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ESA and work settlement payment
- Jenny
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3 years 7 months ago #263923 by Jenny
ESA and work settlement payment was created by Jenny
Hi,
I'm looking for a bit of advice around a potential settlement payment from work and if/how accepting it will affect my ESA.
I was signed off work at the beginning of the year, having been struggling to stay in work for some time due to my health and having a number of lengthy periods off work. After I ran out of company and statutory sick pay, I was put in the support group for ESA. My employer is now looking to agree a mutual parting of ways (I think because they don't want to be seen to be dismissing me on health grounds and partly because they know they could have done more in terms of reasonable adjustments etc.) As part of this, they have offered a substantial settlement payment, which I have until Thursday to accept. The amount is over the £6000 savings limit for ESA, so I just wanted some advice on how accepting this settlement will affect my payments, how long for, what the process is, will DWP automatically stop my payments when I receive the settlement, etc? I'm feeling quite worried about all of this and have been struggling to get any proper advice on it as it's a bit of an unusual situation.
Thanks in advance for any help with this. And thanks too for this fantastic website, you have helped me so much over the years with both my PIP and ESA applications, you are doing such phenomenal work and helping so many people at the mercy of such a cruel system.
I'm looking for a bit of advice around a potential settlement payment from work and if/how accepting it will affect my ESA.
I was signed off work at the beginning of the year, having been struggling to stay in work for some time due to my health and having a number of lengthy periods off work. After I ran out of company and statutory sick pay, I was put in the support group for ESA. My employer is now looking to agree a mutual parting of ways (I think because they don't want to be seen to be dismissing me on health grounds and partly because they know they could have done more in terms of reasonable adjustments etc.) As part of this, they have offered a substantial settlement payment, which I have until Thursday to accept. The amount is over the £6000 savings limit for ESA, so I just wanted some advice on how accepting this settlement will affect my payments, how long for, what the process is, will DWP automatically stop my payments when I receive the settlement, etc? I'm feeling quite worried about all of this and have been struggling to get any proper advice on it as it's a bit of an unusual situation.
Thanks in advance for any help with this. And thanks too for this fantastic website, you have helped me so much over the years with both my PIP and ESA applications, you are doing such phenomenal work and helping so many people at the mercy of such a cruel system.
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- LL26
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3 years 7 months ago #263926 by LL26
Nothing on this board constitutes legal advice - always consult a professional about specific problems
Replied by LL26 on topic ESA and work settlement payment
Hi Jenny,
Firstly thank you for the kind remarks about our website, it is always good to know that people have found this useful.
The most important question is whether you are receiving contribution based or income based ESA.
ESAcb isn't affected by capital. So whatever your work settlement is won't be a problem. You do not need to tell DWP.
With ESAib the settlement will comprise your capital. Whilst you are correct that there is a £6000 threshold, you can continue to receive ESA up to £16000 in the bank. However over £6000, £1 will be deducted off your ESA for every £250 over the £6k threshold.(The settlement amount will be added to whatever other capital you have and any deduction made on the entire amount.)
You will obviously need to contact DWP and tell them because the amount will clearly affect your entitlement. If you fail to do so, this will almost certainly give rise to an overpayment and it may invite a fraud investigation as well!
If your settlement is over £16k and you're on ESAib, then you won't be paid any benefit until your capital reduces, but I think you should be able to continue to receive NI credits. You would need to draw down your capital until under the limit then you can receive ESA again. In this scenario it would be a good idea to keep receipts. If you just spend the money on normal living expenses, eg weekly shop, petrol insurance even rent or mortgage is ok so there shouldn't be a problem as long as these are not excessive. If you have car repairs or house repairs that need reasonably to be done then this should be OK too, again keep receipts get a few quotes first.
If you are seen to be spending excessive amounts and then want to reclaim ESA in a short space of time DWP will still deem you to have the capital and will refuse to award ESA again.(Deprivation of capital rules.)
Please also remember that if you currently receive Housing Benefit or Council Tax Reduction the capital rules will apply here as well.
About your settlement- is this redundancy? Have you spoken to eg CAB or a trade union about this? Do you understand the basis of the payment? These are all things to consider before you accept. Perhaps see if it possible to extend the decision time if you wish to seek further advice on this. If the payment is by way of redundancy there is a statutory amount based on years worked, and there may be something written in your employment contract. (You should receive whichever is the greater amount.) It is really important to check you are getting the right amount for redundancy as it is a legal requirement to be paid correctly.
