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Maintaining pay at existing rate can amount to a reasonable adjustment

The Employment Appeal Tribunal (EAT) has held in the case of G4S Cash Solutions (UK) Ltd v Powell UKEAT/0243/15 that an employer was required to maintain an employee’s rate of pay indefinitely by way of a reasonable adjustment where his role was adjusted on account of his disability to a less senior and less physical role.

The Claimant, Mr Powell worked in a number of roles for G4S from 1997. He was issued with a document confirming the changes each time his role changed. In 2011 he became a single-line maintenance engineer (SLM). He suffered with lower back pain and was unfit for work requiring heavy lifting or to work in confined spaces by mid 2012. It was accepted that from this time, he was disabled under the Equality Act 2010.

G4S created a new role of ‘key runner’ to support engineers in Central London. The role involved driving from the depot to various locations to deliver parts and keys to engineers. The Claimant commenced the role of ‘key runner’ following a return to work after a period of sickness absence. He continued to be paid at his SLM rate. The Claimant believed this to be a long-term role and was led to believe this until his line manager confirmed that the role was not permanent in May 2013. His line manager confirmed that G4S were discontinuing the key runner role for operational reasons. The Claimant was provided with a list of vacancies and was asked to consider which, if any, roles he could perform. He asked what would happen if he was unable to carry out any of the roles and was told that G4S would have to dismiss him on medical grounds.

The Claimant argued, in a grievance, that the commencement of his ‘key runner’ role amount to a change to his terms and conditions of employment. Following which, G4S confirmed that the key runner role would be made permanent but that as the role did not require engineering skills of the kind required in his SLM role, the pay would be reduced. The Claimant did not accept this. The pay reduction amounted to 10% in broad terms. He was dismissed on 8 October 2013 when no other suitable vacancy was identified. The Claimant appealed his dismissal unsuccessfully. He bought claims of unfair dismissal and discrimination arising from disability under s.15 of the Equality Act 2010.  

The employment tribunal rejected the Claimant’s contention that he had agreed a variation to his contract which entitled him to continue in the new role on his original rate of pay indefinitely. However, it held that it was reasonable for G4S to maintain his original rate of pay despite his new less skilled role as a key runner by way of reasonable adjustment to his disability. The tribunal held that there had been no variation but that, in any event, an adjustment pursuant to s.20 Equality Act 2010 (reasonable adjustments duty) can be effective without the employee’s consent. The tribunal distinguished between a contractual variation which requires consent by stating that an adjustment could be imposed without consent.

G4S appealed the finding that it had failed to make reasonable adjustments and the Claimant cross-appealed the tribunal’s finding that there had been no contractual variation.

G4S’ appeal was dismissed. The EAT held that G4S was required to continue to pay the Claimant at the original rate of pay as a reasonable adjustment to his disability.

The tribunal had identified the provision, criterion or practice (PCP) which G4S imposed, was the requirement that the Claimant be fit to do the SLM work. There was little doubt that this placed the Claimant at a substantial disadvantage compared to non-disabled employees. The real issue was whether the adjustment was ‘reasonable’ taking into account the factors set down by the Equality and Human Rights Commission, Equality Act 2010: Employment Statutory Code of Practice including the size and resources of the employer. The tribunal had considered the fact that G4S had substantial resources and the cost of maintaining the Claimant’s salary was easily affordable. G4S had sought to argue that paying the Claimant would cause discontent among other employees but the tribunal found this argument ‘unattractive’. G4S had not demonstrated that it had had such an effect and no complaints by other employees had been produced.

The tribunal reiterated that the reasonable adjustments duty may require an employer to treat an employee more favourably than others, as set out in the case of Archibald v Fife Council [2004] ICR 954. The Council, in this case, was required to transfer Archibald to a clerical post and provide training without requiring her to undergo competitive interviews. This was found to be a reasonable adjustment to her disability which was a result of minor surgery which left her mobility impaired.

G4S sought to argue that pay protection could never be a reasonable adjustment citing the case of O’Hanlon v Commissioners of HM Revenue & Customs UKEAT/0109/06. This case concerned an employee who had brought a claim based on the employer’s failure to continue paying her whilst she was off sick when she had exhausted her sick pay. The Court of Appeal held that it will rarely, save in exceptional circumstances, be a reasonable adjustment to continue paying an employee who is absent from work. This is contrary to the purpose of the legislation as it is likely to act as a disincentive for the employee to return to work.

S.20(3) Equality Act 2010 provides for the employer to take such ‘step’ as is reasonable to have to take to avoid the disadvantage. The EAT held that if enhanced sick pay could constitute a ‘step’ then ordinary pay could also be a ‘step’. The EAT considered that the purpose of the legislation meant that there would inevitably be some cost to the employer. The EAT did make clear that it will not be an ‘everyday event’ for employers to protect an employee’s pay, however this protection together with other measures may amount to a reasonable adjustment. The tribunal will be required to consider the reasonableness in the specific circumstances. Even if an adjustment has a significant associated cost, in overall terms it may still be cost effective compared with say, recruiting and training a new employee and therefore amount to a reasonable adjustment.

In relation to the question of the contractual variation, the EAT held that an employer cannot require an employee to accept an adjustment. If an adjustment to the employee’s terms and conditions is proposed by the employer, the employee can decline it and the adjustment will not be effective.  This is likely to apply only in a limited set of circumstances as the purpose of making a reasonable adjustment is to alleviate the disadvantage suffered. However, where such adjustment involves a change to the employee’s terms and conditions, consent is required. The EAT considered that the tribunal had not made clear findings on whether there had been a contractual variation and what the terms were. It had considered that the Claimant believed the change to be long-term and his line manager had not intimated otherwise but that the change was not effected in writing. However this was not sufficiently clear. In light of the Claimant’s success on the reasonable adjustment point, the EAT found little point remitting the case to the tribunal to deal with the contractual variation point.

This article is not a substitute for legal advice on specific facts and circumstances. It is designed as a free update on the law at the time of publicising. QualitySolicitors Knight Polson accepts no responsibility for reliance on this article and recommends that you seek legal advice on your situation.

If you have any questions or would like to discuss a matter further please do not hesitate to contact us on knightpolson@qualitysolicitors.com  or 023 8064 4822.

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