewed application for permission on 16 January 2013, and gave as my reasons: “ The grounds of appeal put forward by the CAB on behalf of [the appellant] are, in my judgment, arguable. The Secretary of State’s argument was that [the appellant] did not at the relevant time have a recognisable cycle of work of one year over which to attribute the earnings due, in particular, to his having ceased work as a steward in February 2011. Case-law such as R(JSA)1/06 and R(JSA)1/07,as well as the Court of Session’s recent decision in Saunderson –v- SSWP [2012] CSIH 102 , may be relevant. The First-tier Tribunal upheld the Secretary of State’s decision but on the basis that [the appellant] work did fall into a pattern but that the payment was an exceptional payment outside this pattern. This reasoning arguably does not explain adequately what the pattern was and how the pattern and the exceptional payment fitted within the terms of regulation 32 of the IS Regs 1987 ”.[7]The Secretary of State supports the appeal, in a submission dated 21 March 2013. He argues that the tribunal have failed to explain why neither regulation 32(6)(a) nor 32(6)(b) of the IS Regs could be applied to calculate the claimant’s weekly amount of income by reference to his average weekly income. The Secretary of State further submitted that as the appellant’s income had fluctuated and changed more than once (and his regular pattern of work was such that he does not work every week), regulation 32(6) provides that an average weekly income can be applied. He also argues that the tribunal failed to explain why it found that the cup matches were effectively overtime and outwith the appellant’s normal pattern of work. In his view further findings of fact need to be made by the First-tier Tribunal in order to decide the first instance appeal properly; namely, whether the appellant’s regular pattern of work is such that there is a recognisable cycle of work and, if there is not, what period would enable the appellant’s income to be calculated most accurately.[8]In the reply filed by the CAB on behalf of the appellant on 23 April 2013, he fully concurs with the Secretary of State’s submission. He argues that the nature of the football matches (whether cup matches or matches in the league) is not relevant to regulation 32(6), all that is relevant is his work pattern and the fluctuation of his income. However, he argues against the appeal being remitted to the First-tier Tribunal to decide. He argues instead that there is sufficient evidence for the Upper Tribunal to decide that at the time he had “ a regular cycle of work over a 52 week period that is recognisable ”. Error of law[9]In my judgment, the tribunal did err in law. The error in a nutshell was its failure to grapple with the terms of regulation 32 of the IS Regs.[10]The tribunal found that the appellant’s work fell into a pattern. It seems – the reasoning is not wholly explicit here - that this pattern was that the appellant worked as a steward every other week when the club played at home. However, it found that the payment of £60.80 was an exceptional payment falling outside the normal pattern payments, which the tribunal classed as overtime. Again the reasoning is not entirely clear here but it seems that the tribunal decided that both of these payments related to home cup matches and that these fell outside the normal pattern of employment as a steward as these games would depend on how far the team progressed in the cup each season. (Quite what evidence the tribunal based this finding on is unclear as I can find no evidence in the appeal papers about what two matches the £60.80 payment related to). In the tribunal’s view it would be unreasonable to treat this overtime payment as part of the usual pattern of employment and the £60.80 was therefore correctly taken into account for the week following the week in which it was earned.[11]Ignoring the (lack of) evidence of the cup matches, there are in my judgment a number of problems with this analysis. The first is that it does not explain the basis on which the non-cup matches fell within a pattern or what period that pattern covered, or indeed whether this pattern was a recognisable cycle of work (and it not, why not). Secondly, it fails to explain how under regulation 32 of the IS Regs the cup matches fall to be treated. Thirdly, it does not explain the legislative basis for “unreasonableness” as a criterion for distinguishing cup matches from regular season matches. In short, the reasoning fails to have proper regard to regulation 32 of the IS Regs: if it did apply, to explain the manner in which it did; if it did not apply, to explain why it did not.[12]Income support in essence being a weekly benefit, regulation 32 of the IS Regs by its title is concerned with calculating the weekly amount of a claimant’s income. The starting point as laid out in regulation 32(1) is that where the period in respect of which the payment is made does not exceed a week, the weekly amount shall simply be the amount of the payment; but where the period in respect of which a payment is made exceeds week, if the period is a month then the payment figure is multiplied by 12 and then divided by 52 so as to get a weekly amount, and so on. If regulation 32 of the IS Regs stopped here then the payment made to the appellant for stewarding the two matches, being less than a week, would fall to be into account as a weekly payment of £60.80.[13]However, regulation 32 of the IS Regs does not stop at paragraph (1). Regulation 32(1) is expressly made subject to, inter alia, paragraph (6). What regulation 32(6) of the IS Regs provides is that:
