KR v The Secretary of State for Work and Pensions

Where fluctuating earnings have changed more than once, regulation 8(3) of the Social Security Benefit (Computation of Earnings) Regulations 1996 permits a rational, case-specific average which more accurately reflects weekly earnings. Irregular work and retrospective assessment do not, without more, prevent use of regulation 8(3)(b).

The opening words of regulation 8(3) identify the circumstances in which averaging may be used. They do not impose a temporal bar which excludes the first two earning periods from the averaging exercise. The relevant period is the period which enables average weekly earnings to be determined more accurately.

On an appeal, the First-tier Tribunal must exercise the regulation 8(3) discretion afresh. It is not confined to reviewing the Secretary of State’s exercise of that discretion.

KR v The Secretary of State for Work and Pensions concerned entitlement to Carer’s Allowance by a claimant employed on a zero-hours basis as an appeals-panel clerk. Her hours and monthly payments varied. The Secretary of State decided that her earnings exceeded the weekly limit for specified periods in 2018.

The First-tier Tribunal dismissed her appeal. It found no recognisable cycle of work under regulation 8(3)(a) and did not average her earnings under regulation 8(3)(b). It also treated the regulation 8(3) discretion as one for the Secretary of State.

On appeal, the parties agreed that the tribunal had erred by failing properly to consider regulation 8(3)(b) and the exclusion of certain work expenses. The remaining issue was whether averaging could apply from the outset of the fluctuating pattern, rather than only after a second change in earnings.

1. Appeal allowed. The First-tier Tribunal had erred in law. It gave no adequate consideration or reasons concerning regulation 8(3)(b) of the Social Security Benefit (Computation of Earnings) Regulations 1996. Irregular earnings do not themselves exclude that provision, which is intended to have application to irregular earners. Nor does retrospective calculation provide a determinative bar.

2. The tribunal also erred if it regarded its task as a judicial-review-type review of the Secretary of State’s discretion. On an appeal concerning regulation 8, the First-tier Tribunal must, where appropriate, exercise the regulation 8(3) discretion afresh.

3. The proper construction of regulation 8(3) was that fluctuating net earnings which have changed more than once are the condition permitting averaging. The wording does not state that averaging can operate only from the third earning period. A decision maker may take the first two earning periods into account if doing so enables average weekly earnings to be determined more accurately. Whether a period should be included turns on that statutory criterion, not on an automatic exclusion.

4. The Secretary of State’s construction would add an unwarranted fetter to regulation 8(3)(b), could lead to double-counting, and was not supported by administrative-workability concerns. The tribunal also failed properly to consider the exclusion of qualifying travelling and subsistence expenses under regulation 9.

5. Under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007, the tribunal decision was set aside. The Secretary of State’s decisions of 5 January and 30 May 2019 were also set aside, and entitlement to Carer’s Allowance was remitted to the Secretary of State for redetermination in accordance with the Upper Tribunal’s ruling.

• Upper Tribunal (Administrative Appeals Chamber): Allowed the appeal, set aside the First-tier Tribunal’s decision for errors of law, and remitted entitlement to Carer’s Allowance to the Secretary of State for redetermination.
• First-tier Tribunal (Social Entitlement Chamber): On 8 December 2020, dismissed the claimant’s appeal against decisions that her earnings exceeded the applicable limit for Carer’s Allowance.