disparate impact of Covid-19: end of furlough

The Guardian reported on 19 May 2020 that charities and social enterprise employers had been informed that Treasury plans to wind down the Covid-19 furlough scheme and to end it in October did not ‘currently include an exemption for vulnerable workers’. The plan, as it was reported at that time, was for employers to fund at least 80% of furloughed workers’ wages by August, with (at present) employers being treated equally irrespective of sector or ability of staff to return for reasons of vulnerability to Covid-19. Chancellor Rishi Sunak was reported as having stated on 18 May that he was in discussion with unions and business groups as to the route out of furlough but the Guardian reported that ‘Social Enterprise UK’, which represents thousands of charities and social enterprises, said it had been warned by Downing Street not to expect tweaks to the scheme to support vulnerable workers following talks with No 10’, and that it and others had written to the Chancellor to warn that the most vulnerable would be placed at risk of redundancy.

The furlough scheme is closed to new workers as of 10 June 2020 but employers can continue to claim 80% of workers’ normal wages (up to £2 500 per month) or a proportion of that amount to reflect reduced working hours until the end of July 2020 (furloughed employees being able to return part-time from 1 July). New guidance published on 12 June confirms that, from the start of August, employers will not be able to claim in respect of NI or pension contributions of furloughed workers and from 1 September the grant will be set at a maximum 70%/ £2 187.50 (with employers being required to contribute 10%). From 1 October the proportion payable by the state will be 60%/ £1 875 with employers making up the 20% plus pension and NI contributions before the scheme comes to an end on 31 October.

The phasing-out of the furlough scheme was no doubt inevitable in view of the eye-watering cost to the Treasury but the blanket approach taken by the government raises questions about the government’s compliance with the Public Sector Equality Duty which requires (s149 Equality Act 2010) that public authorities (including Ministers) must ‘in the exercise of [their] functions, have due regard to the need to … eliminate discrimination [and] advance equality of opportunity’ in relation to ‘protected characteristics’ which include disability, age, ethnicity and sex. Section 149(3) provides that ‘Having due regard to the need to advance equality of opportunity … involves having due regard, in particular, to the need to … remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic’ and to ‘take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it’. And section 149(4) provides that ‘The steps involved in meeting the needs of disabled persons that are different from the needs of persons who are not disabled include, in particular, steps to take account of disabled persons’ disabilities.’

It is obviously the case that those who are unable, by reason of health-related vulnerabilities, to return to work at the same time as their colleagues, will be placed at risk of dismissal by a blanket approach to the phasing-out of the furlough scheme, not least because the finances of many employers will be parlous after months of lock-down. Some of these vulnerable workers will be among those advised by the state to isolate, in part to reduce pressures on the NHS. Many others will be women disproportionately affected by the continuing requirement for home-based childcare and who, together with BAME workers, are less likely to be able to work from home. Further, the staggered exit from lockdown, coupled with the proposed ending of the furlough scheme, is likely to impact differently on workers of different ethnic groups. Asian people, for example, are disproportionately likely to work in distribution, hotels and restaurants, at least part of which sector is likely to be affected by lockdown later than manufacturing and construction (which are disproportionately white). The different sizes of industrial sectors and the variation in their likely return from lockdown means that no conclusions can be drawn at this point but differential impact is likely between workers of different ethnicity. The same is true as regards men and women, as well as workers by age group.

All of this is required to have been considered by the Chancellor in deciding the future of the furlough scheme. There is no evidence to date that any such analysis has been undertaken.