Dismissal from work to be reversed, and sent via Payroll - what happens with Universal Credit

Elmslie2212

Apologies if this has been asked previously, I did search the forum first before posting.
It is a long story, though I will try to keep it short.
I was diagnosed with a chronic illness,  and my employer would not make any adjustments to allow me to return. I appealed the decision and, at the appeal meeting a year later, the decision was reversed. The HR department has advised it will be like I never left,  and my pay will be given back to me at the end of the month.
Whilst working, I was in receipt of Universal Credit which slowly increased as my salary reduced. Though if I am to be paid back for the time I was on full benefits, I assume that I speak to UC and ask them what I owe them pay this back from my payment.
After this though, I will still be in the same position with my health, and I will not be returning to work so will my claim still remain the same?
Thank you in advance.

calcotti

I think you should not have to pay back any UC. Because entitlement is calculated monthly based on earnings received you will be entitled to what you have received.

If you now receive a year of wages in one go you will obviously have no entitlement to UC in that month. It is likely that your wages will be so far over the amount that would nil your UC entitlement that there will be ‘surplus earnings’ to be carried forward to the following month. The rules around these are complex, suffice it to say that you may have a nil entitlement for a few months while the ‘surplus’ is eroded. However for the earnings to erode you have to keep your claim live. What will probably happen is that when you have a nil entitlement your claim will be closed. You need to then do a rapid reclaim through your journal. If your entitlement is again nil your claim should be closed again, you need to do a rapid reclaim again. Repeat for as many months as necessary. 
See https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/surplus-earnings-and-losses/. Although this refers to self employment the surplus earnings rules are the same for employed claimants.

Eventually you will reestablish entitlement and start receiving UC payments again.

Elmslie2212

Thank you for responding Calcotti, that does make sense.  I had read about the 'surplus earnings', though it was a bit confusing. I could post what happens, as it  may help others.

calcotti

See also page 16 of this https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/864888/Universal_Credit_and_You.pdf
and
https://www.gov.uk/universal-credit/how-your-earnings-affect-your-payments

Alice_Holt

Just wondering if New Style ESA is a possibility, and how that might affect / interact with the UC surplus earnings rules.  
It would mean some income in the months UC won't be paid, I think.

Elmslie2212, is a PIP claim possible due to your chronic illness?
https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/pip/

Elmslie2212

Alice, thank you for responding. I get PIP already, so that wouldn't change, though I will look in to ESA too.

calcotti

If getting new style ESA at the same time as the ‘surplus earnings’ are being diminished the ESA income would have the effect of potentially extending the period of time it would take to extinguish them. Bearing in mind that OP will have received the arrears payment, being without benefit income for a few months might not be an issue.

I think the calculation works like this. Let’s say the UC entitlement is £630/month. This means that earnings of £1000 would result in a nil award (assuming no Work Allowances). If actual earnings are £10,000 the surplus earnings are £9,000. After the £2,500 disregard £6,500 is carried over. Next month the surplus earnings are therefore £5,500 with £3,000 carried over. The following month the surplus earnings are therefore £2,000 which then fall to be disregarded the next month so the UC payable is the full £630.

if ESA is being paid at the Assessment rate this is £316.77/month leaving only £313.23 UC payable. Earnings of £497.19 will therefore result in a nil UC award. In the first month the surplus earnings are now £9,502.81 with £7,002.81 carried forward. Then surplus earnings are £6,505.62 with £4,005.62 carried forward. Surplus earnings are then £3,508.43 with £1,508.43 carried forward. This means that it has taken an extra month to eliminate the surplus earnings which is a loss of £630 of UC but £1,267 of ESA has been received over the period. There is therefore a net gain. 

I suspect that having the ESA will generally be beneficial but the calculations to work through this are, as indicated, quite complicated and perhaps there are scenarios in which there isn’t again depending on the numbers involved. If the gains are small it may be more desirable to get rid of the surplus as fast as possible to avoid having to reclaim every month.

Another point to note is that the £2,500 surplus earnings monthly disregard was previously announced as dropping to £300 in April although I am not sure if this has been confirmed. Obviously if the disregard is reduced the surplus earnings will again take longer to extinguish. 

calcotti

Additional thought, I have overlooked the six month limit.

If the amount of money received is such that it would take more than 6 months for the surplus earnings to disappear it may be easier not to make repeat rapid reclaims. The claim could simply be allowed to close and a completely new claim made after six months. This is because surplus earnings cease to be taken into account if it is more than six months since the money was received.

If the rapid reclaim route is followed the money received will still be ignored as earnings after six months, but any money in the bank would still count as capital.

Either way, the six month limit strengthens the argument for claiming new style ESA if elegible as suggested by Alice.

(Universal Credit - designed to simplify the benefits system!)