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CIB/ 4381/2001



This decision has been reproduced in plain text only. If you wish to submit a copy of a decision as part of an appeal, please download a Word copy from the link below.



Commissioner’s File: CIB/ 4381/2001

1. This is an appeal by the claimant, with the leave of a legally qualified panel member, against the decision of the appeal tribunal sitting at Bolton (“the appeal tribunal”) on 26th July 2001. For the reasons set out below, that decision is not erroneous in point of law. I therefore dismiss the appeal.

2. The issue in this appeal is whether section 30DD of the Social Security Contributions and Benefits Act 1992, which was inserted into the 1992 Act with effect from 6th April 2001 by section 63 of the Welfare Reform and Pensions Act 1991, applies to the claim for incapacity benefit which the claimant made or whether the claimant is protected by the transitional provisions of the Welfare Reform and Pensions Act 1999 (Commencement No. 9 and Transitional and Savings Provisions) Order 2000 (SI 2000/2958), as amended. In particular, regulation 3(2) of that Order, which I shall refer to as the “Commencement order”. Putting the matter very simply, the claimant has two small pensions, the total weekly amount of which exceeds £85. He applied for incapacity benefit. If section 30DD applies, then the amount of incapacity benefit to which he is entitled will be reduced to take account of his pensions. On 21st May 2001 a decision maker decided that section 30DD did apply and gave the following decision.
“The claim to Incapacity Benefit of [the claimant] from 5 May 2000 is allowed. There shall be a deduction from Incapacity Benefit of an amount in respect of Pension Income which is to be calculated at the prescribed rate.”
The claimant appealed that decision to the appeal tribunal. His appeal was dismissed and he now appeals to a Commissioner. The decision given on 21st May 2001, is not concerned with the actual calculations involving the prescribed rate and I have not seen any.

3. I begin by thanking the representatives of both the claimant and the Secretary of State for their clear and helpful submissions. The appeal tribunal paid tribute to the care and courtesy with which the claimant’s representative presented the appeal at the hearing before it. He has continued to represent the claimant in a like manner. At one point, he drew attention to the fact that he was not a lawyer. Nevertheless, he has presented the claimant’s case with great clarity. If this decision is somewhat long, then that partly arises from the need to consider the arguments he has presented. I begin by setting out some brief background facts. I shall then set out the central part of the appeal tribunal’s decision. Finally I shall address the law and the arguments.

4. The claimant worked for the social services department of a local authority. He became ill and was unable to work. He ceased working in October 2000. He was paid statutory sick pay (“SSP”) by his employer up to and including 4th May 2001. After that date he ceased receiving SSP. He had, however, already made a claim for incapacity benefit. The claim form is dated 20th April 2001. On 21st May 2001, he was awarded incapacity benefit from 5 May 2001. As already explained, the decision maker considered that section 30(DD) applied and that the claimant’s pensions had to be brought into account.

