In the fourth part of our series on contract management pitfalls, we look at the risks arising out of varying the terms of construction contracts.
Under the Equality Act 2010 (the Act) an employer has a duty to make reasonable adjustments to help disabled job applicants, employees and former employees in certain circumstances. It is important to remember however that the statutory duty to make reasonable adjustments will only arise if the individual in question has a disability within the meaning of the Act.
The duty to make reasonable adjustments will therefore arise where the employer knows (or ought reasonably to know) that a person has a disability and the disabled person is placed at a substantial disadvantage compared to those who are not disabled by:
- an employer's provision, criterion or practice;
- a physical feature of the employer's premises; or
- an employer's failure to provide an auxiliary aid.
If the above applies, the employer must take such steps as it is reasonable to take to avoid the disadvantage. The EHRC Employment Statutory Code of Practice, which Employment Tribunals must take into account if it appears relevant, contains a non-exhaustive list of potential adjustments that employers might need to make to avoid any such disadvantage. One of the possible adjustments highlighted is "transferring the disabled person to fill an existing vacancy".
In the case of G4S Cash Solutions (UK) Ltd v Powell, EAT considered the extent to which an employer may be required to maintain a disabled employee's existing salary level when transferring them to a new role, as a reasonable adjustment.
Mr Powell worked for G4S Cash Solutions (UK) Ltd (G4S) as a single-line maintenance engineer. He suffered with back pain and in 2012 it was confirmed that he was no longer fit for jobs involving heavy lifting or work in confined spaces - it was accepted that in the circumstances he was disabled under the Act.
After a period of sickness absence Mr Powell began to work as a key runner, a new role created by G4S supporting a single-line maintenance engineers. When Mr Powell was moved into this role, he retained his existing salary as a single-line maintenance engineer. No formal agreements were entered into, but Mr Powell understood the change of role to be long-term.
In 2013, G4S was considering discontinuing the key runner role for organisational reasons, and Mr Powell was to look through a list of alternative vacancies. Subsequently, G4S decided to make the key runner role permanent, but at a lower rate of pay to reflect the fact that it did not require engineering skills. Mr Powell did not accept the proposed salary reduction and therefore was dismissed from his employment. Mr Powell issued a claim that there had been an agreed variation to his contract of employment when he started the key runner role that entitled him to his original salary on a permanent basis.
The EAT decision
EAT determined that G4S was required, as a reasonable adjustment under the Act, to employ Mr Powell as a key runner at his original rate of pay. This decision was appealed by G4S to EAT, who upheld the Employment Tribunal’s decision. EAT found that the Employment Tribunal was entitled to conclude that under the circumstances on this case G4S was required, as a reasonable adjustment, to continue employing Mr Powell in a more junior role involving less physical activity, preserving his existing rate of pay on an indefinite basis.
EAT highlighted however that whether or not pay protection would constitute a reasonable adjustment as part of a package of measures, needed to be determined on a case-by-case basis.
The effect of this decision is that protecting a disabled employee's pay when they are re-deployed should always be considered, and should not be automatically discounted. The reasonableness of potential adjustments must be assessed on a case-by-case basis. The question will always be whether it is reasonable for the employer in question to have to take that step. The financial considerations will always have to be weighed in the balance by the employer against the financial and other resources available to it. It is therefore not the case that pay protection need to be offered by all employers in all the circumstances.
For more advice on the duty to make reasonable adjustment, or any aspects of discrimination law, please contact Anna Dabek.
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