One last thought. Aside from any capital problems, if DWP believe you have quit your job then they do have a power if sanction which could mean they can cancel paying benefit as a result. It is unlikely that this would happen in your circumstances but it might be advantageous to speak to DWP and alert them to the whole scenario.
I hope this helps.
LL26
Firstly thank you for the kind remarks about our website, it is always good to know that people have found this useful.
The most important question is whether you are receiving contribution based or income based ESA.
ESAcb isn't affected by capital. So whatever your work settlement is won't be a problem. You do not need to tell DWP.
With ESAib the settlement will comprise your capital. Whilst you are correct that there is a £6000 threshold, you can continue to receive ESA up to £16000 in the bank. However over £6000, £1 will be deducted off your ESA for every £250 over the £6k threshold.(The settlement amount will be added to whatever other capital you have and any deduction made on the entire amount.)
You will obviously need to contact DWP and tell them because the amount will clearly affect your entitlement. If you fail to do so, this will almost certainly give rise to an overpayment and it may invite a fraud investigation as well!
If your settlement is over £16k and you're on ESAib, then you won't be paid any benefit until your capital reduces, but I think you should be able to continue to receive NI credits. You would need to draw down your capital until under the limit then you can receive ESA again. In this scenario it would be a good idea to keep receipts. If you just spend the money on normal living expenses, eg weekly shop, petrol insurance even rent or mortgage is ok so there shouldn't be a problem as long as these are not excessive. If you have car repairs or house repairs that need reasonably to be done then this should be OK too, again keep receipts get a few quotes first.
If you are seen to be spending excessive amounts and then want to reclaim ESA in a short space of time DWP will still deem you to have the capital and will refuse to award ESA again.(Deprivation of capital rules.)
Please also remember that if you currently receive Housing Benefit or Council Tax Reduction the capital rules will apply here as well.
About your settlement- is this redundancy? Have you spoken to eg CAB or a trade union about this? Do you understand the basis of the payment? These are all things to consider before you accept. Perhaps see if it possible to extend the decision time if you wish to seek further advice on this. If the payment is by way of redundancy there is a statutory amount based on years worked, and there may be something written in your employment contract. (You should receive whichever is the greater amount.) It is really important to check you are getting the right amount for redundancy as it is a legal requirement to be paid correctly.
One last thought. Aside from any capital problems, if DWP believe you have quit your job then they do have a power if sanction which could mean they can cancel paying benefit as a result. It is unlikely that this would happen in your circumstances but it might be advantageous to speak to DWP and alert them to the whole scenario.
I hope this helps.
LL26
Nothing on this board constitutes legal advice - always consult a professional about specific problems
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- Jenny
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3 years 7 months ago #263941 by Jenny
Replied by Jenny on topic ESA and work settlement payment
Thanks so much for your help with this, all this information is really useful and a lot I haven't considered (which is also a bit worrying considering the period of time I have to make a decision).
In terms of the type of ESA - I am on 'new style' ESA, so I don't know whether this is contribution based or income based? I have tried to look it up, but new style ESA appears to be a separate thing from these other two types.
Unfortunately I am not able to extend the decision time, as they already gave me 2 weeks extra time to make a decision on the first settlement (a lower amount) because I was very unwell at the time. They have said that if I don't make a decision on this offer by Thursday, the offer will be off the table and I will be subject to normal absence management policies.
I am in a union, but my rep has be less than helpful I am sorry to say. He has given me very poor advice throughout the process, and when I went to the union itself to try and get alternative help, they just sent me back to the branch and said I needed to speak to the branch secretary if the rep wasn't being helpful (what they didn't realise is that the rep IS the branch secretary, so there was no one else to go to after that and he was obviously quite offended that I went above him to ask for help). It's just been an absolute nightmare when I've which has been hard to manage in itself, especially when I've been very unwell. I haven't tried CAB about this specific issue, as I was only notified of the new offer last Thursday, but I know in my area it can take many months to get an appointment with them, so I definitely won't be getting any help from them in time for this Thursday. When I tried to seek help previously from CAB, I was told they couldn't help me because I was getting help from a union and it would be a conflict of interest, so they refused to speak to me, but obviously I wasn't getting any help from the union which was the point. I'm just completely stuck really.
