January 17, 2022
R. (on applying for maternity plan) v HM Treasury  EWCA Civil 1703
In a judgment delivered on November 24, 2021, the Court of Appeal rejected an appeal concerning the legality of the self-employment income support scheme (“the scheme”) which was introduced by the government in April 2020 during the first confinement as part of its response to the Covid-19 pandemic.
The aim of the scheme was to provide payments to persons engaged in commercial activity whose activity had been affected by the pandemic. Payments were to be calculated by reference to the average trading profits (“ATP”) of previous full fiscal years (2016/17, 2017/18, 2018/2019).
The first caller, Motherhood Plan, also known as ‘Pregnant Then Screwed’, is a registered charity that aims to end the discrimination faced by women and mothers by campaigning to change the law, raising media awareness and working with employers to change business practices and culture. The second applicant, Ms Kerry Chamberlain, worked as a freelance energy analyst. In the 2017-2018 tax year, she took 39 weeks of maternity leave after the birth of her second child, and the following tax year she took another 39 weeks of leave after the birth of her third child. Due to his periods of absence from work, his business profits were reduced.
They alleged that in violation of Article 14 of the European Convention on Human Rights (“the Convention”), read in conjunction with Article 1 of the First Protocol to the Convention, the Regime unlawfully discriminated against against self-employed women who took maternity or pregnancy-related leave in any of those three previous full tax years since the level of support they received under the scheme was not representative of their usual benefits.
Whipple J’s High Court ruling was covered for the UKHR blog here. In summary, the High Court held that the scheme was not indirectly discriminatory, but that even if it was, such discrimination was justified.
The Appellants advanced three grounds of appeal, concerning: (1) the finding of the absence of indirect discrimination; (2) whether there has been a failure to treat differently persons whose circumstances are significantly different (so-called “Thimmenos discrimination”; and (3) the Court’s approach and conclusion that the measure was justified.
The Court cited R (SC) v Secretary of State for Work and Pensions  UK SC 26 as the most recent authoritative statement on indirect discrimination in the context of Article 14 and paragraph 49, where Lord Reed said the following (from the Grand Chamber judgment in DH vs Czech Republic (2008) 47 EHRR 3 (see paragraph 175)):
This is what the case law of the Convention qualifies as “indirect discrimination”. It can arise in a situation where a general measure or policy has disproportionately harmful effects on a particular group. It is called “indirect” discrimination because the measure or policy is based on an apparently neutral ground, which in practice causes a disproportionately harmful effect on a group characterized by a salient attribute or status..
In the context of Lord Reed’s wording requiring only that the measure or policy have a “disproportionate adverse effect on a particular groupWhipple J implicitly admitted in her judgment that the scheme had a disproportionate detrimental effect on recent mothers, but nevertheless concluded that there was no indirect discrimination. The Court of Appeal stated that “basic reasoning” at first instance was that the measure did not impose hidden barriers to eligibility or in relation to the amount of payments (which was based on previous average trading profits), so that:
The same rule applies to all and it is no more difficult for a woman who has been on maternity leave to qualify or to calculate her payment, than another. The fact that some claimants will receive lower payments than others reflects the fact that their earnings were lower in past years; I agree with the defendant that the reasons for the decline in income over the past years, in the context of this scheme with its stated purpose, are irrelevant.
The Court of Appeal considered this analysis in the context of the authorities of Barry v Midland Bank  1 WLR 1465 and R (Adiatu) vs Her Majesty’s Treasury  EWHC 1554 (administrator) (which had been examined in the first instance). barry concerned severance pay in connection with which the applicant had recently opted for part-time work following the birth of her child. The method of calculating the severance pay was less advantageous as a part-time worker and the applicant claimed indirect discrimination on the ground that women, due to maternity, were more likely to move from part-time work full to part-time work. The House of Lords, by a majority of 4 to 1, held that prima facie indirect discrimination had not been established.
After reviewing the reasoning behind each of the majority speeches in this case, the Court concluded that it was essential to a claim of indirect discrimination that the group to which the plaintiff belonged be treated differently from persons not belonging to that group. . Moreover, to determine whether there had been such a difference in treatment, it was necessary to identify the true substance of the measure giving rise to the claim, which might involve an examination of its objective. In this case, the scheme worked by using past profits to represent likely hypothetical “Covid-free” profits. The effect placed new mothers at a particular disadvantage because their calculations of benefits under the plan were disproportionately unrepresentative of others. On the other hand, in barry what part-timers had lost were their part-time earnings; any prior career gains were irrelevant to the income the claimant would have received had she not been fired.
