Some claimants with earnings could be missing out on a Work Allowance for up to 3 months of their Universal Credit, because they are not having it applied from the correct date.
Claimants, or their advisers, may need to look out for this and make requests for decisions to be revised. Otherwise, some claimants could be missing out on up to 55% of their relevant Work Allowance.
Many people need to start a Universal Credit (UC) claim because they have had a drop in income due to sickness or injury. Others may already be on UC, and then fall sick and start supplying medical evidence (ie self-certification /fit notes). In either case the claimant will generally have a 3 month ‘relevant period’ during which they are assessed to determine if they have Limited Capability for Work and/or Limited Capability for Work-Related Activity (LCW or LCWRA).
Having LCW or LCWRA might:
• qualify a claimant for an extra UC element
• excuse them from some, or all, work-related requirements
• lead to some of their (or their partner’s) earnings being disregarded (the Work Allowance).
This article focuses on some of the rules around when the last bullet point, the Work Allowance, can take effect. Is it from when a claimant first reports their illness to UC, or is it only after the ‘relevant period’?
The ‘relevant period’, and UC elements
The LCWRA Element of UC cannot normally be paid during the ‘relevant period’ (UC Reg 28). There are exceptions for terminal illness, or where the UC claim can link to a previous determination of LCWRA. In those cases, the LCWRA Element can be paid straight way. Payment of the LCW Element was similarly affected by the ‘relevant period’, until the LCW Element was abolished for new periods of sickness on 3.4.2017.
LCW/LCWRA status and the Work Allowance
If a claimant, or their partner, has LCW/LCWRA then a Work Allowance will apply to any earnings that they have (UC Reg 22). We believe that if someone falls under a rule which says they are to be ‘treated as’ having LCW/LCWRA, then the Work Allowance should likewise apply.
Earnings include normal wages, and can also be Statutory Sick Pay for example, or a final payment received after a job ends. The effect of the Work Allowance is that the first £379 per month (or £631 per month, if no Housing Costs Element or living in ‘temporary accommodation’) of earnings is ignored in the UC calculation.
Claimants with children will qualify for the Work Allowance regardless of their LCW status. But for those who have earnings and are without children, getting the Work Allowance by the LCW route can make a significant difference to the amount of UC they get.
More on the Work Allowance here.
When does a determination of LCW/LCWRA take effect?
Under certain exceptions to Reg 28 of the UC Regulations (see above), a UC decision-maker might be able to accept that someone has LCW/LCWRA from the point that they qualify. For example, this could be when deciding an initial UC claim they can see that the claimant already has LCW/LCWRA via an ESA award. In other cases the DWP might only decide LCW status following a Work Capability Assessment, or after obtaining relevant evidence. But some claimants can be ‘treated as having’ LCW/LCWRA status (see below). The decision-maker will then need to consider from what date that LCW/LCWRA status applies – and therefore the Assessment Period the Work Allowance should be applied.
The ’relevant period’ does not apply to the Work Allowance
The law on this is not clear, and there is little guidance that is directly relevant.
However, we believe that the Work Allowance should be applied from
• the start of the UC claim , or
• the Assessment Period in which they first provided medical evidence
ie the ‘relevant period’ does not apply to the Work Allowance (see below for our reasoning).
How does getting the Work Allowance work in practice?
We know that DWP sometimes, but do not always, apply the Work Allowance from the start of the relevant period or UC award. Asking on the UC journal to intervene and change a decision can be successful.
We have two standard letters that can help:
UC LCW19: Request to include Work Allowance from MAP during which relevant period started when found to have a LCW/LCWRA
UC LCW20: Claimant request to be treated as having LCW/LCWRA and for Work Allowance to be applied from the start of the relevant period
These letters are part of our UC LCW help pack - click here.
Example 1: Retrospective LCW
Trevor is a single homeowner. He has a car accident and goes off sick from his job. His employer pays him SSP, which Trevor tops up by claiming UC. He supplies a GP fit note, and his work coach refers Trevor for a Work Capability Assessment (WCA). None of the routes described above, to automatically having LCW, or being treated as having LCW, apply to Trevor.
While he is waiting for the outcome of his WCA, 55% of Trevor’s excess earnings are deducted from his UC award. He has no Work Allowance, so this amounts to:
55% x £109.40 (SSP) x 52 /12 = £260.73 per month of excess earnings.
Trevor’s maximum UC is just his personal allowance of £368.74 per month, so this leaves Trevor with a UC award of £108.01 per month to top up his SSP.
