Case law: Protecting pay of disabled employee whose role reduces may be 'reasonable adjustment' – which may amount to variations of contract requiring employee's consent
Employers considering reasonable adjustments for a disabled employee whose role reduces, or who is redeployed to a lesser role, may have to consider protecting his pay as a possible adjustment. They should also consider whether the adjustments amount to variations of the employment contract – which cannot be made without the employee's consent, following a recent legal ruling.
This update was published in Legal Alert - October 2016
Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.
A longstanding employee developed a bad back following an injury and could no longer carry out his job. His injury amounted to a disability for employment law purposes.
His employer gave him a new role, at the same salary. However, in the following year the employer told him it was considering discontinuing his role. The employee had understood that the new role was permanent but his employer argued it had only ever been temporary. It eventually agreed to keep him on in the same role as a permanent employee, but only if he took a pay cut. He refused. His employer dismissed him on medical grounds and he claimed unfair dismissal and disability discrimination.
Under UK law, an employer cannot vary an employee's contract of employment without the employee's consent. Furthermore, employers must consider making 'reasonable adjustments' for disabled employees, to alleviate the effect of their disadvantage. The employer may have to change how things are done, make physical changes at work, or provide equipment or help to the employee. Whether an adjustment is 'reasonable' depends on the circumstances.
Here, the Employment Appeal Tribunal (EAT) ruled that the change in the employee's duties and proposed changes to his pay amounted to variations of his contract of employment, and were ineffective unless he had consented to them. It made clear that an employer is not entitled to impose an adjustment if it is incompatible with the terms of the contract of employment.
It also found that the failure by the employer to protect its employee's pay in his new role was a failure to make reasonable adjustments because, in the circumstances, keeping him on the same salary was a reasonable way for the employer to alleviate the effect of the employee's disadvantages. The fact the adjustment involved his pay made no difference – other types of reasonable adjustment, such as providing additional equipment for a disabled employee, could clearly create costs for an employer, and protecting an employee's pay (in this case, by maintaining it at the same level despite a change in his duties) was just another type of cost.
The effect of the EAT's ruling is clear:
- Protecting an employee's pay can, in the right circumstances, be a reasonable adjustment for an employer to make under disability discrimination law
- A reasonable adjustment may amount to a variation of an employee's contract, requiring the employee's consent before it can take effect
- Employers considering reasonable adjustments for a disabled employee whose role reduces, or who is redeployed to a lesser role, should consider protecting their pay as a possible adjustment; and consider whether the adjustments amount to variations of the employee's employment contract, which cannot be made without the employee's consent
Case ref: G4S Cash Solutions (UK) Ltd v Powell UKEAT/0243/15/RN
Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.