Banks v. Chief Adjudication Officer

Factual and Procedural Background

The Appellant was employed as a special needs assistant at a junior school under a contract with a local education authority. His work was conducted during school term time at approximately 20 hours per week, with no work or pay during school holidays. He applied for income support and later jobseeker's allowance for periods during school holidays when he was neither working nor paid. Earlier decisions had allowed his claims, but subsequent adjudication officers and the social security appeal tribunal rejected them. The Commissioner allowed the appeal, but the Court of Appeal reversed this decision. The case was then brought before the House of Lords to determine the correct interpretation of statutory regulations governing entitlement to benefits for workers with cyclical employment patterns including unpaid school holidays.

Legal Issues Presented

1. Whether a person employed on a cyclical annual contract with unpaid school holidays should be treated as engaged in remunerative work throughout the entire cycle, including the holiday periods.
2. How to interpret regulation 5(3B) of the Income Support (General) Regulations 1987 and regulation 51(2)(c) of the Jobseeker's Allowance Regulations 1996 regarding disregarding school holidays in calculating average hours worked.
3. Whether the statutory provisions require treating the Appellant as engaged in remunerative work during weeks in which he neither works nor receives payment.
4. The proper construction of the statutory definitions and deeming provisions concerning "remunerative work" and "engaged in remunerative work" in the context of cyclical work with school holidays.

Arguments of the Parties

Appellant's Arguments

• The Appellant contended that the school holidays should be disregarded only for the purpose of calculating average hours worked, but not for treating him as engaged in remunerative work during those holiday weeks.
• He argued that since he neither worked nor was paid during school holidays, he should not be deemed engaged in remunerative work during those periods.
• He maintained that the regulations providing for the treatment of school holidays were an exercise of the power to define remunerative work, not an exercise of the power to deem persons engaged in remunerative work when they were not actually working.
• The Appellant stressed that the statutory language should be interpreted in a manner consistent with the fundamental purpose of social security legislation—to provide relief from poverty—and not to impose a statutory fiction that traps part-time ancillary workers in a "poverty trap."

Respondent's Arguments

• The Respondent argued that the Appellant's employment constituted a recognisable cycle of work lasting one year, which includes periods of school holidays during which the Appellant does not work.
• Under regulation 5(2)(b)(i) of the 1987 Regulations, the average number of hours worked is calculated over the entire cycle, including periods without work, and the Appellant is treated as engaged in work throughout the cycle.
• Regulation 5(3B) and the corresponding provision in the 1996 Regulations only direct that school holidays be disregarded for the purpose of calculating average hours, not that the Appellant is not engaged in work during those holidays.
• The Respondent emphasized that the statutory scheme treats cyclical workers as engaged in remunerative work throughout their cycle, including holiday periods, to prevent manipulation of hours and benefits entitlement.

Table of Precedents Cited

Court's Reasoning and Analysis

The House of Lords engaged in a detailed statutory interpretation exercise focusing on the Income Support (General) Regulations 1987 and the Jobseeker's Allowance Regulations 1996. The key issue was the meaning and effect of regulation 5(3B) of the 1987 Regulations and its counterpart in the 1996 Regulations.

The Court recognized that the Appellant's employment had a recognisable annual cycle that included school holidays during which he neither worked nor was paid. Regulation 5(2)(b)(i) provides that, where hours fluctuate, the average hours are calculated over the entire cycle, including periods without work. Regulation 5(3B) directs that school holidays be disregarded for the purpose of calculating the average hours worked, effectively increasing the average weekly hours during term time.

The majority of the Lords held that this disregarding of holidays applied only to the averaging calculation and did not alter the fact that the Appellant was treated as engaged in remunerative work throughout the entire cycle, including school holidays. This means that despite not working or being paid during holidays, the Appellant was deemed to be engaged in remunerative work for the whole year if the average hours during working periods exceeded the threshold.

The Court rejected the argument that the Appellant should not be treated as engaged in remunerative work during unpaid holidays, emphasizing the distinction in the regulations between being "engaged in work" and actually "doing work." The averaging mechanism was seen as a statutory device to prevent manipulation of benefit entitlements.

However, one Lord dissented, favoring a construction aligned with the ordinary meaning of language and social policy considerations. He argued that a person should not be treated as engaged in remunerative work during weeks when no work is done and no payment is received, and that the regulations should be read to exclude school holidays from such treatment.

The Court acknowledged the complexity and ambiguity in the legislation and noted the potential "poverty trap" consequences for ancillary school workers. Some Lords expressed sympathy for the Appellant's position and suggested that legislative amendment might be appropriate to address the issue.

Holding and Implications

The House of Lords DISMISSED the appeal.

The Court held that under the relevant regulations, a person employed on a cyclical annual contract including unpaid school holidays is to be regarded as engaged in remunerative work throughout the entire cycle. The school holidays are disregarded only for the purpose of calculating the average hours worked, not for excluding those periods from the cycle of engagement. Consequently, the Appellant was not entitled to income support or jobseeker's allowance during school holidays.

The decision directly affects part-time ancillary school workers with cyclical contracts, potentially limiting their entitlement to benefits during unpaid holiday periods. The Court did not set new precedent beyond the statutory interpretation of the existing regulations but recognized the social policy concerns and suggested that legislative reform might be necessary to address the identified issues.