Sometimes a UC claimant's monthly award can be based on two months' wages (with the following assessment being based on no wages at all). This can happen when the claimant gets paid a wage early due to their normal payday falling at the weekend - click here, or just because of the way their pay day works with their Monthly Assessment Period.
This can mean that some claimants are:
- Worse off - as only one earnings disregard (or what the DWP call work allowance*) will be applied across the two wages.
- Better off - where they are not entitled to a work allowance* and only normally receive a small amount of UC (click here for an example).
*The work allowance is the amount of earnings claimants with children or with limited capability for work is ignored before their maximum UC award is reduced at a rate of 63p per pound of net earnings.
What if the claimant is worse off?
This is a problem which has affected many working claimants and has been widely reported in the press. Not only were they losing out financially, but the fluctuations in their Universal Credit awards were also causing cash flow difficulties, leading to them falling into debt and, for some, having to choose between paying their rent or paying their childcare costs.
BUT the UC Regulations do allow the DWP to allocate a wage to a different Monthly Assessment Period.
And we have two standard letters that you can use depending on the reason why two wages have been taken in one Assessment Period:
if it's because one wage was paid early as due to be paid on a non-banking day
if it's just because the way the claimant's wages and assessment periods fall.
I thought there was a High Court decision that meant the DWP couldn't take two wages into account in one Assessment Period any more?
And indeed, the Court found that, correctly interpreted, the Regulations mean the DWP can and should adjust its calculation of Universal Credit awards when “it is clear that the actual amounts received in an assessment period do not, in fact, reflect the earned income payable in respect of that period”.
Whilst we hope that this will eventually mean that wages will be allocated to the Monthly Assessment Period in which they would have normally been paid, rather than to the Monthly Assessment Period in which they were received, the 'remedy' suggested by the High Court in this case could be unworkable. Their suggestion is that the wages should be allocated to the Assessment Period within which they were earned. This would usually result in one on the wages being attributable to a previous Assessment Period ie one that has already been assessed and paid - meaning that the award would need to be re-assessed. The problem is that usually that Assessment Period already includes an earnings payment - so attributing another wage into the previous Assessment Period means the problem repeats itself!
So it is difficult to see that the DWP will be able to implement this decision.
In the meantime please use one of the letters above,
NOTE: Free School Meals........where a UC claimant's earnings in a Monthly Assessment Period have dropped below £610 - then they are able to apply for Free School Meals for their children, and, once awarded, their child/ren will remain entitled to Free School Meals up until the end of their current level of education even if the parent's income increases or they come off UC altogether. Click here
for more information.
NOTE: UC reclaims........where a UC claimant's award drops to nil, their UC claim should be closed down - meaning they have to make a reclaim for it to ensure payments continue. We understand that no formal system was in place to ensure this happened - but that due to recent system improvements, it will now generate a 'to do' to DWP so that these claims are closed. This means claimants will have to make a reclaim if they want any future entitlement they are entitled to - click here
for more information.