"Pay protection" can be a reasonable adjustment

It has been held that an employer was required, as a reasonable adjustment, to continue employing a disabled employee in a more junior role whilst still paying him his more senior salary.

20 September 2016

Where an employer knows, or ought reasonably to know that a person has a disability and there is a provision, criterion or practice which places that person at a substantial disadvantage in comparison with those who are not disabled, the employer has to take such steps as it is reasonable to have to take to avoid the disadvantage. An employer who is under a duty to make reasonable adjustments is not entitled to require a disabled employee to pay any of the costs of complying with the reasonable adjustment duty.  

G4S Cash Solutions (UK) Ltd v. Powell UKEAT/0243/15

The facts
Mr Powell worked as a single-line maintenance engineer, maintaining the company’s ATM machines. However, by mid-2012, his back pain was such that he was unable to perform his duties. From that point it was accepted that he was a disabled person under the Equality Act 2010.  

Mr Powell returned from sickness absence to work as a "key runner", a newly created role which involved driving to deliver materials to engineers. This was a less-specialist role, but Mr Powell retained his previous engineer’s salary.

Mr Powell was led to believe this arrangement was permanent. However, about a year after he started work as a key runner, G4S informed Mr Powell that they were considering discontinuing the key runner role for organisational reasons. He was invited to consider a list of alternative vacancies and if nothing was suitable he was told he would be dismissed on medical grounds. Mr Powell claimed that G4S were trying to change his terms and conditions. The company decided to make the key runner role permanent but reduced Mr Powell’s salary to reflect the fact that the position, unlike his previous job, did not require engineering skills. He did not accept the decrease in pay and was consequently dismissed.

The decision
It was clear that Mr Powell was at a substantial disadvantage compared to his non-disabled employees as he was unable to carry out his duties as a single-line maintenance engineer due to his disability. The key issue was whether the duty to provide reasonable adjustments extended to protecting an employee’s higher rate of pay indefinitely where they are redeployed.  

The EAT observed that reasonable adjustments can include a degree of cost for the employer. It can also require an employer to treat a disabled employee more favourably than non-disabled colleagues. In O’Hanlon v. Commissioners of HM Revenue & Customs, it was held that enhanced sick pay could, in principle, be a reasonable adjustment.  The EAT in the present case therefore concluded that there is no reason why ordinary pay should be excluded from the ambit of reasonable adjustments. It commented that the objective of “reasonable adjustments” is to keep employees in work and therefore a package of measures to enable this, which includes some pay protection, is perfectly capable of being a reasonable adjustment.  

G4S had argued that protecting Mr Powell’s pay was not reasonable as this would breed discontent from other employees. The EAT reiterated that the anticipated or actual impact an adjustment might have on other employees should not be taken into account when determining its reasonableness. Wider implications on the organisation or workforce as a whole may, however, be considered.

Finally, the case gave helpful clarification that a reasonable adjustment which amounts to a contractual change will require the employee’s consent for it to be effective.

What employers need to know
A failure to make reasonable adjustments amounts to discrimination. It is, therefore, vital that employers are aware of what is expected of them. The EAT did say that protecting pay as a reasonable adjustments will not be an “everyday event”. However, this should not automatically be discounted as an option when a disabled employee is redeployed or reduces their hours, for example.  

The reasonableness of the potential adjustments must be assessed on a case-by-case basis, taking into account the factors set out in the EHRC Code. These include the costs of making the proposed adjustment and the resources available to the employer. G4S had substantial resources – the additional cost of them paying Mr Powell at the higher rate was easily affordable.  

The true impact of this case will largely come to light once it has been considered in future tribunal cases. For now, however, it is important to be aware of pay protection as a possibility when considering reasonable adjustments.

The full text of the case can be found here.