“ Where the amount of a claimant’s income fluctuates and has changed more than once, or a claimant’s regular pattern of work is such that he does not work every week, the foregoing paragraphs may be modified so that the weekly amount of his income is determined by reference to his average weekly income– (a) if there is a recognisable cycle of work, over the period of one complete cycle (including, where the cycle involves periods in which the claimant does no work, those periods but disregarding any other absences) (b) in any other case, over a period of five weeks or such other period as may, in the particular case, enable the claimant’s average weekly income to be determined more accurately. ”
[14]This provision mirrors regulation 5(2)(b) of the IS Regs. Regulation 5 of the IS Regs is concerned with whether a claimant’s is engaged in remunerative work, that is work of not less than 16 hours a week for which payment is made or which is done in expectation of payment. Regulation 5(2)(b) then addresses the corollary of regulation 32(6) – but in the context of hours of work rather than the income earned – and is concerned with assessing the average weekly hours worked in a case where the work in which the claimant is engaged fluctuates. The importance of the remunerative work rule is that if the claimant’s (average) hours of work are 16 or more a week then that of itself disentitles him or her to income support: per section 124(1)(c) of the Social Security Contributions and Benefits Act 1992.[15]The decided cases I referred to when giving permission to appeal were all concerned with this remunerative work rule (or its equivalent in the Jobseeker’s Allowance Regulations 1996) as opposed to the average income rule in regulation 32(6) of the IS Regs. The remunerative work rule has no adverse bite in respect of the appellant here because even if the focus was just on the one week of work in issue, he only worked for 10 hours in that week. However, the degree of commonality between regulations 5(2)(b) and 32(6) of the IS Regs means that what is said in the case-law on the former about “recognisable cycle of work” ought to apply across to the latter.[16]However, before turning to that case-law it is worthwhile to tease out the terms of regulation 32(6) of the IS Regs a little. It applies in two circumstances: either where the claimant’s income fluctuates and has changed more than once (i.e. there have been at least two changes in income); or where the claimant’s regular pattern of work is such that he does not work every week. The Secretary of State appears to accept that the appellant’s income had in fact changed more than once (including, presumably, the cup match payment(s)). If that is the case, consideration then has to fall on which of sub-paragraphs (a) or (b) applies, and consideration need not be given to whether the appellant’s regular pattern of work was such that he did not work every week. However, even with this test the focus seems to be in terms of the pattern of weeks when the claimant works and weeks when he does not, as opposed to first seeking to identify of the working weeks what was the regular work and what was irregular work (e.g. a one-off week in which a cup match fell). But as this part of regulation 32(6) seems not to be in issue, and I have received no argument on it, I say no more about the reach of this particular test.[17]In either case, the average weekly amount of income is to be determined either over one complete recognisable cycle of work if there is one (sub-para. (a)), or, if there is not such a cycle, over a period of five weeks or such other period as may enable the average weekly income to be determined more accurately. If there is no recognisable cycle of work and the five week period or any other period chosen does not enable the claimant’s average weekly income to be determined more accurately, it would seem that regulation 32(1) of the IS Regs would be unable to be modified and so it (i.e. regulation 32(1)) would have to apply to the individual payment.[18]However, the issue in this case is whether at the time of the payment of £60.80 the appellant had a recognisable cycle of work. It is here that the case-law under regulation 5(2)(b) assists. What R(JSA)1/07 and Saunderson –v- SSWP [2012] CSIH 102 , tell us, amongst other things, is that it is a mistake to assume, or proceed on the basis, that a seasonal worker will, or will be likely to have, a cycle of work of a calendar year. How then to decide whether in fact the appellant here had a recognisable cycle of work of a year, including the off-season when he did no stewarding work at all? The answer lies, in terms of approach at least, in a case I did not refer to when I gave permission to appeal. This is the Tribunal of Commissioner’s decision in R(JSA) 5/03 .[19]R(JSA)5/03 was concerned with the rule in regulation 51(2)(b) of the Jobseeker’s Allowance Regulations 1996 (the “JSA Regs”), which is the equivalent to regulation 5(2)(b) of the IS Regs. It was thus concerned with determining what a person’s average work hours were in a situation where the number of hours for which the claimant was engaged fluctuated. The particular context of the cases before the Tribunal of Commissioners in R(JSA)5/03 was teachers employed on part-time contracts in which they had no work over the school holidays and where their hours fluctuated during term time, and where there was an element of uncertainty as to whether they would be employed the following term. Taking the summer holiday as the most obvious example, the question the Tribunal of Commissioners had to grapple with was whether during the summer holiday the teacher was still within a recognisable cycle of work (and thus was still in remunerative work and not entitled to jobseeker’s allowance during those holidays).