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NI High Court decides different treatment of Statutory Maternity Pay and Maternity Allowance under Universal Credit rules is lawful

17th June, 2022

In the matter of an application by ‘RK’ for judicial review [2022] NIQB 29

In April 2022, the High Court in Northern Ireland gave its decision in an application for judicial review by a Law Centre NI client referred to as ‘RK’.

RK’s case is about the different way Statutory Maternity Pay (SMP) and Maternity Allowance (MA) are treated when calculating an award of Universal Credit (UC).

RK argued that the Department’s different approach to the two payments is unfair and discriminatory and renders her, as a recipient of Maternity Allowance, worse off than a recipient of Statutory Maternity Pay, without good reason.

Background

In December 2018, RK went on maternity leave from her employment. Although RK had an extensive employment history and had been continuously employed since 2013, she did not qualify for SMP. That is because she had not been employed by the same employer for a continuous period of 26 weeks immediately preceding the fourteenth week before her due date.[1]

RK claimed MA instead of SMP and started to receive MA in February 2019. In April 2019, RK made a claim for UC. In each UC assessment period, the full amount of RK’s award of MA was deducted from her UC award. This meant that in some assessment periods, RK received a nil award of UC.

If RK had been in receipt of SMP rather than MA, her UC award would have been deducted by 63% of the SMP she received over and above a work allowance. This would have resulted in an award of UC of approximately £395.

In April 2019, RK also applied for a Sure Start Maternity Grant. The Department refused her claim on the basis that she was not receiving a qualifying benefit. If RK had been awarded UC at that time, she would have been entitled to the Sure Start Maternity Grant.

RK challenged the Department’s decision first to refuse her UC and then to award her a reduced amount. She also challenged the Department’s decision to refuse her a Sure Start Maternity Grant. She argued that the different treatment she received as a recipient of MA compared to a recipient of SMP was unlawful discrimination and in breach of her rights under the European Convention on Human Rights (ECHR).

Legislation

The statutory scheme underpinning Universal Credit treats MA and SMP differently.

Regulation 23 of the Universal Credit Regulations (NI) 2016 requires that a claimant’s unearned income is deducted from their award in its entirety.

In contrast, only 63% of earned income, over and above any work allowance, is deducted. Earned income is therefore treated more favourably than unearned income.

Regulation 55(4) sets out the benefits that are to be treated as ‘employed earnings’. This includes SMP. Regulation 66(1) defines ‘unearned income’, which includes MA.

MA is therefore treated as unearned income and deducted in full, while SMP is treated as earnings and only partially deducted.

Entitlement to a Sure Start Maternity Grant is provided under the Social Fund Maternity and Funeral Expenses (General) Regulations (NI) 2005 and Schedule 4 of the Social Security (Claims and Payments) Regulations (NI) 1987. Only claimants in receipt of a qualifying benefit are entitled to a Sure Start Maternity Grant. Universal Credit is a qualifying benefit.

Article 14 European Convention on Human Rights

The claimant argued that her human rights under the European Convention on Human Rights had been breached.

Article 14 ECHR provides that the rights and freedoms that people are entitled to under the ECHR should be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.

Article 14 ECHR does not provide a stand-alone right. It must be ‘read with’ or considered in conjunction with another ECHR right. In the claimant’s case, she argued that her right not to be discriminated against should be read with Article 8 (right to respect for private and family life) and Article 1, Protocol 1 (protection of property).

In order to establish whether there has been a breach of Article 14 ECHR, the Court undertakes the following assessment:

  • First, only differences in treatment based on an identifiable characteristic amount to discrimination under Article 14. This could be on the basis of one of the grounds mentioned in Article 14, i.e. sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth, or on the basis of some other status.
  • Secondly, there must be a difference in treatment between the claimant and a person in an analogous or relatively similar situation.
  • Thirdly, even if there is a difference in treatment between identifiable groups who are in relatively similar situations, it will not amount to discrimination under Article 14 if it is justified. Difference in treatment will be justified if it pursues a legitimate aim and it does so in a way that is proportionate, i.e. it doesn’t use a sledge hammer to crack a nut.
  • Finally, states have a ‘margin of appreciation’ in deciding whether differences in treatment are justified. Generally, a wide margin of appreciation is allowed for measures of economic or social strategy, such as the administration of benefits.

Moore v. Secretary of State for Work and Pensions [2020] EWHC 2827 (Admin)

In October 2020, the Administrative Court in England and Wales decided a case which also concerned the different treatment of MA and SMP under UC rules: Moore v. Secretary of State for Work and Pensions [2020] EWHC 2827 (Admin).[2]

Like RK, the claimant in Moore argued that the different treatment of SMP and MA was unlawfully discriminatory. The Court, however, dismissed her application. It decided that although there was different treatment, it was justified and did not amount to unlawful discrimination.

