Employers may have to protect a disabled employee’s pay

It may be a reasonable adjustment for an employer to employ a disabled employee in a more junior role on their existing rate of pay on an indefinite basis. 

Speedread

In G4S Cash Solutions (UK) Ltd v Powell, the Employment Appeal Tribunal has ruled that an employer may be required as a reasonable adjustment to continue employing a disabled employee in a more junior role on his/her existing pay rate on an indefinite basis. The cost of making an adjustment is relevant to whether it is a reasonable one for an employer to make. Pay protection is no different to any other form of cost for an employer. Whether it is a reasonable step for the employer to take must be determined in the particular circumstances of the case. 

The EAT also made it clear that an employer cannot impose an adjustment it considers reasonable on an employee if it is incompatible with the employee’s current terms of employment. In most cases, an employee will agree to the adjustment but (s)he is entitled to decline it and the employer cannot impose the adjustment as a unilateral variation to the employment contract.

Facts

Mr Powell worked as a single-line maintenance (SLM) engineer, maintaining cash point machines. He suffered from back pain and by mid-2012 he was no longer able to carry out jobs involving heavy lifting or work in confined spaces. It was accepted that he was disabled for the purposes of the Equality Act 2010. In the summer of 2012, G4S created a new role of “key runner” and after a period of sickness Mr Powell began to work in this role, whilst retaining his existing (higher) SLM engineer salary. He understood the change of role to be long-term. 

By May 2013, G4S was considering discontinuing the key runner role. Mr Powell was told that the role had not been permanent. He was invited to look at a list of alternative vacancies and told that he would be dismissed on medical grounds if nothing was suitable. After Mr Powell submitted a grievance, G4S decided to make the key runner role permanent, but at a lower rate of pay to reflect the fact that it did not require engineering skills. Mr Powell was unwilling to accept the 10% pay reduction and was dismissed.

He claimed disability discrimination and unfair dismissal. The employment tribunal ruled that G4S had breached its duty to make reasonable adjustments. It was a reasonable adjustment to employ Mr Powell as a key runner at his original rate of pay. Mr Powell’s dismissal amounted to discrimination arising from disability and was unfair.

The decision

G4S appealed and the Employment Appeal Tribunal had to consider whether the duty to make reasonable adjustments extended to protecting Mr Powell’s higher rate of pay indefinitely. It ruled that it did. It noted that the duty may require an employer to treat an employee more favourably and may require an employer to transfer an employee to a different role, which would usually receive a lower rate of pay than the employee’s previous pay. It may be part of the reasonable adjustment that the employee’s previous rate of pay is preserved for the new role. The EAT said that pay protection is no different to any other form of cost for an employer and is analogous to the cost of providing training or support. Whether pay protection is a reasonable step for the employer to take must be determined in the particular circumstances of the case. 

The EAT commented on the previous case of O’Hanlon v Commissioners for HM Revenue & Customs, in which the EAT had decided that it was not a reasonable adjustment for an employer to have an enhanced sick pay policy for employees with a disability. It clearly stated that Mr Powell’s circumstances were different from those in O’Hanlon as the adjustment of protecting his pay was part of a package of measures to enable him to remain in work, rather than augmenting the level of sick pay to be paid to the employee. It also noted that in O’Hanlon the decision to enhance sick pay would have affected a number of employees, not just a single employee as was the case with Mr Powell. For these reasons, the EAT made it clear that the cost of protecting pay is just one aspect of deciding whether a particular adjustment is reasonable, the cost to the employer does not make it automatically unreasonable.

G4S had been paying Mr Powell the higher rate for nearly a year and had led him to believe that the arrangement was long term. The main reason G4S gave for not wishing to continue paying the SLM rate to Mr Powell for performing the new role was the likelihood of discontent from other employees. The EAT’s view was that this was an unattractive reason and the employment tribunal had been entitled to reject it.

Implications

The duty to make reasonable adjustments will not always require an employer to continue to pay an employee at their existing rate of pay if they are transferred to another role. However this is something which employers should consider. Whether an employer is required to do so will be determined on a case by case basis, taking account of the factors set out in the EHRC Code, including the cost of making the adjustment and the employer’s financial resources. However, the fact that pay protection might cause discontent amongst the workforce is not a relevant factor.