[20]As is evident from the passage I am just about to quote, the key focus for the Tribunal of Commissioners in answering this question was on the contract or agreement between the employer and the employed and how it addressed periods of no work and “re-employment” at the end of the summer break. The key part of the decision is paragraph 22, where the Tribunal of Commissioners ruled: “ In our view, the approach taken by decision-makers should be as follows. Where a contract of employment comes to an end at the beginning of what would be a period of absence from work even if the contract continued, the person should be taken still to be in employment if it is expected that he or she will resume in employment after that period, either because there is some express arrangement, though not necessarily an enforceable contract, or because it is reasonable to assume that a long standing practice of re-employment will continue ”.[21]I can see no reason for not applying that approach also to regulation 32(6)(a) of the IS Regs and the facts of the appellant’s case. It was this same approach that was adopted by Commissioner Howell QC in R(JSA)1/07 in the context of people only employed during the summer season, where he explained with his usual clarity the material issues (so far as this appeal is concerned) in this way (at paragraphs 14-16):
“ In each of these cases the tribunal recorded a finding, which is challenged by the Secretary of State, that after the claimant’s employment had been terminated at the end of the summer season he or she had no “expectation” of work at the start of the next season the following spring, but only a “hope”: that he or she would again find work in the tourist industry with the same or another employer, which in either case would as the tribunal found involve having to apply afresh at that time in competition with the large pool of other people seeking similar work. The reason this is an issue is that in accordance with established authority on persons who continue in work on a year-round but sessional basis (such as those employed in schools or universities who do not work during the holidays or vacations) it is not the continuing existence of a formal contract of employment that is crucial in determining whether there is a continuing employment relationship, and thus whether the person concerned should count as being in or out of work. In particular, a Tribunal of Commissioners emphasised in paragraph 22 of the decision in R(JSA) 5/03 that: “Where a contract of employment comes to an end at the beginning of what would be a period of absence from work even if the contract continued, the person should be taken still to be in employment if it is expected that he or she will resume in employment after that period, either because there is some express arrangement, though not necessarily an enforceable contract, or because it is reasonable to assume that a longstanding practice of re-employment will continue.”
In such circumstances regard is to be had to the reality of what is in substance a continuing job, and the person concerned may be found to have continued in remunerative work in the same way as one whose contract had formally continued. There are obviously shades of potential meaning in the word “expectation” in this context, and I do not need to say whether I would have chosen to formulate the point in precisely the way the Tribunal of Commissioners did in the paragraph just quoted. What is important is that the existence of such an expectation is a question of fact to be determined in the circumstances of the individual case; and I am not persuaded that the facts found in the present three cases, where the employment and work conditions were of course materially different from the much more regular kind of job the Tribunal of Commissioners had in mind, required the tribunal to treat these claimants in the same way as analogous to a person remaining in work though with nothing to do during a fixed holiday or vacation period. For my part I agree with the submission of Ms French on behalf of the claimants that there would need to be some element of mutuality in the arrangement or understanding between employer and employee before the kind of “expectation” in point here could be found to exist, of which there is no kind of evidence in any of these cases; but at all events the tribunal’s conclusion that in none of them did the evidence establish the claimant had anything more than a hope of being able to get similar or other work again the following season, not amounting to a continuing employment relationship or expectation sufficiently close to it, was not in my judgment perverse or unreasonable on the facts found, and on that basis I cannot interfere with it ”.[22]A similar working out of this principle is found in paragraphs 9-11 of R(JSA)1/06 (expressly approved in R(JSA)1/07 ), where Commissioner Jupp (as she then was) said:
“ The Secretary of State’s representative submitted a skeleton argument on 25 January 2005, in preparation for an oral hearing which was then postponed, in which he raised the issue of whether the claimant remained within a recognisable cycle of work after he stopped working on 2 November 2002, so that he should be considered as remaining in remunerative work after that date under regulation 51 of the Regulations, irrespective of the holiday pay issue. A Tribunal of Commissioners held in R(JSA) 5/03, paragraph 22 that: “Where a contract of employment comes to an end at the beginning of what would be a period of absence from work even if the contract continued, the person should be taken still to be in employment if it is expected that he or she will resume employment after that period, either because there is some express arrangement, though not necessarily an enforceable contract, or because it is reasonable to assume that a longstanding practice of re-employment will continue.”