After 3 months, Trevor is subsequently found to have LCW by scoring 15+ points in the WCA. His UC award in his 4th consecutive assessment period includes a Work Allowance. This allowance is £631, which exceeds his SSP. All his earnings are therefore ignored, and Trevor now gets the full £368.74 per month of UC to top up his SSP.
Now that he has LCW, Trevor requests on his journal for the Work Allowance to be applied retrospectively to when he first supplied his medical evidence at the start of his claim. If Trevor is successful, DWP apply the Work Allowance from the first Assessment Period, and Trevor will get a further £782.19 in arrears of UC.
Example 2: Treated as having LCW
Milly was working, and getting UC to help pay the rent (£450 per month). She was then dismissed from work and also has to go into a rehabilitation clinic to treat an addiction (likely stay 4 months). She supplies UC with a fit note and starts the WCA process. She returns her UC50 form on which she reports that she has entered residential rehabilitation.
Milly’s final net wage, including accrued holiday pay, and pay in lieu of notice, amounts to £1200. She receives this during her first UC assessment period. DWP calculate her UC award as:
(£368.74 personal allowance + £450 housing element) = Maximum UC = £818.74
minus assessable income of 55% x £1200 = £660 excess earnings.
= £158.74 of UC for the first assessment period
Milly asks DWP to reconsider this calculation. She tells them she has been advised that being in a residential treatment programme means that she should be treated as having LCW, and so a Work Allowance should have been applied to her earnings without needing to serve a waiting period or to wait for her WCA outcome. DWP recalculate her UC to include a £379 work allowance:
(£368.74 personal allowance + £450 housing element) = Maximum UC = £818.74
Minus assessable income of 55% x (£1200 - £379) = £451.55 excess earnings.
= £367.19 of UC for the first assessment period.
Why the ‘relevant period’ does not apply to the Work Allowance
Reg 35(9) of the [Decision and Appeal etc 2013] Regulations says that a determination of LCW or LCWRA takes effect either:
(a)in a case to which [reg 28(1) of the UC Regs] applies, from the beginning of the assessment period specified in that paragraph; or
(b)in any other case, from the beginning of the assessment period in which the decision (if made on the Secretary of State's own initiative) or the application for a supersession was made.
The intention of sub-para (a) seems to be to link LCW and LCWRA status to entitlement to the corresponding UC Element, which according to Reg 28 of the UC Regulations can usually only be paid after the 3 month relevant period. However, Reg 28 was amended in 2017 to remove references to the LCW Element, because that element was abolished. It is therefore arguable that sub-para (a) does not apply when deciding an effective date of LCW, and so we must apply sub-para (b) instead. This would make LCW/LCWRA a more free-standing status, as LCW/LCWRA determinations would then take effect from the assessment period in which the claimant applies for it.
We have further discussion of this issue here.
Circumstances in which a claimant is to be treated as having LCW
There are rules which allow for claimants in certain circumstances to be treated as having LCW or LCWRA.
If the health circumstance exists at the start of the UC claim then we believe that the Work Allowance should apply straight away, without waiting for the outcome of the WCA. Similarly for those already on UC, the Work Allowance should apply from the Assessment Period in which they first provide medical evidence that they fit the rules for being treated as having a LCW.
These situations are (see Schedule 8 of the UC Regs):
1. They are receiving certain treatments (or in some cases are recovering from them). These treatments are:
(a) regular weekly treatment by way of haemodialysis for chronic renal failure;
(b) treatment by way of plasmapheresis; or
(c )regular weekly treatment by way of total parenteral nutrition for gross impairment of enteric function.
2. They are undergoing (or in some cases, recovering from) treatment as an in-patient in a hospital or similar institution. This can include attending a residential programme of rehabilitation for the treatment of drug or alcohol dependency.
3. They are prevented from working by law, for example under the Public Health (Control of Disease) Act 1984 due to having an infectious disease.
4. They are a risk to themselves or others, and the risk could not be reduced by taking prescribed medication, or by reasonable adjustments being made in the claimant's workplace. The claimant must be ‘suffering from a specific illness, disease or disablement by reason of which there would be a substantial risk to the physical or mental health of any person were the claimant found not to have limited capability for work’. ^
5. They have a life-threatening and uncontrolled disease.^
6. They are over State Pension age and get a qualifying disability benefit (ie Personal Independence Payment/Adult Disability Payment, Disability Living Allowance). This could apply to the older member of a mixed-age couple who are claiming UC.
^ Will only apply if the claimant does not qualify for LCW through the normal WCA route (UC Reg 39 (6)).
There is a similar list of routes to being treated as having LCWRA given in Schedule 9 to the UC regs, - which include people who are terminally ill and whose death can reasonably be expected within 6 months, and those on Attendance Allowance. Click here for the full list.