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Employment Law

Legal guidance - compliance - software

12 SEP 2016

Disability discrimination - is pay protection a reasonable adjustment?

Joanne Oliver
Senior Associate, Veale Wasbrough Vizards

In the recent case of G4S Cash Solutions (UK) Ltd v Powell, the Employment Appeal Tribunal considered two issues.

First, whether continuing to pay a disabled employee at his existing rate of pay, in a lesser role, can be a reasonable adjustment. Secondly, whether there must be an agreed variation of contract for a reasonable adjustment to take effect.

The facts

Mr Powell had been employed by G4S as a maintenance engineer. He suffered with back pain and, from 2012, it was accepted that he was disabled under the Equality Act 2010 (EqA 2010).

When he returned to work, Mr Powell was given a newly created, less skilled role as a 'key runner', but retained his original salary as a maintenance engineer. Mr Powell was led to believe that this role and his protected pay were long-term adjustments.

G4S later proposed to reduce Mr Powell's pay by 10% and dismissed Mr Powell when he refused to accept this reduction.

The law

Section 20(3) of the EqA 2010 sets out the employer's duty to make reasonable adjustments where there is a provision, criterion or practice (PCP) that puts a disabled person at a substantial disadvantage in comparison with those who are not disabled. Failure to make reasonable adjustments amounts to discrimination.

Section 20(7) of the EqA 2010 provides that an employer who is under a duty to make reasonable adjustments is not entitled to require a disabled person to pay any of the costs of complying with the duty.

The Employment Tribunal (ET)

The ET found the dismissal to be discriminatory and unfair, and that the reasonable adjustments required extended to maintaining the claimant's former pay in his new role. G4S appealed against the reasonable adjustment finding.

The ET rejected Mr Powell's argument that his employment contract had been varied when he started the 'key runner' role to include the retention of his higher rate of pay. It concluded instead that the implementation of a reasonable adjustment under s 20 of the EqA 2010 differs from a variation of contract, in that an employer does not need the employee's consent to impose an adjustment under s 20. Mr Powell cross-appealed on this point.

The Employment Appeal Tribunal (EAT)

The EAT dismissed the appeal from G4S and held that, although it will not be an 'everyday event', protecting an employee's existing level of pay may be a reasonable adjustment, as part of a package of reasonable adjustments, to get a disabled employee back to, or keep them in, work.

In relation to the contractual variation point, the EAT held that the ET's conclusion had been based on an error of law. The EAT's view was that, if an employer proposes an adjustment which is incompatible with the terms of the employee's contract, the employee is entitled to reject it. The adjustment cannot then be imposed where there is no agreement and will not be effective in the absence of a variation of contract.

Best practice

This case demonstrates that pay protection could be considered a reasonable adjustment. Although determining what is reasonable in terms of an adjustment will always be assessed on a case-by-case basis and will come down to the particular factual circumstances.

To determine the question of reasonableness, the tribunal will consider various factors including the size of the employer, the costs of making the adjustments and the financial and other resources available to the employer. What the employee has been told by their employer in terms of the duration of any pay protection will also be relevant. In this case, G4S did not indicate that the protection was temporary, giving the impression that it was permanent. Therefore, if the intention is for pay protection to be an interim measure, as part of a phased return for example, then it is essential that this is made clear when the adjustment is proposed.

Employers should also be aware that the judgment in this case could be applied to circumstances where a disabled employee continues in their existing post, with reasonable adjustments to reduce their duties, and their employer seeks to reduce their pay to reflect the lower level of responsibility or workload. The employer may be required to maintain the existing rate of pay as part of the package of reasonable adjustments (although this will be considered on a case-by-case basis). Employers should seek advice when proposing, implementing or withdrawing adjustments to reduce the risk of a disability discrimination claim.
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