Reasonable pay protection
Labour & European Law Review Weekly Issue 491 12 October 2016
Where a worker is disabled and put at a substantial disadvantage by a provision, criterion or practice (PCP) in comparison to those who do not have a disability, the employer is under a duty to make a reasonable adjustment. In G4S Cash Solutions (UK) Ltd v Powell, the Employment Appeal Tribunal (EAT) held that “pay protection” may be a reasonable adjustment as part of a package of measures to keep an employee in work or to get them back into work.
Mr Powell, who had worked in a variety of roles for G4S, started to have problems with his lower back. By mid-2012 it was clear that he could no longer do jobs involving heavy lifting or work in confined spaces. The employer accepted that he had a disability.
Following his return to work from a period of absence in 2012, Mr Powell started work in a new role as “key runner” but retained his salary as an engineer. He understood that this arrangement would be long term. However, in 2013 the company said it was considering discontinuing the role of key runner and invited Mr Powell to apply for alternative jobs.
He argued that his employer was attempting to change his terms and conditions and lodged a grievance. The company said it was prepared to make the post of key runner permanent but on a lower salary. Mr Powell refused to accept the reduction in pay. As no other suitable alternative vacancy could be found he was dismissed.
He claimed unfair dismissal and disability discrimination.
At the tribunal, Mr Powell argued that he had been permanently reassigned to the post of key runner and that his employer had tried to vary his contract without his consent. The tribunal rejected his argument. Instead, it held that G4S had, by virtue of slotting Mr Powell into the alternative role, been fulfilling their statutory duty of making reasonable adjustments for a disabled employee.
However, it then went on to hold that that the company was required, as a reasonable adjustment, to continue to employ Mr Powell in the new role of “key runner” on his original rate of pay.
The company appealed against this part of the tribunal’s decision. Mr Powell cross-appealed on the variation issue.
The EAT held that the tribunal’s finding that there had been no agreed variation was an error of law. In particular, if an employer proposes an adjustment which is incompatible with the terms of the contract of employment, the employee is entitled to decline it. A reasonable adjustment cannot be effective without agreement. In this case, there had been a variation of contract between the two parties in the latter part of 2012. However, as the tribunal had failed to ascertain the terms of that variation, that part of its decision was wrong.
In terms of whether it was a reasonable adjustment to pay Mr Powell a higher rate of pay, the EAT agreed with the tribunal and rejected the employer’s argument that pay protection could not amount to a reasonable adjustment.
As the objective was to keep employees in work, there was no reason why a package of measures for this purpose, which included some pay protection, should not be a reasonable adjustment. Although it was not an “everyday event” for a tribunal to conclude that an employer should have to make up an employee’s pay long-term to any significant extent, this was one of those cases where it formed part of a package of reasonable adjustments to keep Mr Powell in work. However, if the circumstances changed, then it might not be reasonable to expect the employer to continue to make that adjustment.
This decision is useful although the EAT made clear that whether pay protection amounts to a reasonable adjustment depends on the particular circumstances of the case. In this case pay protection had been paid for a year, the employer had led the employee to expect it to be long term and the employer’s main reason for bringing it to an end was because of the likelihood of discontent from other employees, a reason the EAT found “unattractive”.