Pay protection on an indefinite basis can be a reasonable adjustment under the Equality Act

This article was first published in People Management in September 2016.

The recent Employment Appeal Tribunal 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 (the “Act”) may require them to maintain a disabled employee’s salary where the employee is moved to a lesser skilled role. Whilst this is not expected to be an “everyday event” it is possible in principle but will depend on the circumstances of the case.

Background

Under section 20 of the Act, an employer will be 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.

Mr Powell worked for G4S Cash Solutions UK Limited (“G4S“) as a single-line maintenance engineer (an “SLM“). 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. Mr Powell began work as a “key runner” on the same SLM salary; this role did not require the same level of engineering skills and training. After 12 months, G4S informed Mr Powell that he could continue as a “key runner” on a lower rate of pay (a reduction of around 10%), accept a suitable alternative position or face dismissal on medical grounds.  Mr Powell refused to accept the lower rate of pay and was dismissed in October 2013.

Employment Tribunal and EAT proceedings

Although there was a separate dispute about the variation to the contract from SLM to “key runner”, the point of interest relates to reasonable adjustments.

The Employment Tribunal found that continuing to employ Mr Powell as a “key runner” on a permanent basis and on his previous SLM salary was a reasonable adjustment which G4S was required to make. The difference in the rate of pay was around £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”.

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 that:

• Many forms of reasonable adjustment will involve a cost to the employer (eg. providing training and/or support). 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 [2005], 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“. Pay-protection was reasonable in the context of Mr Powell’s change in role, distinguishing it from the enhanced sick pay in question in
• This case involved a single claim turning on its own facts, and was not a claim which inevitably applied to many others.
• It would not be an “everyday event” that employers would be required to make up an employee’s pay long-term to any significant extent – the question will always be what is reasonable in the circumstances of the case.
• A change in circumstances may render what was a reasonable adjustment to cease to be a reasonable adjustment, for example if the need for a job disappears or if the economic circumstances of the business alter.

Comment

This decision illustrates that there may be situations where maintaining a disabled employee’s pay when they move to a lesser 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 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.