Work have said that the basis of the payment is a combination of things - payment for annual leave not taken since I have been off, and an adjustment to sick pay (I'm struggling to word this in a way that makes sense) so that I am paid back for the time that I was on half pay and SSP to the level of my normal salary (if that makes sense? So the amount I am being paid is as if I have been on full pay since I have been off, although I was on half pay and then SSP for a substantial part of it.)
I do owe a family member some money for housing related issues that they helped me with last year, but I'm guessing if I just transferred the settlement directly to them once I receive it, the DWP would just this to be spending an excessive amount as you mentioned below?
Yes I was worried about the sanctioning as someone did mention to me that accepting the settlement could seem to the DWP like making myself intentionally redundant, but someone else said that it shouldn't matter if I am receiving ESA and not UC and because I'm not fit for work currently. I have no idea though and these people were not benefits advisors so may not know.
I really wish I had thought to ask here before now, I've kind of got myself even more stressed now because there are so many things I hadn't considered and literally no time to make a decision about it before the offer is taken off the table.
Thank you for your detailed advice I will try and work out what type of ESA 'new style' ESA is as this seems to be central to all the issues.
In terms of the type of ESA - I am on 'new style' ESA, so I don't know whether this is contribution based or income based? I have tried to look it up, but new style ESA appears to be a separate thing from these other two types.
Unfortunately I am not able to extend the decision time, as they already gave me 2 weeks extra time to make a decision on the first settlement (a lower amount) because I was very unwell at the time. They have said that if I don't make a decision on this offer by Thursday, the offer will be off the table and I will be subject to normal absence management policies.
I am in a union, but my rep has be less than helpful I am sorry to say. He has given me very poor advice throughout the process, and when I went to the union itself to try and get alternative help, they just sent me back to the branch and said I needed to speak to the branch secretary if the rep wasn't being helpful (what they didn't realise is that the rep IS the branch secretary, so there was no one else to go to after that and he was obviously quite offended that I went above him to ask for help). It's just been an absolute nightmare when I've which has been hard to manage in itself, especially when I've been very unwell. I haven't tried CAB about this specific issue, as I was only notified of the new offer last Thursday, but I know in my area it can take many months to get an appointment with them, so I definitely won't be getting any help from them in time for this Thursday. When I tried to seek help previously from CAB, I was told they couldn't help me because I was getting help from a union and it would be a conflict of interest, so they refused to speak to me, but obviously I wasn't getting any help from the union which was the point. I'm just completely stuck really.
Work have said that the basis of the payment is a combination of things - payment for annual leave not taken since I have been off, and an adjustment to sick pay (I'm struggling to word this in a way that makes sense) so that I am paid back for the time that I was on half pay and SSP to the level of my normal salary (if that makes sense? So the amount I am being paid is as if I have been on full pay since I have been off, although I was on half pay and then SSP for a substantial part of it.)
I do owe a family member some money for housing related issues that they helped me with last year, but I'm guessing if I just transferred the settlement directly to them once I receive it, the DWP would just this to be spending an excessive amount as you mentioned below?
Yes I was worried about the sanctioning as someone did mention to me that accepting the settlement could seem to the DWP like making myself intentionally redundant, but someone else said that it shouldn't matter if I am receiving ESA and not UC and because I'm not fit for work currently. I have no idea though and these people were not benefits advisors so may not know.
I really wish I had thought to ask here before now, I've kind of got myself even more stressed now because there are so many things I hadn't considered and literally no time to make a decision about it before the offer is taken off the table.
Thank you for your detailed advice I will try and work out what type of ESA 'new style' ESA is as this seems to be central to all the issues.
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- Gary
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3 years 7 months ago #263944 by Gary
Nothing on this board constitutes legal advice - always consult a professional about specific problems
Replied by Gary on topic ESA and work settlement payment
Hi Jenny
New Style ESA is a Contribution Based benefit and is not means tested with the exception of pension income which can reduce the amount that you receive.
The Income Related benefit that goes with NS ESA is Universal Credit.
New Style ESA is a fortnightly payment that can be claimed on its own or at the same time as Universal Credit (UC).
New Style ESA is a contributory benefit. Normally, this means you may be able to get it if you’ve paid or been credited with enough National Insurance contributions in the 2 full tax years before the year you’re claiming in.
