This time last year our Money Advice Officer wrote an article about steps you can take to prevent your Universal Credit being reduced if you are paid early at Christmas time. A recent Court of Appeal case has led to a change in the law giving new powers to the DWP to reallocate wages to different assessment periods, so there is now an extra way to deal with this issue.
What’s the Problem?
Universal Credit payments are calculated every month based on income paid in a strict period of time known as an ‘Assessment Period’. It does not matter what period the wage payment relates to, only the date it is paid. Therefore, if wages are paid monthly and the usual payment day falls on a weekend or bank holiday, it is common practice to pay them on the closest available working day prior to the usual payment date. This early payment can cause 2 wage payments to be paid in the same Universal Credit Assessment Period and the calculation would then take into account both wages, meaning that Universal Credit for that month is greatly reduced or cancelled out entirely.
In the Court of Appeal case of SSWP v Johnson, Woods, Barrett & Stewart it was decided that this method of calculation was irrational. Following this Judgment, the law was changed to give the DWP extra powers to treat a wage payment made in one assessment period as a payment for a different assessment period instead. This only applies where wages are paid calendar monthly (not weekly, fortnightly or 4-weekly where similar problems arise), and only for assessment periods that start after the new law came into force on 16 November 2020.
How does this work?
At the time of writing (December 2020), there is no automatic way for the Universal Credit computer system to know when a double-wage payment happens and it’s not likely to be resolved for a long time. Therefore, it will be up to claimants to highlight whenever this happens by asking the DWP to recalculate their Universal Credit payments based on the correct wages, and specifying which payment relates to which assessment period. This is done by requesting a ‘Mandatory Reconsideration’ of the decision about how much to pay that particular month, and this process needs to be repeated every time the double-wage payment happens.
What about previous assessment periods?
The new law states that it only applies to assessment periods that start after 16 November 2020. However, considering the Court decided the previous law was irrational, it is worth challenging these old decisions by lodging Mandatory Reconsiderations on the same grounds as in the Johnson case. It would be worth getting advice from a welfare benefits specialist to do this. It’s early days and it isn’t clear at this stage how the DWP or Tribunals would react, but it’s always worthwhile putting pressure on agencies to rectify these sorts of situations.
How can the issue be prevented?
This problem illustrates how the timing of a Universal Credit claim can be crucial. If you’re claiming Universal Credit for the first time and you are being paid calendar monthly from work, it’s best to try and avoid claiming on your usual payment day, or in the few days leading up to this. Any other time of the month would avoid this particular problem.
Where can I get help?
If you’re a Warrington Housing Association resident and need advice about this issue you can get in touch with our Money Advice Officer, Steven, for a free appointment. Otherwise you could contact Citizens Advice for some support.