Tens of thousands of people could encounter problems receiving their Universal Credit (UC) payments this festive season. To limit the risk, new benefits guidance has been issued by the Department for Work and Pensions (DWP) this winter.
The DWP issues UC payments based on a person’s monthly income. However, a tax service director with financial firm Blick Rothenberg has said that employers paying working UC claimants’ wages early due to bank holidays in December must be careful that they get the dates exactly right.
If wages are issued at the wrong times, the DWP may wrongly assume a worker has had a double payday within a four-week period and so reduce their next UC payment.
“In the run up to Christmas, it is common for employers to pay December salaries earlier than normal, but if they get the dates wrong on the electronic submission they make to HMRC, it could severely impact those on Universal Credit,” said Robert Salter, tax service director. “Employers may pay the salary for the month ended December 31 on, say, December 17, rather than the traditional last working day of the month, because of office closures or to assist employees from a cashflow perspective – which is a nice gesture, but it could go wrong.”
The issue could potentially impact thousands of workers who claim UC to top up their income. Estimates suggest that 85,000 people could be at risk of these ‘double payday’ issues. Some claimants could see their UC slashed to zero as a result of employers wrongly reporting the period covered by their wages.
DWP’s systems are designed automatically to identify cases in which a claimant has received a second salary payment during a single assessment period. Due to the potential confusion caused by weekends or bank holidays, the system relies on employers supplying the correct information. For early payments during the festive season, employers must ensure that the dates stating the time period the payment is for are accurate to avoid confusing the DWP system.
“It’s an easy mistake for employers – and their payroll teams – to make, but it could have a really painful impact on those employees and their families who are in receipt of UC, to top up their pay.”
Part 3 of the International Covenant on Economic, Social and Cultural Rights protects the right of people in the UK to work under just conditions earning fair wages to provide a decent living, as well as the right to social security.
The government released a bulletin to businesses to remind them to be careful when submitting documentation to HRMC.
“We know some employers pay their employees earlier than usual over the Christmas period,” said the bulletin. “If you do pay early over the Christmas period, please report your normal – or contractual – payday as the payment date on your Full Payment Submission (FPS) and ensure that the FPS is submitted on or before this date.
“Doing this will help to protect your employees’ eligibility for Universal Credit, as reporting the payday as the payment date may affect current and future entitlements.”
If you have any concerns or questions about how your UC payments could be affected, get in touch with your employer’s finance department to ensure that they are aware of these issues or contact the DWP.