In G4S Cash Solutions (UK) Ltd, the Employment Appeal Tribunal (‘EAT’) has recently held that it was a reasonable adjustment for an employer to continue to pay a disabled employee his original salary, after he was transferred to a lower skilled role.

Facts

Mr Powell worked for G4S Cash Solutions (UK) Ltd (‘G4S’) as a single-line maintenance (‘SLM’) engineer, maintaining the company's ATM machines. He had been employed since 1997 in a variety of roles. He suffered with back pain and by mid-2012 he was no longer fit for jobs involving heavy lifting or work in confined spaces. From this period onwards it was accepted that he was disabled under the Equality Act 2010.

In the summer of 2012, G4S created a new role of ‘key runner’ supporting ATM engineers. The role involved driving from their depot to various locations to deliver materials to engineers. This enabled the engineers to travel by public transport.

After a period of sickness absence, Mr Powell began to work as a key runner while retaining his existing salary as a SLM engineer. He understood the change of role to be long-term. By May 2013, G4S was considering discontinuing the key runner role for organisational reasons. They told Mr Powell that the role had not been permanent and invited him to look through a list of alternative vacancies. If nothing was suitable, he would be dismissed on medical grounds.

Mr Powell submitted a grievance, claiming that G4S was attempting to change his terms and conditions. G4S then 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 was unwilling to accept the 10 percent pay reduction this would entail and was subsequently dismissed.

Employment Tribunal Decision

The tribunal found that the dismissal had been discriminatory and unfair, and that G4S was required, as a reasonable adjustment, to employ Mr Powell as a key runner on the same salary as under his previous role. G4S appealed to the EAT.

EAT Decision

The EAT dismissed the appeal and agreed that the G4S should have continued to pay Mr Powell at the higher level, as a reasonable adjustment.

The EAT confirmed that if an employer proposes a reasonable adjustment that is incompatible with the employee’s contract of employment, the adjustment will not be effective without the employee’s consent. The EAT was satisfied that Mr Powell’s contract had been varied in 2012.

It is well established that the reasonable adjustments duty may require an employer to treat a disabled employee more favourably than others, and that the duty may include transferring an employee to a different role. In the EAT’s view, pay protection is no more than another form of cost for an employer, analogous to the cost of providing extra training or support to a disabled employee. The legislation envisages an element of cost to the employer and therefore it is a step that could fall within the requirements of the legislation; the question in each case is whether it is reasonable for the employer to take that step.

The EAT did, however, conclude that it will not be an ‘everyday event’ for an employer to provide long-term pay protection, but that it might be a reasonable adjustment as part of a package to get the employee back to work or to keep an employee in work.

Comment

Until now, employers have been confident that they are able to make reasonable adjustments and redeploy an employee at a reduced rate of pay.

In considering whether an adjustment is reasonable, an employer will need take into account various factors including the cost of maintaining pay, whether it is likely to be a long-term change and the financial circumstances of the business and resources available to the employer. Each case will turn on its own facts. In this case, the tribunal concluded that G4S was a company with substantial resources for whom the additional annual cost of employing Mr Powell would have been easily affordable. Notably, G4S's evidence was that the main reason for not continuing to pay the SLM rate was the likelihood of discontent from other employees. The EAT described this as an “unattractive reason". This is a reminder that the impact (or anticipated impact) on other employees of an adjustment is not generally a factor that should be taken into account when determining reasonableness.

This case shows that it is possible for pay to be protected but it does not mean that it will be reasonable in every case. As the EAT stated in this case, it will not be an ‘everyday event’ to protect an employee's pay on a long term basis. The EAT also made it clear that an adjustment may cease to be reasonable, for example, if the employer's economic circumstances changed.

It remains to be seen whether the decision will be appealed by G4S - watch this space!