Women entrepreneurs are being unfairly penalised for taking maternity leave
The Chancellor says self-employed people who have had a “volatile income” will be fairly treated by the Self Employment Income Support scheme, but one social enterprise is making clear that taking maternity leave is not a so-called “bad business year”.
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), says The Women’s Organisation.
The internationally leading social enterprise 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.
One of these women is Liverpool-based entrepreneur and founder of Good Taste Magazine, Jade Wright.
She says: “I am one of thousands of women who have been disadvantaged by taking maternity leave. My grant has been effectively cut in half because the maternity leave I took three years ago wasn’t taken into account in the calculation. Even though I returned to work in 2018 and have since earned a normal amount, I have lost over 50% of my grant because I made a loss on my self-employed pay during my first year in the assessment period.
“Women often take on the role of primary care givers, even beyond maternity leave countless women take additional leave every year to look after family members, and this all impacts on the amount they will receive. This is an example of structural discrimination which disproportionately penalises women and more must be done protect and encourage more female entrepreneurs”.
Maggie O’Carroll, CEO of The Women’s Organisation, says: “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 three years ago, 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 adds that 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 last 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.
“Covid19 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.
“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 re-consider 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."