Change to Adiatu, the Divisional Court in this case considered whether the rate at which Statutory Sick Pay (“SSP”) was set constituted indirect discrimination against women and members of ethnic minorities. The plaintiff’s case was that women and BAME employees were disproportionately represented in the lowest income groups, were disproportionately likely to be unable to have the resources to manage with such low income, and were therefore disadvantaged by the PHC rate by losing income or having to go to work when they shouldn’t.
The Court of Appeal held that the essential point was the same as that of barry. In particular, SSP was not designed to mitigate the effects of low income, the fact that a recipient has low income does not affect the issue, and the fact that a higher high SBP would benefit low-income people An argument that they were materially disadvantaged by the actual rate could not be established. Returning to the present case, the Plan’s objective of using past earnings as a measure of these hypothetical lost earnings meant that the issue of past earnings was not insignificant but in fact crucial.
The Court of Appeal therefore held that Whipple J erred in relying on these cases and concluding that the use of the ATP measurement for the diet, At first glance, did not constitute indirect discrimination.
Section 14 may impose a positive obligation to treat individuals differently in certain situations and failure to comply with this obligation may also constitute discrimination – commonly referred to as “Thlimmenos discrimination”.
The Court of Appeal observed that Whipple J.’s reasons for dismissing this part of the appellants’ case largely overlapped with his reasons for rejecting the claim of indirect discrimination, and the Court of Appeal was therefore inclined to consider that the reasoning was also flawed. However, it was considered that it was not necessary to reach a definitive opinion in view of the alternative conclusions drawn with regard to indirect discrimination, as indicated above.
While the legal approach at the time of Judge Whipple’s judgment was entirely appropriate, the Supreme Court has since reconsidered whether “manifestly without reasonable basis” was the correct test when considering justification in R (SC) v Secretary of State for Work and Pensions  UKSC 26. The Court of Appeal considered Lord Reed’s judgment in detail before citing Lord Reed’s findings at paragraph 161:
It follows that in domestic cases, rather than trying to arrive at a precise definition of the scope of the phrase “manifestly without reasonable foundation”, it is more fruitful to focus on the question of whether a broad margin of judgment is appropriate in light of the circumstances of the case. The ordinary approach to proportionality gives appropriate weight to the judgment of the primary decision-maker: a degree of weight that will normally be substantial in areas such as economic and social policy, national security, criminal policy, and matters raising moral questions. or sensitive ethics. . It follows[…]that the ordinary approach to proportionality will provide the same leeway to the decision maker as the “manifestly unreasonable basis” formulation in circumstances where a particularly wide leeway is appropriate.
The Court of Appeal was not convinced that the reformulation of the law following CS was important for the way Whipple J approached the question of justification. He felt that Whipple’s assessment was nuanced, respected the assessment of democratically accountable institutions, and recognized both the need for caution before intervening in areas of social and economic policy and that a rationale convincing was required for a measure having a differential impact on women. In any event, the Court of Appeal held that, had it reconsidered the assessment in the light of SC, it would have reached the same conclusion that the indirect discrimination was justified.
The thorough examination by the Court of Appeal of the competent authorities – in particular, barry and Adiatu – clarifies this area of law. What stands out is the requirement to focus on the purpose and substance of the alleged provision, criterion or practice (i.e. the PCP – here, the Regime) in determining whether they can be qualified as indirectly discriminatory. The ruling is to be welcomed as it will prevent reliance on authorities such as barry and Adiatu in circumstances such as this where the scheme was manifestly indirectly discriminatory.
But even so, the Court of Appeal appears to have been correct in upholding Justice Whipple’s decision with respect to justification. The circumstances surrounding the development of the regime – namely a global pandemic and an impending economic crisis – must be taken into account. Given the essential requirements of speed, simplicity and verifiability in the provision of the scheme, it seems entirely reasonable to conclude that its impact on recent mothers was not disproportionate to the benefit of the scheme.
Henry Tufnell is a barrister at 1 Crown Office Row.