31 August 2016

Employers will be aware that the Equality Act requires reasonable adjustments to be made where a disabled person is placed at a particular disadvantage in the workplace. Common adjustments include hours of work, additional support, changes to workload etc.

Another adjustment that is also quite common, where an employee is unable due to their condition to continue in their role, is to look at whether they can be redeployed into another vacancy that the employer has, that the employee would be able to fulfil despite the disability. Previous authority has suggested this could even include transferring an employee to a promoted post and waiving the usual requirement for a competitive interview.

More commonly, the transfer is to a more junior post. Traditional thinking has been that there would be no requirement to preserve the employee’s previous (higher) salary, unless the contract stated this would be done, but a new decision of the Employment Appeal Tribunal (“EAT”) suggests otherwise.

Mr Powell was employed by G4S as a First Line Maintenance (“FLM”) engineer. He became unable to fulfil this role due to a back injury (which amounted to a disability). While medical investigations were carried out, he took on a new role as a “key runner” which he was able to carry out. This would normally be a more junior role with a lower salary, but he was allowed to retain full salary. He was led to believe this change would be “long-term” but not necessarily permanent.

Once the medical investigations were concluded, a year later, G4S sought to regularise matters. They were willing to offer the alternative role on a permanent basis but on the lower salary that would normally apply. Mr Powell refused and was dismissed, there being no other options available.

Mr Powell claimed unfair dismissal and disability discrimination, claiming that his contract had been varied at the start of the new role, a year ago, so that he was entitled to the higher salary for the new role. The tribunal rejected this argument. He argued alternatively that there was a duty to make reasonable adjustments when the job was being made permanent, the reasonable adjustment being to pay the higher FLM salary for the more junior role. He argued also that the dismissal was discriminatory due to this failure.

The employment tribunal agreed that the employer should have made the adjustment and allowed the more junior job on the higher salary, there being no evidence that the employer could not afford to do so.

The employer appealed and the appeal was rejected by the EAT, which reviewed all the previous authorities and held that there is no reason in principle that the employer should not pay the employee more than the job was worth, in order to address the disadvantages the employee would otherwise suffer. It rejected the argument that this amounted to “charity” for disabled persons and could not have been Parliament’s intention.

It was stressed that each case must be judged on its own facts, and it was relevant here that the employer had been paying the higher salary for the junior role for a year before it sought to regularise matters. The effect of this comment might be to dissuade employers from maintaining salary while short-term or temporary adjustments are implemented.

The EAT commented: “I do not expect that it will be an everyday event for an Employment Tribunal to conclude that an employer is required to make up an employee’s pay long-term to any significant extent - but I can envisage cases where this may be a reasonable adjustment for an employer to have to make as part of a package of reasonable adjustments to get an employee back to work or keep an employee in work. They will be single claims turning on their own facts… The financial considerations will always have to be weighed in the balance by the Employment Tribunal”

The EAT states therefore that this does not set a precedent that in all cases it will be reasonable to maintain a higher salary in a more junior role, and such cases may be unusual. However, this gives a potential argument to all employees who are placed in such a position due to a disability and is something employers will have to wrestle with. One unanswered question is how big a drop in salary might an employer have to make up – it really will depend on all the facts and circumstances of the case.

This is a controversial decision, with wide ranging implications for employers, which may potentially be subject to further appeal.

This decision could also lead to the re-opening of a point that many thought had been settled - whether it would be a reasonable adjustment to pay a disabled person full pay when off sick instead of sick pay or SSP. As the latest decision is authority that employers may have to take purely financial steps to assist an employee, could that extend to the issue of sick pay? It may be that this will be raised in future litigation.

The law in this area is a minefield and G4S would not have expected this outcome. Employers should take great care when dealing with employees who may have a disability, and take expert legal advice.

Contact: Douglas Strang Senior Associate dst@bto.co.uk T. 0141 221 8012

Ref: G4S Cash Solutions (UK) Ltd v Powell