Protecting a disabled employees’ pay can be a reasonable adjustment

G4S Cash Solutions (UK) Limited recently got themselves into trouble where one of their engineers involved in maintaining ATM machines suffered back pain, and ultimately was no longer fit to do work involving heavy lifting or in confined spaces.  It was therefore accepted that from 2012 onwards (having worked for them since 1997) that he was disabled for the purposes of the Equality Act 2010.  Whilst he had been absent from work the company had created a Key Runner role in central London involving driving deliveries to engineers who could then travel by public transport, Mr Powell returned to work as a Key Runner, and was maintained on his previous higher salary.  From his perspective he understood that the change was a long-term one, however, a year later his employer was considering discontinuing the role for operational reasons and they tried to tell him that it had never been permanent and required him to look at alternative vacancies.  Unsurprisingly he presented a grievance and claimed the company were attempting to change his terms and conditions.  His employer then offered him the Key Runner role on a permanent basis but at lower pay rate reflecting the fact that it didn’t require engineering skills.  The employee was unwilling to accept this 10% pay reduction and was therefore dismissed.

The case centred around two issues, firstly whether there had been a contractual variation. The EAT found that if an employer proposes an adjustment which is incompatible with the terms of contract, an employee is entitled to decline it i.e. an adjustment won’t be effective without agreement which is of course a variation of the contract.  They agreed that there had been a variation of contract in the summer of 2012: the real issue was what the terms of that variation were.  It noted that the employee clearly thought the adjustment was a long-term one and had been allowed to believe this but equally the employer had not documented anything, which may suggest that they didn’t intend it to be a permanent change, in the circumstances the Employment Appeal Tribunal found that they didn’t need to make a clear finding on this issue because of the second issue.

The second question was whether or not it was a reasonable adjustment to protect Mr Powell’s pay.  It was clear that he was at a substantial disadvantage compared to non-disabled colleagues because he could no longer carry out his duties as an engineer but was it a reasonable adjustment to protect his pay indefinitely at the higher rate?  The EAT noted that the duty to make reasonable adjustments may require an employer to treat an employee more favourably than others, this has been the case since Archibald v Fife Council 2004 (a House of Lords decision). It is also well established that the duty may include transferring an employee to a new role. Pay protection is a cost to the employer: they saw no reason why this was different to any other cost that employer might incur when making adjustments such as providing extra training, so the question becomes whether or not it is reasonable for the employer to take that step.  The EAT rejected the submission that pay protection could never be a reasonable adjustment – the legislation envisages an element of cost to the employer if it is one which is reasonable for the employer to have to make.  They did go on to say however that it will not be an every day event for an employer to provide long term pay protection – the financial considerations will always have to be weighed in the balance.

It’s very important to emphasise the effect of this decision is simply that protecting a disabled employee’s pay when they are redeployed should not be discounted.  Whether or not it is going to be reasonable to do it will depend on all the factors including the cost of making the adjustment and the financial resources available to an employer.  Clearly a large well-resourced employer could find themselves having to put in place some pay protection.

It’s undoubtedly the case that the way G4S had handled this matter is likely to have influenced the case outcome – they’d clearly led the employee to believe the arrangement was a long-term one.

The EAT was not attracted by the argument that other employees might resent more favourable treatment of an individual employee, and this is a reminder that the impact or anticipated impact on other people is not generally a factor that should be taken into account when determining reasonableness.

It’s useful for the case to have also clarified that an employee has to consent to an adjustment.