Most employers are clear that they have a duty to make reasonable adjustments for disabled employees to address any substantial disadvantage that they suffer at work due to their disability. This duty to make reasonable adjustments for disabled employees is imposed upon an employer under the Equality Act 2010 (EqA 2010).

A common question we get asked is whether employers are obliged to preserve an employee’s pay.

This forms part of the difficult question for employers, as to what amounts to “reasonable adjustments” and how far this duty extends, particularly where an adjustment that would help an employee would come at a significant cost to the employer, or may have an impact on other employees.

There has been much case law on whether adjustments made by employers were indeed reasonable and whether adjustments should be made at all. The case of G4S Cash Solutions (UK) Ltd v Mr A Powell, considered the question of reasonable adjustments and employees pay. This case provides guidance on whether preserving an employee’s pay, if they are re-deployed to a different role due to a disability, could amount to a reasonable adjustment under s.20 EqA 2010.

The Facts

Mr Powell worked for GCSU Ltd as an engineer responsible for maintaining automatic teller machines (ATMs). After many years of employment, he suffered from back problems meaning that he could no longer work in a role requiring heavy lifting. Accordingly, GCSU Ltd re-deployed Mr Powell into a new role of ‘key runner’ (primarily a driving role). GCSU Ltd continued to pay Mr Powell the same rate of pay he had enjoyed in his previous role and he was led to believe this new role (as well as existing terms and conditions) was permanent.

However, the following year GCSU Ltd said it was only prepared to employ him in this role at a reduced rate of pay. Mr Powell refused these terms and accordingly was dismissed. As a result, Mr Powell claimed unfair dismissal and disability discrimination at the Employment Tribunal (ET).

Decision

It was accepted that Mr Powell was disabled for the purposes of the EqA 2010. Mr Powell claimed that there had been an agreed variation to his contract of employment when he started the new role. The Employment Tribunal rejected this argument. However, the ET decided that GCSU Ltd were required, as a reasonable adjustment under s20 EqA 2010, to continue to employ Mr Powell at his original rate of pay. GCSU Ltd appealed the decision.

The EAT decided that if an employer suggests an adjustment which is incompatible with the terms of the employment contract, the employee is entitled to refuse it. Therefore, the adjustment will not be effective without an agreed variation to the contract. In Mr Powell’s case, the EAT said that the change did amount to a contractual variation, but it was the terms of the variation which remained unclear i.e how long the variation would last and whether the pay would be reduced after this period.

Pay and reasonable adjustments

The EAT said that the ET was entitled to conclude that GCSU Ltd was required in these circumstances, as a reasonable adjustment, to continue to employ Mr Powell in his new role at his original rate of pay. The EAT made some interesting findings in relation to this. It considered the following points:

• There is no reason why the duty to make reasonable adjustments cannot include a requirement to protect an employee’s pay in similarity to other measures made to prevent the employee being disadvantaged in certain circumstances;
• Pay protection is no different to other costs incurred by an employer when making reasonable adjustments, such as training or support. Employers will likely incur some degree of cost when making adjustments and pay protection is no different;
• There is no reason why pay protection could not be classified as a ‘step’ within s20 EqA 2010.

Summary

The crux of this case centred on the terms of the variation to the contract. In this case, G4S had paid Mr Powell at the higher rate of pay for around a year, and had led him to believe that the arrangement would be long-term. Variations to employees contracts are fairly common. However, this case highlights when the variation occurs in the context of a disability it is particularly important to make the expectations clear and whether this is a long term or short term arrangement.

The EAT was clear that it will not be an “everyday event” for an employer to provide long-term pay protection in this situation, simply that cases can be envisaged where some pay protection may be a reasonable adjustment as part of a package to get an employee back to work or to keep an employee in work.

It is important to emphasise that the point to be taken from this case is simply that protecting a disabled employee’s pay when they are redeployed should not be discounted, not that there will usually be an obligation to do so.

In every case the reasonableness of potential adjustments must be assessed on a case-by-case basis, taking account of the factors set out in the EHRC Code, including the costs of making the adjustment and the financial and other resources available to the employer.

In this case the ET had concluded that G4S was a company with substantial resources for whom the additional annual cost of employing Mr Powell would have been easily affordable, as demonstrated by the fact that they had done so for some time.

It was also key that G4S’s evidence for wishing to reduce the pay rate was the likelihood of discontent from other employees. The EAT described this as an “unattractive reason”. Had G4S had a clear pay scale for certain roles, or relied on other legitimate considerations, the decision may have been different.

If you would like further advice or guidance on making reasonable adjustments in the workplace, please do get in touch with a member of the Employment team.

Our next training session on 28 March 2023 from 09:00 – 11:30 am aimed at HR professionals and those with HR responsibilities as part of their role will also be covering managing disabled employees and reasonable adjustments in more detail. Book your place for this managing employees with disabilities training.