5. The claimant’s appeal was heard on 26th July 2001, by a tribunal consisting of a chairman sitting on her own. After hearing argument she dismissed the appeal. The decision notice confirmed the decision which had been given on 21st May 2001. The important parts of the statement of reasons for the decision were as follows.
“Under new legislation which came into force on 6 April 2001, a reduction falls to be made from the amount of Incapacity Benefit which would otherwise be due to be paid in respect of pension income. The reduction is calculated in a prescribed manner which is set out in the legislation – The Welfare Reform and Pensions Act 1993, Section 63. Transitional protection was provided in respect of claims to Incapacity Benefit in which entitlement to that benefit commenced before 6 April 2001. There is no transitional protection if there was no entitlement to Incapacity Benefit (The Welfare Reform and Pensions Act 1995, Commencement No 9 and Transitional and Savings Provisions Order 2000, paragraph 3). There is no disagreement between [the representatives for the parties] as to the fact that [the claimant’s] date of claim for Incapacity Benefit was 5 May 2001. The disagreement arose as to whether there was entitlement to transitional protection if the claimant was in receipt of Statutory Sick Pay (SSP). The law is quite clear that where a person receives SSP there can be no entitlement to Incapacity Benefit (Social Security Contributions and Benefits Act 1992, Sections 30A to 30E and Schedule 12, paragraph 1). There is no dispute between [the representatives] that [the claimant] was entitled to SSP until 4 May 2001. [He] could not be entitled to Incapacity Benefit until 5 May 2001, ie the day following the last date of entitlement to SSP. [His representative] feels that there was an incorrect conclusion drawn from the legislation as drafted, in that he feels that it is contrary to the rules of natural justice because it is discriminatory in that, for example, if there were 2 people with the same incapacity start date, one was employed and was unemployed, the latter would have the transitional protection whereas the former would not. Mr Wilson felt that this discriminates against the employed, as they would be treated differently from the unemployed, as the former received SSP. The unemployed person in this instance would have transitional protection. The Chairman passed no view on this and has no opinion as to whether it is discriminatory or not but it is the law and she upholds that the law has been correctly applied in the case of [the claimant], who cannot be entitled to transitional protection under the above legislation. As a consequence thereof [his] entitlement to Incapacity Benefit is subject to deductions in respect of pensions income in the manner prescribed in the legislation. Nor does she uphold the argument put forward by [the claimant’s representative] that there was ‘an underlying entitlement’ to Incapacity Benefit from the beginning of any incapacity and that payment of SSP does not remove that underlying entitlement. However, when considering entitlement to Incapacity Benefit, payment of SSP prohibits entitlement to Incapacity Benefit. SSP and Incapacity Benefit are not overlapping benefits and the period of entitlement to SSP shall not be treated as a period of incapacity when calculating such entitlement to Incapacity Benefit. The Transitional Regulations relate only to where a claimant is entitled to Incapacity Benefit before 6 April 2001 and the legislation holds that a period of entitlement to SSP is not a day of ‘incapacity for work.’ Had it intended to be otherwise, the legislation would have addressed the SSP issue in relation to such matters as incapacity for work and any protection that is afforded to the claimant by the Transitional Regulations.

Accordingly, the decision of the Secretary of State issued on 21 May 2001 is confirmed and the appeal fails.”

6. In my judgment that is a correct and clear statement of the law and therefore the appeal against the tribunal’s decision fails. However, in deference to the able and well researched arguments put forward by the claimant’s representative I now set the matter out in more detail.

7. Crucial to the understanding of this matter is the relationship between incapacity benefit and SSP. The former is dealt with by sections 30A to 30E of the Social Security Contributions and Benefits Act 1992, and the latter by sections 151 to 153 of the same Act. Both benefits are concerned with incapacity for work. SSP, however, only applies to those who are employed or, as the Act puts it, have a contract of service with an employer. Section 151(1)introduces SSP with the words: “Where an employee has a day of incapacity for work in relation to his contract of service with an employer …”. If such an employee has a day of incapacity for work in relation to that contract then, provided certain specified conditions are met, his employer is liable to make a payment to him and that payment is known as SSP. It is a benefit which can only apply to employed persons. Subsection (4) of section 151 provides that for the purposes of SSP “a day of incapacity for work in relation to a contract of service means a day on which the employee concerned is, or is deemed in accordance with regulations to be, incapable by reason of some specific disease or bodily or mental disablement of doing work which he can reasonably be expected to do under that contract”. The concluding words “under that contract” are important. Incapacity is tested by what the employee can reasonably be expected to do under his contract of service.

8. Incapacity benefit is not dependent on employment and for the purposes of the legislation relating to that benefit “a day of incapacity for work” means a day on which a person is incapable of work; see section 30C(1)(a). For incapacity benefit, whether a person is incapable of work is determined in accordance with Part XIIA (sections 171A to 171G) of the Social Security (Contributions and Benefits) Act 1992. The test is different from that set out in section 151(4). In fact there are two tests known as the “own occupation test” and the “personal capability assessment” (formerly known as the “all work test”). Thus, incapacity for work is determined differently according to whether SSP or incapacity benefit is under consideration. The structure of the benefits is that a person who is entitled to SSP, which means of course an employed person, will be paid SSP by his employer for a period of 28 weeks. At the end of that period, the employer’s liability to pay SSP ceases and the employee becomes entitled to incapacity benefit. This is what happened in the claimant’s case. SSP was paid up to 4th May 2001, and incapacity benefit was paid thereafter.