Eligibility
To get New Style ESA you’ll need to have been an employee or self-employed and paid (or been credited with) National Insurance contributions, usually in the last 2 to 3 years.
www.gov.uk/national-insurance
You will also need to have a fit note (sometimes called ‘sick note’ or ‘doctor’s note’) but you can start making your claim before you have one. If you have only just become ill, you can self-certify for the first 7 days.
You can get New Style ESA on its own or at the same time as Universal Credit. If you apply for and are awarded both benefits, the New Style ESA you are paid will reduce your Universal Credit payment by the same amount.
www.gov.uk/guidance/new-style-employment...ailed-guide#overview
You can find your local Welfare Rights Organisation to help you with advice by clicking on the link below and putting in your post code, it will then come up with a MAP with a list of agencies. advicelocal.uk , you may also want to contact a local law centre for advice.
Gary
New Style ESA is a Contribution Based benefit and is not means tested with the exception of pension income which can reduce the amount that you receive.
The Income Related benefit that goes with NS ESA is Universal Credit.
New Style ESA is a fortnightly payment that can be claimed on its own or at the same time as Universal Credit (UC).
New Style ESA is a contributory benefit. Normally, this means you may be able to get it if you’ve paid or been credited with enough National Insurance contributions in the 2 full tax years before the year you’re claiming in.
Eligibility
To get New Style ESA you’ll need to have been an employee or self-employed and paid (or been credited with) National Insurance contributions, usually in the last 2 to 3 years.
www.gov.uk/national-insurance
You will also need to have a fit note (sometimes called ‘sick note’ or ‘doctor’s note’) but you can start making your claim before you have one. If you have only just become ill, you can self-certify for the first 7 days.
You can get New Style ESA on its own or at the same time as Universal Credit. If you apply for and are awarded both benefits, the New Style ESA you are paid will reduce your Universal Credit payment by the same amount.
www.gov.uk/guidance/new-style-employment...ailed-guide#overview
You can find your local Welfare Rights Organisation to help you with advice by clicking on the link below and putting in your post code, it will then come up with a MAP with a list of agencies. advicelocal.uk , you may also want to contact a local law centre for advice.
Gary
Nothing on this board constitutes legal advice - always consult a professional about specific problems
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- LL26
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3 years 7 months ago #263967 by LL26
Nothing on this board constitutes legal advice - always consult a professional about specific problems
Replied by LL26 on topic ESA and work settlement payment
Hi Jenny,
Gary has helpfully set out the framework for New Style ESA. This is a contribution based benefit so will NOT be affected by your work settlement.
You can spend the money as you like, and in any event just for the record, in terms of deprivation of capital paying off a legitimate debt is unlikely to cause a problem providing you have evidence if the debt etc. But this is NOT relevant here.
I'm still not clear on what basis you are being paid off. Is this medical retirement?
Unpaid wages which would include holidays not taken is money that is contractually due to you. What is the sickness policy at work eg what payment should you receive for this under your employment contract? If the employer is obliged under contract to pay the money all he is paying is money actually owed.
Perhaps the difference between ssp and normal wages is not within the contract, hence this would be extra to money actually owed.
Think also about any works pension, is this being paid early, or will it be frozen until normal retirement age?
Maybe have a look at this website.
www.moneyhelper.org.uk/en/pensions-and-r...ckness-or-disability
There is a helpline. If you contact them it may be helpful to have a piece of paper in front of you explaining the settlement to refer to.
I hope this helps.
LL26
Gary has helpfully set out the framework for New Style ESA. This is a contribution based benefit so will NOT be affected by your work settlement.
You can spend the money as you like, and in any event just for the record, in terms of deprivation of capital paying off a legitimate debt is unlikely to cause a problem providing you have evidence if the debt etc. But this is NOT relevant here.
I'm still not clear on what basis you are being paid off. Is this medical retirement?
Unpaid wages which would include holidays not taken is money that is contractually due to you. What is the sickness policy at work eg what payment should you receive for this under your employment contract? If the employer is obliged under contract to pay the money all he is paying is money actually owed.
Perhaps the difference between ssp and normal wages is not within the contract, hence this would be extra to money actually owed.
Think also about any works pension, is this being paid early, or will it be frozen until normal retirement age?
Maybe have a look at this website.
www.moneyhelper.org.uk/en/pensions-and-r...ckness-or-disability
There is a helpline. If you contact them it may be helpful to have a piece of paper in front of you explaining the settlement to refer to.
I hope this helps.
LL26
Nothing on this board constitutes legal advice - always consult a professional about specific problems
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