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EAT: 'reasonable adjustments' can in principle include protected pay

Out-Law News | 02 Sep 2016 | 12:07 pm | 3 min. read

The duty to make reasonable adjustments (RAs) to enable an employee who is disabled for the purposes of the 2010 Equality Act can in principle include continuing to pay a higher salary when that employee is moved to a lower grade role, the Employment Appeal Tribunal (EAT) has ruled.

Although the judgment appears to be a significant departure from previous decisions on the point, EAT judge David Richardson also said that whether or not pay protection would be an RA would very much depend on the circumstances of the case, according to employment law expert Sue Gilchrist of Pinsent Masons, the law firm behind Out-Law.com.

Whether pay protection measures were appropriate would always depend on "whether it is reasonable for the employer to have to take that step", the judge said. In addition, what was "reasonable" at one point in time could change in the future, should the need for the job disappear or the economic circumstances change, he said.

Previous decisions had made it clear that it was "highly unusual to require that a disabled employee is paid more than a non-disabled employee", for example in the case of sick pay, employment law expert Sue Gilchrist said.

"However, RAs do often result in what can appear to be a more favourable position for the disabled employee; and whether this is likely to be unpopular with other employees is an unattractive argument which was considered and strongly rejected by the employment tribunal and EAT in this case," she said.

"To help avoid this type of situation arising, clarity around such pay protection arrangements is required - no ambiguity should remain as to how long they are to apply or why they are being put in place. This should be made clear from the outset, with appropriate consideration given as to why this is reasonable in the context of making an RA," she said.

Andrew Powell, the employee in this case, had suffered a back injury which amounted to a disability for the purposes of the Equality Act, and which meant he was no longer able to work in a role that involved heavy lifting. His employer, G4S Cash Solutions, transferred him to the less skilled role of 'key runner', but kept him on the same salary. The employment tribunal heard evidence that these arrangements were in place for nearly a year, and that Powell had been led to believe that they would be long-term.

In 2013, G4S informed Powell that his pay would be cut by around 10%, to the level of the key runner role. It could not identify an alternative suitable role. Powell refused to accept the pay cut, and was dismissed. He then began an employment tribunal claim for unfair dismissal.

Under the Equality Act, an employer is required to make reasonable adjustments in cases where disabled employees are "at a substantial disadvantage" in comparison to employees that are not disabled. Examples of what might be a reasonable adjustment are set out in statutory guidance, and many of these "involve additional cost to the employer", according to the EAT judge in this case.

For this reason, the judge said that he could see "no reason in principle" why this could not extend to protecting an employee's pay "in conjunction with other measures to counter the employee's disadvantage through disability".

"The objectives of the legislation plainly envisage an element of cost to the employer; if an adjustment is one which it is reasonable for the employer to have to make, it is not a matter for charity, but a legal requirement reflecting the expectations of parliament and society," he said. "The objective is to keep employees in work, and I see no reason why a package of measures for this purpose, which includes some pay protection, should not be a reasonable adjustment."

"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 ... The financial considerations will always have to be weighed in the balance by the employment tribunal," he said.

If the EAT judge had not upheld the employment tribunal's decision on this point, he would have upheld a 'cross-appeal' brought by Powell that G4S had imposed a variation of his contract on him without his consent, he said.