9. There are, naturally, a number of statutory provisions governing the relationship of these two benefits. Among these are section 160 of the 1992 Act which provides that Schedule 12 to that Act has effect with respect to the relationship between SSP and certain benefits and payments. Before turning to that Schedule, it should be noted that section 153 refers to, and defines, what is known as “a period entitlement”. The definition, which is for the purposes of SSP, is contained in sub-section (2). The expression means, as between an employee and his employer, a period beginning with the commencement of a period of incapacity for work in relation to the contract of service and ending with whichever of a number of events first occurs. One of these is the expiration of the 28 week period for which the employer is liable to pay SSP. In the claimant’s case, the period of entitlement began when he became incapable of work and ended on 4th May 2001. Schedule 12 to the 1992 Act is headed “Relationship of Statutory Sick Pay with benefits and other payments, etc.”. Paragraph 1 is headed “The general principle” and provides as follows.
“1. Any day which –
(a) Is a day of incapacity for work in relation to any contract of service; and
(b) Falls within a period of entitlement (whether or not it is also a qualifying day),
shall not be treated for the purposes of this Act as a day of incapacity for work for the purposes of determining whether a period is a period of incapacity for work for the purposes of incapacity benefit.”

10. Now my understanding of that provision, which is contained in an Act of Parliament and is therefore primary legislation, is that in a case like the present, it removes from someone in the claimant’s position the right which they might otherwise have to be entitled to incapacity benefit by reason of their incapacity. Putting it another way, the claimant might well have been entitled to incapacity benefit from October 2000 to 4 May 2001, but for this provision. Pausing there, the reason for the provision is clear. It is to prevent an employee from being entitled to both SSP and incapacity benefit when the scheme of the legislation is that he should only received one of these benefits at a time. In a case like present, the entitlement to incapacity benefit only takes effect on the expiration of the period of 28 weeks.

11. The legislation relating to both benefits makes use of the expression “period of incapacity for work” but defines it in subtly different ways. For the purposes of SSP, it is defined by section 152(2) to mean:
(2) In this Part of this Act [which means Part XI which deals exclusively with SSP] “period of incapacity for work” means any period of four or more consecutive days, each of which is a day of incapacity for work in relation to the contract of service in question.”
Section 30C(1)(b), on the other hand, defines “a period of incapacity for work” in the following terms.
30C(1) For the purposes of any provisions of this Act relating to incapacity benefit, subject to the following provisions and save as otherwise expressly provided –
(a) …
(b) a period of incapacity for work means a period of 4 or more consecutive days, each of which is a day of incapacity for work;
The two definitions are not identical. More importantly, each is confined to a different benefit. Contrast the words “In this Part of this Act” and “For the purposes of any provisions of this Act relating to incapacity benefit”. It follows, in a case like the present, that the person concerned has, first, a “period of incapacity for work” for the purposes of SSP and then, when that comes to an end, “a period of incapacity for work” for the purposes of incapacity benefit.

12. On 11th November 1999, the Welfare Reform and Pensions Act 1999, received the Royal Assent. That Act contained section 63, which inserted the new section 30DD into the 1992 Act. I shall not set out the wording of either 63 or section 30DD because what is in issue is not the terms of that legislation but whether it applies at all. The 1999 Act was brought into effect in stages by a series of commencement orders. Section 63 was brought into effect from 6th April 2001 by the Commencement order. As one would expect, the implementation of the provision was subject to transitional arrangements. The relevant provision is regulation 3(2), the text of which has already been set out in a direction given in this appeal on 20 June 2002, in the following terms.
“3(2) Notwithstanding the commencement of section 63 (incapacity benefit: reduction for pension payments) and paragraph 22 of schedule 8 (incapacity benefit: rate) where a person is entitled to incapacity benefit under sections 30A to 30E of the Contributions and Benefits Act on any day of incapacity for work in a period of incapacity for work beginning before 6th April 2001 which continues, whether or not by virtue of section 30C of that Act or regulations made under than section, on or after that date, sections 30A to 30E of that Act shall have effect in relation to him, in that period of incapacity for work, as if section 63 and paragraph 22 of Schedule 8 had not been commenced.”

13. That legislation is clear. Section 63 does not apply to a person who was entitled to incapacity benefit under sections 30A to 30E “on any day of incapacity for work in a period of incapacity for work beginning before 6th April 2001”. The claimant’s period of incapacity in relation to his contract of service began back in October 2000 and was still continuing when his SSP came to an end. However, the words in paragraph 1 of Schedule 12 to which I have drawn attention prevent entitlement to incapacity benefit arising for the period before 5th May 2001, and in the absence of entitlement to incapacity benefit before 6th April 2001, the claimant falls outwith the scope of the transitional protection given by regulation 3(2). For the purposes of incapacity benefit, the relevant period of incapacity for work is that which began when the claimant started to receive incapacity benefit.

