Sick Note

O’Hanlon v HM Revenue & Customs

The Disability Discrimination Act 1995 sets out various ways in which employers can discriminate against disabled people, including direct discrimination (not justifiable); disability related discrimination (justifiable); and a failure to make reasonable adjustments (not justifiable).

In O’Hanlon v HM Revenue & Customs, the Court of Appeal said that failing to pay a disabled person full pay while on sick leave did not amount to a failure to make a reasonable adjustment.

Mrs O’Hanlon’s union, PCS, instructed Thompsons to act on her behalf.

Basic facts

Mrs O’Hanlon started work for HMRC in 1985. She began suffering from clinical depression in 1988, after which she took long periods of sick leave.

The Revenue’s sick pay scheme provided for six months full pay and six months half pay, subject to a maximum of 12 months paid sick leave in any four years. After that employees were only entitled to their equivalent pension rate of pay, or half pay.

The scheme also provided for an additional discretionary 40 days sick absence at full pay for unrelated illness, and a further 20 days at full pay for treating the original illness or injury.

Mrs O’Hanlon claimed her employers should have paid her in full, once the initial six months sick pay were up, by making one of the following two reasonable adjustments

• awarding her full pay during her disability related absences, or
• separating out the disability and non-disability related absences and paying her in full for the latter

Tribunal decision

The tribunal agreed that Mrs O’Hanlon had been placed at a substantial disadvantage by the rules, and the Revenue were under a duty to make reasonable adjustments. However, it said that paying her salary in full was not reasonable.

It also said she was not discriminated against for a reason related to her disability, given that she was treated in the same way as a non-disabled person. The tribunal went on to say that even if Mrs O’Hanlon’s treatment did amount to disability related discrimination, the Revenue’s treatment of her was justified.

EAT decision

The Employment Appeal Tribunal (EAT) agreed that Mrs O’Hanlon had been disadvantaged by the scheme rules. However, it said that it would be “a very rare case indeed” where giving higher sick pay to a disabled employee would be considered a reasonable adjustment.

As for the question of disability related discrimination, it said that the correct comparator was someone who had not been off work at all, as opposed to someone who had been off work for non-disability related sickness. It said that the Revenue had discriminated against her when it reduced her pay because the underlying reason for her absence from work was disability related.

However, it agreed with the tribunal that the failure to pay her was justified because there was a ‘material and substantial’ reason for the discrimination, which was the cost of paying full pay to all disabled employees off work with a disability related illness..

Court of Appeal decision

The Court of Appeal also agreed that Mrs O’Hanlon had been placed at a substantial disadvantage by the sick pay scheme, but that a non-disabled person (the correct comparator) would feel the same stress. Paying her full pay for disability related illness absence was not, therefore, a reasonable adjustment.

Likewise, the Court also rejected the argument that Mrs O’Hanlon’s disability and non-disability related absences should be separated and that she should be paid in full for the latter.

It agreed, however, that Mrs O’Hanlon had been subject to disability related discrimination, but that it was justified because she had not identified any factor which would have distinguished her position and led her employer to reach a different decision.