In the submission of the Secretary of State’s representative, it was not apparent from the papers whether the claimant remained within a recognisable cycle of work, and this issue should be determined before a decision could be made on how the claimant’s holiday pay should be treated. [The claimant’s representative], in his submission of 12 April 2005, responded to this last point by advising that, as instructed by the claimant, in this case the facts were that he had worked as a seasonal custodian for his employers for three years prior to the period of employment immediately relevant to this appeal. He had “gone back” to work for them at the same place in March 2003. In each of the years for which he had worked there, he had been given a contract for a minimum of 27 hours a week for three days a week from March to September, and then a new/amended contract for October of that year for eight hours per day – a minimum of 24 hours a week – due to the change in seasons and reduction in the hours the premises were open. Each new contract was discrete and the claimant applied for employment each year. In January of each year he was asked to indicate if he wished to be considered for the following season and, if so, to complete a new application form. This was assessed in open competition with others, and followed by a formal interview. Although in the initial years interviews had taken place, subsequently this had been dispensed with; the claimant understood this to be so that the employers could save the travelling expenses involved in his travelling to interview. He had worked for his employers for the 2003 season, but was not offered a position in 2004, and in the current year of 2005 had declined to apply because of his broken arm. At the oral hearing, [the claimant’s representative] reiterated the points made in his skeleton argument and [the Secretary of State’s representative] supported the view that the employment ended on 2 November 2002. I may say at this stage that I accept this submission. There is no reason to suppose the details given by the claimant are inaccurate and whilst the claimant may have held the post of seasonal custodian for five successive summers in total, there is nothing to indicate that the claimant should be considered as remaining in employment after 2 November 2002. In these circumstances, regulation 51 of the Regulations has no application ”.[23]As the relevant wording in regulations 32(6)(a) and 5(2)(b) of the IS Regs and 51(2)(b)(i) of the JSA Regs is identical – “ recognisable cycle of work ” - I can see no reason why the approach set out in the three decisions above ought not to apply to determining whether the appellant was in a recognisable cycle of work when he was paid £60.80, and, if so, whether the cycle was for a calendar year. It would be an odd result if a different approach was to be applied just because in one situation what is being sought is the average weekly hours of work and in another the average weekly income earned from those hours of work.[24]That no doubt was why District Tribunal Judge Moss on 26 April 2012 directed the appellant to produce his contract of employment with the football club. As far as I can see that document, or anything equivalent to it, was never produced to the tribunal that then decided the appeal. On the basis of the above analysis and paragraph 22 of R(JSA)5/03 in particular, however, I struggle to understand the basis on which the tribunal felt able to conclude that the appellant’s work did fall into a pattern - if by doing this it was concluding that the appellant had a recognisable cycle of work - in the absence of evidence as to the terms (express or implied) of the appellant’s contract with the football club.[25]On the other, if what the tribunal decided (and its reasoning here is sufficiently unclear as to itself justify setting the decision aside for want of adequate reasons) was that the analysis never got to “recognisable cycle of work” because the income in question did not form part of the regular pattern of work, that was a flawed approach for the reasons set out in paragraph 16 above given the Secretary of State’s acceptance that the appellant’s income had changed more than once.[26]The tribunal’s decision dated 4.09.12 must therefore be set aside. As I do not have the contract of employment or agreement between the appellant and the football club before me, or any evidence as to the substantive working relationship between the appellant and the club over his period working for it, or any evidence of how the appellant’s not working for the club from February 2011 was addressed under the contract, I am not in a position to re-decide the first instance appeal.[27]The appeal will therefore have to be re-decided by a completely differently constituted First-tier Tribunal (Social Entitlement Chamber). The appellant’s success on this appeal to the Upper Tribunal on error of law says nothing one way or the other about whether his appeal will succeed on the facts before the First-tier Tribunal, as that will be for that tribunal to assess in accordance with the law and once it has properly considered all the relevant evidence.[28]The fresh tribunal must decide the appeal in accordance with law as set out above. It will assist the tribunal if the appellant was to attend the hearing before it and/or provide it with as much documentary evidence of his contract/agreement to work for the football club as a steward. If such a document does not exist (and it ought to – though I note on page 36 he says he doesn’t have a (written) contract), then the appellant will need to explain as best he can the nature of his agreement to work as a steward for the football club, how the off-season was treated under the agreement, how his time off from February 2011 was dealt with, and whether he had to reapply (and if so how) for the job of steward in August of each year. The more casual was his working relationship with the club the less likely it may be that he will have been in a recognisable cycle of work.[29]For the reasons set out above, it seems that it is accepted by the Secretary of State that the appellant’s income had changed more than once and therefore regulation 32(6) could apply. If that is correct then the issue for the tribunal to decide will be which (if either) of sub-paragraphs (a) and (b) under regulation 32(6) of the IS Regs applies on the evidence before it.[30]The appellant will shortly be contacted to ask if he wishes to attend the hearing before the First-tier Tribunal. It is a matter for him if he attends or not. However, for the reasons given above, it is likely to assist the tribunal to decide his appeal if he does attend.[31]I make one final observation. The appeal has proceeded on the basis that the appellant was an employee of the football club at the relevant time. If instead he provided a contract for services and so was self-employed, regulation 32 of the IS Regs will have no application. ( Signed) S. M. Wright Judge of the Upper Tribunal Dated 6 th August 2013

Cited in 2 later judgments