Women entrepreneurs ‘unfairly penalised for taking maternity leave’

Prof Julia Rouse

New mothers who took maternity leave within the last assessment period are being unfairly disadvantaged in the Government’s Self Employment Income Support Scheme (SEISS), claims a North West social enterprise.

The Women’s Organisation, which has offices in Liverpool and Manchester, is warning that entrepreneurs who are mothers, who typically take longer parental leave than their male counterparts, are being unfairly impacted by having taken time out from trading to look after their new-borns.

While official government guidance states that self-employed people who have taken, or are currently on, parental leave “may” still be eligible for the scheme – as HMRC considers them to be still trading – these entrepreneurs are receiving grants significantly lower than had they not taken this leave.

Under the Self Employment Income Support Scheme, the Government will pay self-employed people grants of 80% of their average profits, up to £2,500, for three months.

These average profits are calculated based on the last three years of tax returns, but this does not consider any time taken off for maternity leave in that period, substantially bringing down the average for many.

The Women’s Organisation has estimated that this could potentially impact around 80,000 self-employed women in the UK who took leave during this time.

Maggie O’Carroll, The Women’s Organisation chief executive, said: “When queried about this failure in government we heard The Chancellor Rishi Sunak say that the system was fair in ensuring that people who had a ‘volatile year’ would get the opportunity to use an average calculation.

“Let us be clear. Taking maternity leave is not a bad business year – it is time away from trading to care for a baby.

“What’s more, employed people who have been furloughed under the Job Retention Scheme aren’t getting a reduced wage for having taken maternity leave, where is the parity?

“There is a real danger here that the unintended consequence of this approach can be understood as structural discrimination, which disproportionately penalises women in the scheme.

“Government must address this disparity as a matter of urgency, so that mother entrepreneurs can be rightly and properly supported.”

The organisation is calling for government to allow mothers to work out their average profits without having to include maternity leave in the calculation.

It says one viable way of regulating this would be for the Government to look at who claimed maternity allowance which self-employed women receive when the take maternity leave, over the past three years.

Professor of Entrepreneurship and head of the Sylvia Pankhurst Gender Research Centre at Manchester Metropolitan University, Julia Rouse, says: “The Self-Employment Income Support Scheme aims to compensate small traders for loss of earning during lockdown.

“Assessing those losses by taking into account maternity leaves taken in the past makes no sense at all. It is plainly unfair and a blow to new mothers who worked heroically to ensure that their businesses survive during pregnancy and maternity.

“COVID-19 is another massive challenge for these businesses and one through which they need support, not discrimination. Imagine for a moment running a business while nurseries and childminders are closed. Mother entrepreneurs need and deserve our support and, at the very least, a fair deal.”

She added: “In the UK we have The Equalities Act that specifically states that it is discriminatory for the state to disadvantage someone on the basis of pregnancy or maternity.

“It is time for the Government to reconsider this unfair clause so that they act in both the spirit and the letter of the law – and show their empathy and commitment to women business owners.”