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Why Has My Employee's Universal Credit Changed Due to Their Earnings?

Understanding Universal Credit assessment periods and four-weekly pay cycles

When your employee asks why their Universal Credit has been reduced or stopped, this is a Universal Credit system issue, not a payroll problem.

Your payroll is processed correctly - this happens to everyone on four-weekly pay cycles.

🔍 The Simple Explanation

Universal Credit is calculated monthly, but four-weekly pay cycles create 13 pay packets per year instead of 12.

Once a year, two pay packets fall within the same Universal Credit assessment period, making that month's income appear double and reducing their UC payment.

📅 Why This Happens

  • Monthly Assessment Periods: Universal Credit calculates payments based on fixed monthly periods set by the Department for Work and Pensions (DWP)
  • 13 Pay Packets Per Year: Four-weekly pay cycles result in 13 pay packets annually, rather than 12 that would align with monthly schedules
  • Double Income Month: Once per year, two pay packets fall within a single 30/31-day UC assessment period

💰 Impact on Universal Credit

  • Reduced Payment: Because earnings appear higher in that assessment period, the UC payment for that month will be considerably reduced
  • Potential Eligibility Loss: In some cases, the income may be too high to qualify for Universal Credit for that specific month
  • Temporary Issue: The UC payment returns to normal the following month

👥 What You Should Tell Your Employee

This affects everyone paid four-weekly — it's built into how Universal Credit works:

  • ✅ Not a payroll error — your payroll is processed correctly
  • ✅ System-wide issue — this happens to all employees on four-weekly pay cycles
  • ✅ Contact their work coach — they should speak to DWP directly for budgeting support
  • ✅ Plan ahead — they need to budget for the one month per year when UC will be lower

❌ What You Cannot Do

As the employer or payroll provider, we cannot:

  • Change how Universal Credit assessment periods work
  • Modify the timing of UC calculations
  • Alter the employee's UC payments
  • Fix this issue through payroll adjustments

🎯 Key Point for Employers

This is not something you need to fix or can fix.

Your four-weekly payroll is processed correctly, and this UC fluctuation is an inevitable consequence of how the Universal Credit assessment system works.

💬 Need help explaining this to your employees or have other payroll questions? 

Contact us here and we'll provide additional support.