14. I entirely appreciate the very real sense of grievance which the claimant feels. The force of his feelings are all the more apparent because of the dignified way in which he has presented his arguments. Nevertheless, in my judgment the law is clear. Furthermore, incapacity benefit is an entirely statutory scheme. There is no natural or common law right to that benefit. Parliament has voted money for incapacity benefit and has laid down the rules specifying who is to be entitled to that money, in what circumstances and under what conditions. The scheme is entirely statutory and decision makers, tribunals, Commissioners and Courts are bound to apply the scheme as it is set out in the legislation. Of course, if a provision is doubtful, there may be scope for argument. However, I do not find any doubt or ambiguity arises in connection with the provisions I am concerned with.

15. The claimant’s representative has raised an argument in relation to section 62 of the Welfare Reform and Pensions Act 1999, and regulation 3(1) of the Commencement Order. Section 62 amends provisions about contributions and regulation 3(1) provides for the implementation of that section. Neither appears to me to be relevant for present purposes. The claimant’s grievance is with section 63 and not section 62. Regulation 3(1) contains transitional provisions relating to section 62 but, as I understand it, the claimant does not need to rely on them because he satisfies section 62 in any event. Nor, with due respect, am I able to perceive any argument which assists him in relation to section 63 and the construction of regulation 3(2).

16. The principal grounds of argument, at least in connection with the more recent submissions, has been the Human Rights Act 1998, which incorporated much of the European Convention on Human Rights into English law and which came into effect on 2 November 2001. The claimant puts his case, through his representative, in this way.
“5. My argument is that the officer making the decision and the tribunal, in upholding that decision, misinterpreted the regulations and that [the claimant] is entitled to transitional protection. If that argument does not succeed then I would maintain that the legislation denying [the claimant] such transitional protection is discriminatory and runs counter to natural justice and the European Convention adopted by the UK.

6. The argument is set out in my original appeal to you in documents numbered 31-38. The argument in the alternative relating to discrimination is contained in paragraphs 7-10.

7. Having looked at the convention articles in the Human Rights Act 1998 it would seem to me that the case would fall under article 14 “Prohibition of Discrimination” and presumably would be included under “or other status”.

8. My understanding is that the Human Rights Act requires a “purposive approach” which means taking a broad and more flexible interpretation of the law, rather than a strict legal view.

9. As this legislation covers a recent period and refers to a transitional protection, I would think it unlikely that there is any precise Strasbourg Authority and I find it extremely surprising that a national government, subscribing to the European Convention on Human Rights, would introduce national legislation that would put a particular group, at an unwarranted disadvantage for no good and proper reason.

10. I’m sorry that I cannot be more precise but either the law has been wrongly interpreted or [the claimant] is being discriminated against and justice is not being done.”
(These arguments have been clarified and expanded in the representative’s observations on the Secretary of State’s submissions. See pages 65 to 69.)

17. It is not, I think, possible to put the point with greater clarity. For the purposes of this decision I shall assume in the claimant’s favour that section 30DD and section 63 do discriminate against him. I stress that that is an assumption and that I am not deciding that there has been discrimination. That does not, however, assist the claimant. If one relies on the Human Rights Act, one must do so subject to the very precise provisions of that Act. The Secretary of State has pointed out a number of these. Section 6(1) states that it is unlawful for a public authority to act in any way that is incompatible with a convention right. However, that is subject to sub-section (2) which provide that the general rule is not to apply if:
(a) as a result of one or more provisions of primary legislation, the authority could not have acted differently; or
(b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions.

18. Likewise section 3(1) provides that so far as it is possible to do so, primary and subordinate legislation, whenever enacted, must be read and given effect in a way which is compatible with Convention rights. However, again that is not an unqualified rule because (see sub-section (2)) the section –
(i) does not affect the validity, continuing operation or enforcement of any incompatible primary legislation ; and
(ii) does not affect the validity, continuing operation or enforcement of any incompatible subordinate legislation if, disregarding any possibility of revocation, primary legislation prevents removal of the incompatibility.

