Pay protection: the cost of reasonable adjustments

Pay protection: the cost of reasonable adjustments

By calledi
Wednesday, 14th September 2016
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A recent UK employment case between G4S Cash Solutions Ltd v Powell will interest employers both in the UK and Ireland, it concerns whether protection of salary can be a reasonable accommodation (known as a ‘reasonable adjustment’ in the UK) in a disability discrimination case and contract variations.

Mr Powell was an ATM engineer in London. After the Claimant became disabled through a back injury the Respondent gave him work in a new role (“key runner”) at his existing rate of pay and led him to believe, according to the evidence, that the role was long-term.  The following year, however, it said that it was only prepared to employ him in this role at a reduced rate of pay by around 10% because he had fewer responsibilities as a key runner; and when the Claimant refused to accept these terms he was dismissed.

It was argued by the Claimant that there was a variation of his contract entitling him to work as a key runner at his existing rate of pay. The Employment Tribunal (UK equivalent of a WRC adjudicator) rejected the Claimant's contention that there must have been a contractual variation in this case, given that his rate of pay remained unchanged for the 12 months or so during which he was working to amended duties. However, they did find that the Respondent discriminated against the Claimant by failing to make reasonable adjustments and by dismissing him, because they dismissed him for his refusal to agree to a lower rate of pay. Both parties appealed.

The Claimant cross-appealed on the basis that the Employment Tribunal had rejected his case, at least in part, because it considered that an employer was entitled to impose an adjustment on an employee without the employee’s consent.  This was an error of law, according to the Employment Appeal Tribunal (equivalent of the Labour Court in Ireland):

"If an employer proposes an adjustment which is incompatible with the terms of the contract of employment, the employee is entitled to decline it: the adjustment will not be effective without agreement, that is to say without a variation of the contract.  No doubt in the vast majority of cases such agreement will be forthcoming; but there will be cases where an employee does not agree with a proposed adjustment.  In such a case an employer is not entitled to impose it if the adjustment is incompatible with the terms of the contract of employment."

However the Employment Tribunal had gone on to find that the Respondent was required, as a reasonable adjustment, to employ the Claimant as a “key runner” at his existing rate of pay.  EAT judge Richardson J stated, "...the objectives of the legislation plainly envisage an element of cost to the employer; if an adjustment is one which it is reasonable for the employer to have to make, it is not a matter for charity, but a legal requirement reflecting the expectations of Parliament and society.  The objective is to keep employees in work, and I see no reason why a package of measures for this purpose, which includes some pay protection, should not be a reasonable adjustment."

Until now, employers have been confident that they are able to make reasonable adjustments and redeploy an employee at a reduced rate of pay. This case is a striking example of the significant scope of the duty to make reasonable adjustments and provides the opportunity for employees to argue that their higher rate of pay should be maintained.

Source: Legal Island - Review of Recent Employment Developments in Ireland 9/9/2016