RK’s case

RK argued that the different treatment she received as a recipient of MA in contrast to a recipient of SMP was unlawfully discriminatory. She argued it breached her rights under the ECHR, namely Article 14 when read with Article 8 and Article 1, Protocol 1.

RK also argued that she suffered discrimination in the way set out in the European Court of Human Rights case of Thlimmenos v. Greece (2000) 31 EHRR 15. She argued that by treating MA in the same way as other types of unearned income, she had been treated similarly to people who were actually in a different situation to her. This, she argued, also amounted to unlawful discrimination.

RK further claimed that the different treatment of SMP and MA is irrational, and contrary to provisions of the United Nations Convention on the Rights of the Child and United Nations Convention on the Elimination of All Forms of Discrimination against Women.

The Department’s case

The Department argued that RK’s case does not come within Article 14 ECHR because RK’s situation is not sufficiently analogous to that of a recipient of SMP. It highlighted differences between MA and SMP in support of its case, including that SMP is paid by an employer and that SMP is taxable, whereas MA is not.

The Department argued that even if RK’s case does come within Article 14, any difference in treatment between MA and SMP is justified by practical considerations. It referred to the fact that SMP is integrated within the Real Time Information system, whereas MA is not. It argued that this approach gives rise to efficiency, cost-effectiveness and reduction in scope for fraud and error. The Department also argued that the different treatment between MA and SMP was a conscious policy choice of the Government when the UC regime was introduced and that it aimed to incentivize long-term employment.

Decision

Sitting in the High Court, Mr. Justice Scofield acknowledged that RK was materially worse off having claimed UC because she was in receipt of MA rather than SMP.

He referred to the recent decision of the High Court of England and Wales in Moore and, while acknowledging that he is not bound by the decision, he indicated that it is entitled to a high degree of respect.

He went on to consider whether the difference in treatment received by RK amounts to unlawful discrimination contrary to Article 14:

  • First, he decided that RK’s treatment falls within the ambit of her Article 1, Protocol 1 Convention rights. He also agreed that RK’s case comes within Article 8 because of the nature and purpose of MA and the potential impact on family life.
  • Secondly, the Judge decided that RK has ‘other status’ within the terms of Article 14 on the basis that she is a recipient of MA rather than SMP.
  • Thirdly, the Judge accepted that RK’s position is analogous to that of a woman in receipt of SMP.

Having decided that RK’s case comes within the ambit of Article 14, the Judge went on to consider whether the differential treatment can be justified. In doing so, he considered whether the difference in treatment pursues a ‘legitimate aim’ and whether there is a ‘reasonable relationship of proportionality between the aim and the means employed to achieve it’.

After considering the parties arguments, the Judge decided that the Department had justified the difference in treatment and he dismissed RK’s application.

At paragraph 59, he stated:

‘In the premises, I conclude, as the court did in Moore, that [the Department] has justified the difference in treatment of which [RK] complains in this case. I am satisfied that the aims being pursued by [the Department] – namely addressing the practical issues identified in Moore, along with the desire to incentivise stable employment over more sporadic employment – are sufficiently important to justify the differential treatment; and that the difference in treatment is rationally connected those aims. I am further satisfied that there is a reasonable relationship of proportionality between those aims and the means employed to achieve them.’

The Judge also dismissed RK’s case on the basis of Thlimmenos v. Greece (2000) 31 EHRR 15, finding that the absence of differential treatment between MA and other types of unearned income was justified.

Finally, he dismissed RK’s claims based on irrationality and international treaties, namely the United Nations Convention on the Rights of the Child and United Nations Convention on the Elimination of All Forms of Discrimination against Women.

In conclusion, the Judge, referring to the Supreme Court decision in R (on the application of SC, CB and 8 children) v. Secretary of State for Work and Pensions and others [2021] UKSC 26 (known as ‘the two child’ case), stated:

‘…as the decision of the Supreme Court in SC makes abundantly clear, the role of the courts in assessing discrimination claims in this field of social policy is not to correct every grievance for which they might have sympathy or which might appear inequitable. It is to assess the legality of the respondent’s approach, allowing it an appropriate margin of appreciation in all the circumstances of the case.’

For a full copy of the judgment, click here.

[1] See section 160 Social Security Contributions and Benefits (NI) Act 1992.

[2] Moore was decided after RK’s application for judicial review had been lodged with the Court.