Hagan v Secretary Of State For Social Security

Reduced earnings allowance is assessed by reference to each industrial accident that causes a change in the claimant’s regular occupation and a consequent loss of earnings. Where successive accidents cause successive occupational changes, separate claims and awards may be made for each accident. The 40% ceiling applies to each award, while the aggregate of disablement pension and all reduced earnings allowance awards remains subject to the overall 140% ceiling. Statutory aggregation of disablement percentages for pension purposes does not require aggregation of earnings losses for reduced earnings allowance. The statutory reference to one or a number of awards supports that construction.

The claimant suffered two industrial accidents, each followed by a change in his regular occupation. His first claim for reduced earnings allowance was refused, while a later claim relating to the second accident was allowed. The Social Security Appeal Tribunal rejected the appeal concerning the first accident. On further appeal, the Social Security Commissioner held that only one reduced earnings allowance claim could be made in respect of all accidents and awarded benefit for one week.

The Secretary of State appealed, arguing that each accident and consequential occupational change could generate a separate claim and award. The central issue was whether the statutory scheme required the accidents and earnings reductions to be aggregated in a single claim.

Disposition

Lord Justice Schiemann delivered the judgment, with Lord Justices Mance and Keene agreeing. The appeal was allowed. The Commissioner’s decision was affirmed in part, set aside in relation to the aggregation issue, and the claimant was declared not entitled to reduced earnings allowance for 7 to 13 January 1998. There was no order for costs.

1. Separate accidents and claims. Reduced earnings allowance compensates for the reduction in earnings caused by the relevant industrial accident and the resulting change from the claimant’s regular occupation. Where successive accidents each cause a further occupational change and further loss of earnings, the scheme permits separate claims and awards in respect of those accidents.
2. Limits on awards. Paragraph 11(10) of Schedule 7 to the Social Security Contributions and Benefits Act 1992 applies the 40% limit to each reduced earnings allowance claim. It separately imposes an overall limit of 140% of the maximum disablement pension on the combined payments of disablement pension and reduced earnings allowance.
3. No aggregation of earnings losses. Section 103(2) of the Social Security Contributions and Benefits Act 1992 permits aggregation of assessed percentages of disablement for disablement pension purposes. It does not authorise or require aggregation of reductions in earnings from successive accidents for reduced earnings allowance purposes.
4. Statutory structure. Paragraph 13(1) of Schedule 7 expressly contemplates entitlement arising from one award or a number of awards. The reference in paragraph 11(8) to successive claims is consistent with that construction. The Commissioner therefore erred by relying on the link between reduced earnings allowance and disablement pension, and on section 6(c) of the Interpretation Act 1978, to read the relevant provisions in the plural.

• Court of Appeal (Civil Division): In [2001] EWCA Civ 1452, the appeal was allowed. The Commissioner’s aggregation ruling was set aside and the claimant was declared not entitled to reduced earnings allowance for the week in issue.
• Social Security Commissioner: Held that all industrial accidents and consequential earnings losses had to be dealt with in one reduced earnings allowance claim, and awarded the claimant benefit for one week.
• Social Security Appeal Tribunal: Refused the claimant’s appeal concerning reduced earnings allowance for the first accident.