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Pay protection can be a reasonable adjustment

In a decision that could have cost implications for employers, the Employment Appeal Tribunal (EAT) in G4S Cash Solutions (UK) v Powell has held that maintaining a higher rate of pay where an employee is moved to a lesser role can be a reasonable adjustment. 

Facts

Mr Powell worked as an engineer but developed back problems, which meant he was unable to carry out in his role. Following a period of sickness absence, he returned to work in a newly created role of key runner, which he was able to carry out despite his disability. 

In his new role, G4S continued to pay Mr Powell at his original salary level, despite him having reduced duties, which did not require the skill-set of an engineer. Mr Powell understood this to be a long-term change to his role. 

G4S then considered discontinuing the key runner role for operational reasons, and advised Mr Powell that the role was only temporary. However, they then decided to make the role permanent but on a lower rate of pay. Mr Powell was unwilling to accept the 10% reduction in pay and was dismissed. Mr Powell brought a claim in the employment tribunal that was appealed to the EAT. 

Pay protection as a reasonable adjustment 

The key question for the EAT was whether the duty to make reasonable adjustments to counter an employee's disadvantage through disability required the long-term protection of Mr Powell's higher rate of pay where he had been moved to a role that required a lesser skill-set. 

It was noted that the objectives of the reasonable adjustments duty contained within the Equality Act 2010 plainly envisage an element of cost to the employer. The EAT considered pay protection to be analogous to other forms of reasonable adjustment cost for an employer.  These include the direct costs related to providing extra training or support for a disabled employee or the indirect costs borne by the employer where measures are taken which render the disabled person's employment less productive. As such, there could be no reason why pay protection should be distinguished from other 'steps' captured by the reasonable adjustment provisions.

Variation of contract

The other issue was whether there had been a variation of Mr Powell's employment contract when he returned from sickness absence into the key runner role – the EAT held that there had clearly been a variation. 

It went on to confirm that an employer cannot unilaterally impose a reasonable adjustment which amounts to a variation of the employee's contract without the employee's consent.  

Comment 

Decisions in reasonable adjustment cases always fall on the specific facts of the case and what is reasonable in the circumstances. 

This case provides an important reminder to employers of the extent of their obligations under the reasonable adjustment legislation. 

Employers should note the following:

  • When faced with situations involving reasonable adjustments, employers should be mindful that the purpose of the legislation is to get the employee back to work and/or keep the employee in work. 
  • What is reasonable in the circumstances will include assessment of the cost of the adjustment and the resources (financial and otherwise) available to the employer.
  • The impact (or anticipated impact) of an adjustment on other employees should not generally be taken into account when determining reasonableness. But wider implications on the organisation or the workforce as a whole can be considered
  • Whilst long-term pay protection may be a reasonable adjustment, employers can take comfort from the fact that the EAT did not expect this to be an everyday event, and both the economic and commercial circumstances of the employer would be taken into account. 
  • If a reasonable adjustment is intended to be temporary then this should be clearly communicated to the employee and documented. 
  • Reasonable adjustments cannot be unilaterally imposed by the employer. It is important to consult with the employee and seek their agreement to any adjustments, whether it is a temporary measure or permanent. 
  • Guidance on reasonable adjustments can be found in Chapter 6 of the EHRC Statutory Code of Practice

Contributors: Aileen Irvine and Amy Whiting

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.


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