Is Pay Protection considered a Reasonable Adjustment?
Friday, 21st October 2016
An employer has a duty under the Equality Act 2010 to make reasonable adjustments where a provision, criterion or practice puts a disabled person at a substantial disadvantage in comparison with those who are not disabled.
In a recent case, G4S Cash Solutions (UK) Ltd v Powell, the EAT held that an employer was required, as a reasonable adjustment, to continue employing a disabled employee in a more junior position whilst preserving their existing rate of pay.
Mr Powell was employed by G4S as an engineer in 1997, maintaining the company's ATM machines. He suffered from back problems and in 2012 was unable to carry out his role as an engineer which involved heavy lifting. Consequently, G4S created a new role of "key runner" to support the ATM engineers. Mr Powell began working as a key runner whilst retaining his original salary as an engineer which he believed would be a long-term change.
In 2013, due to organisational reasons, G4S considered discontinuing the role of key runner. They informed Mr Powell and presented him with a list of alternative vacancies. They told Mr Powell that, if he did not consider none of these alternative vacancies to be suitable, G4S would dismiss him on medical grounds.
Mr Powell raised a grievance, claiming that G4S were changing his terms and conditions of employment. In response, G4S decided to make the key runner role permanent, but on a lower wage to reflect the fact that the role did not require engineering skills. Mr Powell refused to accept the 10% pay reduction and consequently was dismissed on 8 October 2013.
Employment Tribunal decision
The Employment Tribunal rejected Mr Powell's claim that there had been an agreed variation to his employment contract when he started as a key runner. However, the Tribunal held that G4S was required to employ Mr Powell as a key runner on his existing pay, as a reasonable adjustment under the Equality Act. The Tribunal found that Mr Powell's dismissal was unfair and amounted to discrimination arising from disability.
G4S appealed the decision and Mr Powell cross-appealed on the contractual variation point.
The EAT held that the Tribunal had based their decision on an error of law, and that an employer can impose a particular adjustment without the employee's consent, differentiating it from a variation of contract which requires consent.
As for the reasonable adjustment of pay, the EAT dismissed the appeal and upheld the Tribunal's decision. The EAT held that G4S should have continued to pay Mr Powell at the higher rate of pay as a reasonable adjustment. The EAT stated that pay protection is no more than another form of cost for an employer, similar to providing extra training or support. The objective is to keep employees in work and there was no reason why pay protection should not be a reasonable adjustment.
G4S tried to argue that other employees may feel disgruntled at continuing to pay Mr Powell a higher rate of pay. However, the EAT described this as an "unattractive reason", reminding us that the opinions of other employees of an adjustment is not generally a factor that should be considered.
It must be highlighted that this case does not set a precedent to the effect that pay protection will always be a "reasonable adjustment", and each case will continue to turn on its own facts. The EAT itself concluded that this will not be an "everyday event", and that the employer's resources and financial situation will always have to be weighed in the balance by the Tribunal. Additionally, an adjustment may eventually become unreasonable should the employer's circumstances change. However, it also demonstrates the significant scope of the duty to provide reasonable adjustments and is something that employers should consider.