Divisional Court: Bean LJ and Cavanagh J, [2020] EWHC 1554 (Admin), 15 June 2020

The claimants sought unsuccessfully to challenge the approach taken by the Chancellor to the furlough scheme, arguing in particular that the exclusion of self-employed workers from entitlement to furlough payments and the restriction of payments for non-furloughed workers who could not attend work (because they were symptomatic or self-isolating) to SSP discriminated against self-employed workers contrary to Article 14 EHCR, and indirectly discriminated against women and BAME workers contrary to EU law. They also claimed that the Chancellor had failed to pay regard to the PSED in designing the scheme.

The failure of the Article 14 claim was unsurprising in view of the very low threshold for justification of discrimination on non “suspect” grounds (here worker status). The same might be said of the failure of the EU law claims given the very limited evidence available to the claimants, though the Court was prepared to accept that some disparate impact had been shown. Having said this, it appears that the Court failed to grasp the main thrust of the SSP challenge which appears to have been to the decision to use SSP, rather than to devise another scheme, to fund workers unable to work by reason of Covid-19. It was because this decision was taken that the shortcomings regarding the level of, and eligibility for, SPP, came into play. A similar failure appears to characterise the Court’s approach to the PSED which saw the Court asking itself whether the Treasury had paid sufficient attention to the equality implications of making SSP more generous, rather than the decision to provide workers who were unable to work because of Covid-19 only to SPP (or not even that), even when those workers would have been physically able to work but were required to remain at home in the broader interests of society.

The first claimant is a Nigerian man and a member of the second claimant who worked as a cab driver until, because of a drastic fall-off in his income, he was unable to pay for his private hire vehicle licence renewal in April 2020. The claimants sought declarations that the defendant’s decisions in relation to the treatment of workers in the context of the pandemic, in particular in relation to statutory sick pay (SSP) and the job retention scheme (JRS), discriminated contrary to the ECHR and/or EU law, and/or breached the PSED. Payments made under the JRS are available only to workers paid by PAYE. SSP is available to self-isolating employees who have not been furloughed but is not available to workers who are not employees, or to those whose earnings are below a lower earnings limit (LUL). The claimants challenged these limitations as well as the decision to rely on SSP in response to the pandemic without increasing the level of payments made under it, arguing inter alia that (1) they breached Article 14 read with A1P1; (2) save in the case of the JRS exclusion, they discriminated on grounds of race and/or sex contrary to EU law; and/or (3) the defendant had failed to comply with the PSED in adopting the decisions.

The ground of discrimination relied on in relation to the Article 14 claim was worker status. The claim failed. The Court ruled that, whether or not the MWRF test for justification applied outside the welfare context (i.e., for the JRS challenge), very great weight and respect had to be given in this context to the judgment of the executive. It accepted that the reasons put forward by the executive, which emphasised that the purpose of the JRS was to support continued employment, were sufficient by way of justification. The MWRF test applied to the SSP challenge and the Court was satisfied that the additional costs of extending SSP to non-employees together with the fact that such action would have required “a fundamental rewrite of the SSP system at a time when the scale of the problem combined with the urgency of the crisis required a bright line solution”, and would have given rise to significant potential for fraud problems, was sufficient to justify the discriminatory treatment.

The EU claim rested on the argument that women and BAME workers are more likely to be low-paid and to have limited financial resources with no access to occupational sick pay, so that the low rate of SSP on which they would have to rely if symptomatic or self-isolating would have the effect that a disproportionate number of women and BAME workers would feel compelled to go to work when they should not. Further, BAME workers who went to work with coronavirus were more likely to suffer serious ill-health. The Claimants also argued that the LEL for SSP disadvantaged women and BAME workers who are more likely to fall below it, and that the exclusion of most non-employed workers from SSP was indirectly discriminatory because of race.

The Court accepted that EU law applied in the UK until 31 December 2020 and that SSP was “pay” for EU purposes, and that claims could be brought by way of judicial review against the Treasury (rather than against the employer in the ET (or, as regards the sex claim, the county court)). It also accepted that the claimants had standing, but ruled that no PCP had been applied as regards the rate of SSP, which was the same for everyone. The Court more or less accepted that the PAYE and LEL requirements applied to SSP were PCPs which placed women and BAME workers at a particular disadvantage, and that the PAYE requirement applied to the JRS disproportionately excluded BAME workers. But it ruled that a broad margin of discretion applied to government decisions of major political, economic and social importance (citing, inter alia, R v Secretary of State for Employment, ex p Seymour-Smith (No 2) [2000] 1 All ER 857, [2000] 1 WLR 435, Lord Chancellor v McCloud [2018] EWCA 2844, [2019] ICR 1489 and Palacios de la Villa v Cortefiel Servicios SA (Case C-411/05) [2007] ECR I-8531, [2009] ICR 1111), making reference also to the speed at which the government had to respond to a huge national emergency.

The Court accepted that the extension of SSP to cover workers who were self-isolating or shielding, the removal of the 3 day waiting period and the provision of a subsidy for SMEs for the first two weeks of SSP resulting from the pandemic, was plainly legitimate in pursuit of the government’s aim to provide extra assistance within the SSP scheme for those who are covered by it and who are unable to work, as well as to encourage those within the SSP scheme to stay away from work when they were suffering from coronavirus. It took the view that the difficulty with the claimants’ case was that it sought to challenge the changes to SSP on the basis that they did not seek to achieve a different aim altogether: widening the scope of SSP to cover a different group of workers who had never previously have been within its scope. In addition, the government had provided alternative measures of financial assistance to non-employed workers who were unable to work (SEISS, Bounce Back loans, UC, and delays in tax payments) which would encourage such workers who were unwell or at risk of infection to stay away from work. The claimants’ arguments relating to the LUL fared equally badly, the Court ruling that this element of the scheme was justified on grounds of cost, in order to avoid making workers better off on SSP than they would have been at work, and because workers below the LEL threshold qualify for UC and other benefits.

Finally, the Court ruled that the PSED did not apply to decisions which fell to be given effect in primary legislation (here the decision not to remove the LEL from SSP, as this required amendment of primary legislation). Nor did it apply as regards decisions which the defendant did not make (or consider), such as (here) other options which would have been more beneficial for women and BAME workers. The Court considered whether the defendant had complied with the PSED in amending the SSP scheme to apply to workers who were self-isolating or shielding in accordance with Government guidance, but who were not sick; to removing the three day wait prior to SSP payment; and providing for SSP rebates for SME employers for up to two weeks of SSP payments made to employees as a result of coronavirus. It was satisfied that it had. That left only the JRS which, again, was “part of a wider package of measures, including the SEISS and several loan schemes, designed to help the self-employed and businesses”. The Court was satisfied on the basis of ministerial submissions to the Chancellor that the equalities implications of the measures had been adequately considered.

 

Claimants: Ben Collins QC, Eleena Misra, Nadia Motraghi and Rachel Owusu-Agyei, instructed by Leigh Day

Defendants: Julian Milford QC, Rupert Paines and Ben Mitchell, instructed by Government Legal Department

post modified 15 January 2022