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Employment Law

Legal guidance - compliance - software

23 FEB 2015

Did a bonus scheme linked to sickness record amount to disability discrimination? 

Did a bonus scheme linked to sickness record amount to disability discrimination? 
Gemma Cawthray
Associate, Veale Wasbrough Vizards

Yes, held the Employment Appeal Tribunal (EAT) in Land Registry v Houghton and others.

The Land Registry operated a bonus scheme which paid an annual sum to eligible employees. Under the scheme, employees who had received a formal warning with respect to sickness absence in the relevant financial year lost their entitlement to the bonus. There was no discretion in the scheme for managers to discard this requirement and pay a bonus to any staff who had received such warnings.

Ms Houghton and others (the Claimants) who all had a disability, were not eligible for a bonus because they received formal warnings for sickness absence in the relevant financial year. The warnings were issued for sickness absence which accrued as a result of the Claimants' respective disabilities under the Equality Act 2010 (EqA 2010).

The Claimants lodged a claim with the Employment Tribunal (ET) on the basis that they had been treated unfavourably by the Land Registry because of 'something arising in consequence of' a disability. The Land Registry argued they had already made reasonable adjustments to the sickness policy by delaying trigger points for the issue of a formal warning where the sickness absence was the result of a disability.

The ET upheld the claims, concluding that there was a causal link between the loss of bonus entitlement and the Claimants' disabilities. The formal warning resulted from disability-related sickness absence, and the warning automatically disentitled the Claimants to a bonus. The ET was also satisfied that the scheme could not be objectively justified. The Land Registry appealed to the EAT.

The EAT dismissed the appeal, upholding the decision of the ET. The EAT determined that despite reasonable adjustments having been made by the Land Registry in the sickness policy itself, the automatic disentitlement of the Claimants from the bonus was a result of sickness absences which were disability related.

The EAT was also satisfied that the scheme was not capable of being objectively justified. It noted in particular, that there was no discretion over the issuing of the written warnings in the sickness policy (unlike in the case of a warning for conduct), nor was there any way of taking into account an improvement in attendance after the warning had been given.

Best practice

The case is a useful reminder that disability discrimination can occur where an employee is treated unfavourably because of something arising in consequence of a disability, in some cases even where reasonable adjustments have already been made. When drafting policies such as sickness absence policies or bonus schemes, employers should carefully consider the aim of the policy or scheme and the potential impact which this might have on those who take disability-related absence. It may be that an element of discretion will assist in allowing for the exercise of sensible judgement in such cases.
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