Disability Discrimination - Does the duty to make reasonable adjustments extend to an obligation to ring-fence salary if an employee is moved to a lesser role?

The EAT considered this issue in G4S Cash Solutions (UK) Ltd v Powell. Powell was originally employed as an engineer but developed back problems and as a result was moved to a newly created but lesser role of key runner, initially on the same pay. The problems arose when the company decided to make this transfer permanent and wanted to reduce Powell’s salary to reflect the level of the role he was then undertaking. He refused to accept the reduction in pay and was subsequently dismissed.

At the ET hearing Mr Powell argued that there had been an agreed variation to his contract of employment when he commenced in the key runner role, such that he was entitled to continue in that role at his original salary on a permanent basis. The ET disagreed, but found that the ring-fencing of pay was a reasonable adjustment and found in his favour.

The EAT was tasked in considering:

1. Whether there had been a variation to the contract of employment;
2. Whether maintaining a higher rate of pay is a reasonable adjustment.

The EAT held firstly that actually there must have been an agreed variation of the contract of employment on the basis that if an employer proposes an adjustment which is incompatible with the terms of the employment contract, the employee is entitled to decline it; the adjustment will therefore not be effective without an agreed variation of the contract.

Secondly, there was no reason in principle why the duty to make reasonable adjustments should not include the protection of an employee’s pay in conjunction with other measures to alleviate the employee’s disadvantage through disability. The question will always be whether it is reasonable for the employer to take that step.  The EAT found that the duty to make reasonable adjustments often results in additional cost to the employer, for example for providing extra training or equipment, and there is no reason in principle why ring-fencing pay is not analogous to this and should be excluded.  

Comment

This case is a clear example of where better communication at the outset could have avoided a dispute. While there was a variation of the contract of employment when Mr Powell moved to the new role, the parties did not agree:

• If the variation was permanent or temporary;
• If temporary, how long it would last and how it could be terminated.

Secondly, while the EAT pointed out that it would not be an everyday event for a tribunal to determine that long-term pay protection is required, this case clearly establishes an authority that ring-fencing a higher rate of pay is a measure that should be considered by an employer when looking at reasonable adjustments.  The EAT did point out that this adjustment was open to review if there is a change in circumstances such as a redundancy situation or a change in the economic circumstances of the employer.

We would therefore suggest that if you are offering a lesser role to an employee as a reasonable adjustment you consider whether in your case ring-fencing pay would be reasonable. If you do, make the terms clear, and allow yourself scope to review the effectiveness of your adjustments and the ability of the company to maintain or remove them.