Secretary of State for Work and Pensions v NC (ESA): [2024] UKUT 251 (AAC)
Upper Tribunal Administrative Appeals Chamber decision by Judge Church on 28 January 2025
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Judicial Summary
This appeal is about how pension contributions by way of 鈥榮alary sacrifice鈥� should be treated for the purposes of the conditions of eligibility for Employment and Support Allowance under the Employment and Support Allowance Regulations 2008 (the 鈥淓SA Regulations鈥�).
If the 鈥榮alary sacrifice鈥� amounts formed part of the claimant鈥檚 earnings for the purposes of regulation 96 of the ESA Regulations the claimant鈥檚 earnings exceeded the limit for 鈥榩ermitted work鈥�, disentitling from ESA for the relevant periods, but if they were excluded from his earnings under regulation 95(2)(a) as a 鈥榩ayment in kind鈥� his earnings would be below the permitted limit and he would be entitled to ESA.
Judge Church decides, following R(CS) 9/08, that such an arrangement involved the employee agreeing contractually to forego an amount of cash pay to which he would, but for that agreement, be entitled in return for the employer鈥檚 agreement to make a payment in kind, namely an employer鈥檚 contribution to the employee鈥檚 occupational pension. The amount 鈥榮acrificed鈥� does not form part of the employee鈥檚 earnings. The decision of the First-tier Tribunal involved no material error of law and was upheld. followed.