19. Furthermore, the House of Lords has twice recently reminded Courts that there are limits as to how far it is permissible and possible to read and give effect to legislation so as to make it compatible. In Re S(Minors) (Care Order: Implementation of Care Plan) [2002] 2 All ER192, at paragraphs [37] to [39], Lord Nicholls said:
[37] Section 3(1) provides: “So far as it is possible to do so, primary legislation … must be read and given effect in a way which is compatible with the Convention rights” This is a powerful tool whose use is obligatory. It is not an optional canon of construction. Nor is its use dependent on the existence of ambiguity. Further, the section applies retrospectively. So far as it is possible to do so, primary legislation ‘must be read and given effect’ to in a way which is compatible with convention rights. This is forthright, uncompromising language.

[38] But the reach of this tool is not unlimited. Section 3 is concerned with interpretation. This is apparent from the opening words of s3(1) ‘so far as it is possible to do so’. The side heading of the section is ‘Interpretation of legislation’. Section 4 (power to make a declaration of incompatibility) and, indeed, s 3(2)(b) presuppose that not all provisions in primary legislation can be rendered convention compliant by the application of s 3(1). The existence of this limit on the scope of s3(1) has already been the subject of judicial confirmation, more than once: see, for instance [and Lord Nicholls then refers to a number of decided cases].

[39] In applying s 3 courts must be ever mindful of this outer limit. The 1998 Act reserves the amendment of primary legislation to Parliament. By this means the 1998 Act seeks to preserve Parliamentary sovereignty. The 1998 Act maintains the constitutional boundary. Interpretation of statutes is a matter for the courts; the enactment of statutes, and the amendment of statutes, are matters for Parliament.”

20. That statement was subsequently approved by the House of Lords in R v. Secretary of State for the Home Office (on behalf of Anderson). The facts of that case are very different from those in the present appeal. However, at paragraph 30, Lord Bingham said this.
30. The question of relief therefore arises. Section 29 of the Crime (Sentences) Act 1997, quoted in paragraph 6 above, appears to stand in the way of the appellant. It is unrepealed primary legislation. Mr Fitzgerald contended that it was possible to read and give effect to section 29 in a manner compatible with the convention, and that the House should do so in exercise of the interpretative power conferred by section 3(1) of the Human Rights Act 1998. Mr Pannick contended that, even if the House were to accept Mr Fitzgerald’s argument summarised in paragraph 20 above, the only relief which the appellant could obtain would be a declaration of incompatibility under section 4 of the 1998 Act. On this point if am satisfied that Mr Pannick is right. As observed in paragraph 6 above, Parliament did not attempt to prescribe the procedures to be followed in fixing the tariff of a convicted murderer. But some things emerge clearly from this not very perspicuous section. The power to release a convicted murderer is conferred on the Home Secretary. He may not exercise that power unless recommended to do so by the Parole Board. But the Parole Board may not make such a recommendation unless the Home Secretary has referred the case to it. And the section imposes no duty on the Home Secretary either to refer a case to the board or to release a prisoner if the board recommends release. Since, therefore, the section leaves it to the Home Secretary to decide whether or when to refer a case to the board, and he is free to ignore its recommendation if it is favourable to the prisoner, the decision on how long the convicted murderer should remain in prison for punitive purposes is his alone. It cannot be doubted that Parliament intended this result when enacting section 29 and its predecessor sections. An entirely different regime was established, in the case of discretionary life sentence prisoners, in section 28. The contrast was plainly deliberate. In section 1(2) of the Murder (Abolition of Death Penalty) At 1965, Parliament was at pains to give judges a power to recommend minimum periods of detention, but not to rule. That was for the Home Secretary. To read section 29 as precluding participation by the Home Secretary, if it were possible to do so, would not be judicial interpretation but judicial vandalism: it would give the section an effect quite different from that which Parliament intended and would go well beyond any interpretative process sanctioned by section 3 of the 1998 Act (In re S (Minors) (Care Order: Implementation of Care Plan) [2002] 2 WLR 720 at 731-732, para 41).

21. I am, therefore, precluded from construing the provisions I am concerned with, which are partly contained in primary legislation, in the manner which the claimant seeks. The High Court has power, in such circumstances, to make what is known as a declaration of incompatibility. However, Courts and tribunals below the High Court do not possess this power. I therefore have no jurisdiction to make such a declaration even if I were satisfied that it was appropriate to do so. That being the case, I have not investigated the matter and express no view on it. I have not investigated it for two reasons. First it would have required further detailed submissions. Secondly there would be no practical benefit to the claimant in my doing so.

22. For these reasons I therefore dismiss the appeal.

(Signed) J.P. Powell

Dated: 25th February 2003