esa contribution based

[worried54]

hello,

 

my husband is currently receiving contribution based esa £73.10 pw, and his company is to finish him on ill health with 3 months pay for termination of contract will this affect his esa payments.

[honeybee13]

Hello and welcome to CAG.

 

With a couple of exceptions, ESA isn't means tested. Here's a link.

 

http://www.entitledto.co.uk/help/employment-and-support-allowance-contribution-based

 

My best, HB

[worried54]

hi honeybee,

 

so do we need to tell them, this is first time ever claimed benefits been at work for over 38 years

 

many thanks

[honeybee13]

Hello again.

 

Other people here know more than I do, but I would say unless your husband is going to receive a pension or money from a permanent health/income replacement insurance policy, you don't need to tell them.

 

HB

[antone]

If his ESA is entirely contribution based (that is, no portion of it is means tested) then this would not affect his benefit at all. Things like severance pay are counted as capital, which does not affect ESA©.

 

As Honeybee says, the main type of payments that do affect ESA© are wages, occupational pensions, and payments from income replacement plans. If it's just a one-off payment he receives there's no need to tell the DWP, although you certainly can let them know if it makes you feel more comfortable about things.

[worried54]

Thanks,I have just found out that they are to pay over 3months as they can't afford to pay it in a lump sum is this ok

[antone]

Hmm, I'm not 100% sure. I think it should be OK - it should properly be regarded as three payments of capital rather than a single lump sum, and it's still not payment for actual hours worked.

 

But in these circumstances I would declare it to the DWP, and get something in writing from the employer to explain what the money is and why it's being paid in installments. You don't want any suggestion that it's undeclared wages from employment.

[worried54]

Hi the union solicitor is drawing up a legal agreement so will have everything in writing

[antone]

That sounds like a good idea. My worry was that at some point in the future a "data matching" exercise between the DWP and HMRC might reveal the payments, and they could look like regular wages/salary payments. Best that your husband covers himself against possible future problems by letting them know in advance what's going on.

 

I believe his actual entitlement should not be affected but, as I said, I'm not 100% sure.

[hunterandthehunted]

hi,

 

this kind of situation is called a settlement agreement which includes a pay off, back pay and all accrued holiday rolled into one payment and can be paid by your employers as a lump sum tax free and free from NI contributions.

 

normally the employer will also pay the solicitors fees for drawing up the terms etc... and one of the key terms will be that the pay off is kept between the gate and the gatepost.

 

as he is being dismissed for ill health he will most likely be able to access any company pension he is a member of.

 

have the company followed their capability procedures properly and does he agree with the company's decision to retire him on ill health grounds as he could ask for reasonable adjustments to be made under the equality act 2010.

[worried54]

They are drawing up a settlement agreement but want to pay over 3months as they say they can't afford to do it in one lump sum. He is happy with the dismissal on health grounds. They have paid his holiday pay but he has been taxed on this. Unite union is dealing with this. Should we ask for it in a lump sum.

[worried54]

Also he has a company pension which he was going to wait until he is 55 in may to take.

[antone]

Also he has a company pension which he was going to wait until he is 55 in may to take.

 

A company pension will affect his ESA© entitlement, but he doesn't have to declare that until he actually starts receiving it.