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Long-term pay protection for disabled employees can be a reasonable adjustment under the Equality Act

The recent Employment Appeal Tribunal (EAT) decision in G4S Cash Solutions (UK) Limited v Powell makes it clear that an employer's duty to make reasonable adjustments under the Equality Act 2010 may extend to maintaining the salary of a disabled employee who has been moved to a less skilled role.

Under section 20 of the Equality Act, an employer is required to make reasonable adjustments where it knows or ought reasonably to know that a person has a disability, and a provision, criterion or practice places that person at a substantial disadvantage in comparison with non-disabled people.

Powell worked for G4S Cash Solutions UK Limited (G4S) as a single-line maintenance engineer. He had ongoing back problems and by 2012, it was accepted that he had a disability. Around the same time, G4S created a new role of "key runner" to support its engineers. Powell began work as a key runner on the same salary as before, although his new role did not require the same level of engineering skills and training. After 12 months, G4S informed him that he could continue as a key runner on a lower rate of pay (a reduction of around 10 per cent), accept a suitable alternative position or face dismissal on medical grounds.  Powell refused to accept the lower rate of pay and was dismissed in October 2013.

Tribunal and EAT  

An employment tribunal found that continuing to employ Powell as a key runner on a permanent basis and on his previous salary was a reasonable adjustment G4S was required to make. The difference in the rate of pay was around £2,480 a year. Taking into account Powell's age, he was likely to be employed for another 15 years. The total cost of the adjustment, around £37,000, was relatively small in the long term. The tribunal noted that G4S had "very substantial resources" and that the additional annual cost would have been "easily affordable".

On appeal, the EAT confirmed that pay protection "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".  It found the following.

  • Many forms of reasonable adjustment (for example, providing training and support) involve a cost to the employer. There is no reason in principle to rule out pay protection as a possible adjustment that employers could be required to make.
  • Pay protection is to be considered in the context of a package of reasonable adjustments. Following the reasoning in Meikle v Nottinghamshire County Council, the objective of the legislation is not to treat disabled persons as objects of charity but "to require modifications which will enable them to play a full part in the world of work".  Protecting Powell’s pay was reasonable in the context of the change in his role, distinguishing it from the enhanced sick pay in question in the Meikle case.
  • This case involved a single claim turning on its own facts, and was not a claim that inevitably applied to many others.
  • Requiring employers to make up an employee's pay over the long-term would not be an "everyday event". The question will always be what is reasonable in the circumstances of the case.
  • A change in circumstances may mean that a reasonable adjustment stops being reasonable - for example, if the need for a job disappears or the economic circumstances of the business change.

Comment

This decision illustrates that there may be situations where maintaining the pay of a disabled employee who has moved to a less skilled role forms part of a package of reasonable adjustments. Although this is not expected to be common, it is possible in principle. Employers cannot therefore rule out pay-related adjustments when assessing their obligations under the Equality Act. Ultimately the question will always be what it is reasonable in the circumstances, taking into account all relevant factors, including those set out in the Statutory Code of Practice on Employment, such as the cost of making the adjustment, its effectiveness and the employer's financial or other resources.

Added: 15-09-2016
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