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Chambers & Partners
22/06/2020

Judgment in challenge to exclusion of workers from sick pay & income protection during pandemic

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On 15 June 2020 the High Court handed down its expedited judgment in R (Adiatu & IWGB) v HM Treasury [2020] EWHC 1554 (Admin).

Having granted permission to the Claimants, recognising the urgency of the issues and the matters at stake for the Claimants, Bean LJ and Cavanagh J dismissed the Claimants’ application for judicial review in a challenge to the Coronavirus Job Retention Scheme (‘JRS’) and Statutory Sick Pay (‘SSP’) regimes which exclude workers who are not paid via PAYE.

The Claimants argued that the following decisions were unlawful:

  1. The decision to exclude limb b workers from the JRS.
  2. The decision to amend the scheme for SSP as a response to the pandemic without:
    a.    Including limb b workers within the scheme; or
    b.    Raising the level of SSP; or
    c.    Removing the lower earnings limit.

Grounds of challenge

It was argued that both decisions were violations of Article 14 read with Article 1, Protocol 1 (‘A1P1’) of the European Convention on Human Rights (‘ECHR’) and were therefore unlawful pursuant to section 6 of the Human Rights Act 1998.

The Claimants argued that the second decision was discriminatory on grounds of race and/or sex and represented a breach of EU law.

The Defendant had also failed to comply with the public sector equality duty (‘PSED’) with respect to both decisions.

Exclusion of limb b workers from the JRS

The JRS offers a grant to employers whose employees are paid via PAYE. To the extent that any person who is a worker under section 230(3)(b) of the Employment Rights Act 1996 (‘limb b worker’) is paid via PAYE, their employers are also entitled to claim a grant for their pay under the JRS.

The Claimants argued that the vast majority of limb b workers are not paid via PAYE and are therefore excluded from the pay protection of the JRS. These include a wide range of workers including those within the gig economy who have been deemed to be workers, such as Uber drivers and some care home workers.

There was no dispute that limb b workers – and the narrower category of limb b workers who are not paid via PAYE – are a valid “other status” under Article 14 ECHR. It was also accepted that PAYE status may be an “other status” insofar as the comparison was to be made as between PAYE and non-PAYE workers. There was also no dispute that the decisions in question came within the ambit of A1P1.

The court held that limb b workers who are not paid via PAYE are in an analogous position to employees or other workers who are within the PAYE system to some extent.

However, they found that the difference in treatment between the two groups was justified.

The Defendant argued that the relevant test for justification was that of “manifestly without reasonable foundation” on the basis that the impugned scheme concerned welfare benefits, whilst the Claimants argued that this case required more intrusive inspection by the court because the JRS is about employment protection and pay. The court held that they needed to “give very great weight and respect to the judgment of the executive” in assessing justification and stated that the difference between the standards of review put forward by the parties was “a fine one, if not academic”, applying R (Drexler) v Leicestershire CC [2020] EWCA Civ 502 (see paragraph 76 per Singh LJ in particular).

The court accepted that aims of the JRS – including supporting employers, simplicity in design, reducing fraud and the ability to provide swift assistance – were legitimate and that its ambit was proportionate. The court found that the Defendant could have designed any number of schemes in response to the pandemic, but the JRS was the one which it had created, and it was that scheme which fell to be assessed by the court within permissible bounds.

The court accepted that aims of the JRS – including supporting employers, simplicity in design, reducing fraud and the ability to provide swift assistance – were legitimate and that its ambit was proportionate. The court found that the Defendant could have designed any number of schemes in response to the pandemic, but the JRS was the one which it had created, and it was that scheme which fell to be assessed by the court within permissible bounds.

SSP challenges

Having held that the position of limb b workers who fall outside the definition of “employee” under Part XI of the Social Security Contributions and Benefits Act 1992 was analogous to those who fall within the definition, the court also held that the exclusion of limb b workers from SSP was justified.

On justification, the court accepted the Defendant’s evidence that the additional costs for employers and the government of extending SSP to all limb b workers would be very significant, and such a change would not be practicable in the context of the pandemic, notwithstanding public statements by the Chancellor that the government would do whatever it takes which were of no consequence (see paragraph 62).

As a matter of EU law, the Claimants argued that the requirement to be paid via PAYE in order to qualify for SSP indirectly discriminated against BAME workers on grounds that they are more likely to be in low paid work and were disproportionately at risk of becoming seriously ill and dying if infected with Covid-19. They are therefore put to a particular disadvantage. In relation to the aim of making changes to SSP in the context of the pandemic, the court found that – applying a broad margin of discretion – the Defendant’s failure to extend SSP to cover limb b workers was not disproportionate. The same was true of the Defendant’s decision not to remove the lower earnings limit.

Whilst acknowledging the “deeply disturbing” emerging data concerning BAME individuals suffering COVID-19 and disproportionate number of deaths as found by Public Health England, the court held that the rate of SSP did not constitute a provision, criterion or practice under the Racial Discrimination Directive 2000/43/EU or the Recast Equal Treatment Directive 2006/54/EC.

PSED challenge

The court confirmed that the PSED applied to decisions that are given effect by delegated legislation, but held that the PSED did not extend to the government’s failure to remove the lower earnings limit because it is given effect by primary legislation. The court confined itself to considering the Defendant’s compliance with the PSED with respect to its chosen amendments to the SSP regime in the context of the pandemic and the JRS, and did not assess whether the failure to implement the measures raised by the Claimants’ application represented a failure to comply with the PSED. The Defendant’s evidence of equality analysis was accepted as complying with the PSED. The Claimants had argued that this evidence was scant and showed very little meaningful engagement with the PSED prior to implementing the changes in question.

Ben Collins QC, Eleena Misra, Nadia Motraghi and Rachel Owusu-Agyei were instructed by Leigh Day on behalf of the Independent Workers of Great Britain trade union.

Key contacts

Ben Collins QC

Ben Collins QC 020 7269 0360 Email

Eleena Misra

Eleena Misra 020 7269 0357 Email

Nadia Motraghi

Nadia Motraghi 020 7269 0357 Email

Rachel Owusu-Agyei

Rachel Owusu-Agyei 020 7269 0351 Email

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