Employment Appeal Tribunal held that pay protection was not a reasonable adjustment

In July 2021, the Government published its National Disability Strategy which includes a wide range of practical actions to improve the lives of disabled people. This was followed by a consultation paper on 16 December 2021 on disability workforce reporting for large employers. The consultation period ends on 25 March 2022.

Employers will be aware of the duty to make reasonable adjustments for disabled employees in certain circumstances. A recent case which considered this issue was Aleem v E-Act Academy Trust Limited (E-Act), in which the Employment Appeal Tribunal held that it was not a reasonable adjustment to maintain the employee’s pay at her higher, previous rate following her move to a lower paid role because of her disability.

Many forms of reasonable adjustment will involve a cost to the employer for example, providing training and/or support. Pay protection should be considered in the context of a package of reasonable adjustments. There is no reason in principle to rule out pay protection as a possible reasonable adjustment but the tricky issue for employers is determining what is reasonable in the circumstances of the case. The Aleem decision provides useful guidance.

Legal background

Section 20 of the Equality Act 2010 impose a duty on employers to make reasonable adjustments where:

• A provision, criterion or practice (PCP) puts a disabled person at a substantial disadvantage in comparison with those who are not disabled;
• A physical feature puts a disabled person at a substantial disadvantage in comparison with those who are not disabled;
• A disabled person would, but for the provision of an auxiliary aid, be put at a substantial disadvantage in comparison with those who are not disabled.

It is important to remember that an employer is only under a duty to make a reasonable adjustment where they know or could reasonably be expected to know that the individual has a disability and is likely to be placed at a substantial disadvantage.

The Equality and Human Rights Commission Employment Statutory Code of Practice which Employment Tribunals must take into account if it appears relevant, contains a non-exhaustive list of potential adjustments that employers might be required to make (paragraph 6.33). It also refers to some of the factors which may be taken into account when deciding what a reasonable adjustment is, including the cost of the adjustment in the light of the employer’s financial resources and the disruption that the adjustment would have had on the employer’s activities. Ultimately, however, it is for an Employment Tribunal to objectively determine whether a particular adjustment would have been reasonable to make in the circumstances.

Employment Appeal Tribunal decision

The EAT upheld the Employment Tribunal’s decision that, whilst it was a reasonable adjustment to continue to pay the Claimant at the teacher’s rate of pay whilst her return to work was being supported and internal processes were being handled, it was not reasonable to expect this to be a permanent pay protection. The EAT also held that the Employment Tribunal was not wrong to consider:

• (i) the significant additional cost that would be involved if E-Act had continued to pay her at her original rate; and/or
• (ii) evidence of the financial difficulties E-Act was facing, when concluding that the adjustment was not reasonable.

The question is what it is reasonable for an employer to do considering all the relevant circumstances, including practicability, cost, service delivery and business efficiency. Here the Employment Tribunal considered the fact that the cost of maintaining the Claimant’s salary indefinitely would be substantial, against the backdrop of a publicly funded institution facing some financial pressures.

Comment

Interestingly, the EAT addressed a previous decision of the EAT in G4S Cash Solutions (UK) Ltd v Powell. In G4S, the EAT held that maintaining an employee’s rate of pay despite moving them to a lower paid, lesser skilled position was a reasonable adjustment. Whilst this is not expected to be an “everyday event” it is possible, in principle, but will depend on the circumstances of the case. However, the decision in Aleem demonstrates that this will not always be the case and that each case is fact-specific.

There are some key distinguishing features between Aleem and G4S and one was the information provided to the employee regarding the pay protection. In G4S the employee had been given assurances that the higher rate of pay would be continued as part of the agreement to return to work. In Aleem, E-Act had made it clear that the pay would be adjusted to the lower rate after the grievance and probation period concluded and the Claimant accepted the job on this basis. In G4S, the lower rate of pay meant a reduction of around 10% which amounted to £2,480 a year. Taking into account Mr 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. G4S had “very substantial resources” and the additional annual cost would have been “easily affordable”. It is clear from Aleem that:

• (i) the cost of the adjustment;
• (ii) the disruption that the adjustment would have had on the employer’s activities; and
• (iii) what the employee has been led to believe, will be relevant to an Employment Tribunal in determining whether there has been a failure to comply with the duty to make reasonable adjustments.