In the August 2004 issue of Employment Law SMIB, we reported the
case of Nottinghamshire County Council v Meikle. As we
commented at the time, one part of Mrs Meikle's claim for
disability discrimination related to the fact that, whilst off ill,
her employers had put her on half pay. The Court of Appeal held,
amongst other things, that the duty to make reasonable adjustments
included a duty to consider paying disabled employees full pay
during periods of sickness absence.
It is, of course, quite usual for employers not to pay full pay
during the whole of any period during which employees are absent
due to ill-health. Full pay for the first three or six months of a
period of absence would generally be regarded as a generous
provision and it is often the case that employees on long term
sickness absence will have exhausted their right to any sick pay
long before they return to work. Against that background, it would
be fair to say that the suggestion in the Meikle case that, at
least where disabled employees are concerned, employers may be
obliged to pay full sick pay throughout a period of absence did
raise a few eyebrows.
The scope of the Meikle decision was recently discussed by the
Employment Appeal Tribunal in O'Hanlon v HM Revenue &
Customs. The EAT's judgement was handed down on 4 August
2006.
There was no dispute that Mrs O'Hanlon was a disabled person
within the meaning of the Disability Discrimination Act 1995. She
had suffered clinical depression for a number of years and she
started to have long periods of absence from work from 2001. HM
Revenue and Customs' sick pay rules included a provision to the
effect that, if an employee had received 12 months sick pay in any
4 year period, that employee would thereafter be paid at a rate
equivalent to his or her pension rate of pay. As a consequence of
that provision, Mrs O'Hanlon was paid at her pension rate for
absences after 13 October 2002.
No doubt encouraged by the Meikle decision, an application to
the Employment Tribunal was lodged on Mrs O'Hanlon's behalf in
terms of which it was claimed that she ought to have been paid full
pay for all of her sickness absences. The Tribunal ruled against
Mrs O'Hanlon but she appealed to the EAT.
It may be worth recapping that there are three different types
of disability discrimination. The first is direct discrimination.
This would occur where someone is discriminated against because
they are disabled. So, if an employer refused to hire a prospective
employee because he doesn't want disabled people working for him,
that would be direct discrimination. Direct discrimination can
never be justified. Accordingly, if an employer is found to have
directly discriminated, that discrimination will be held to be
unlawful regardless of the justification that the employer may wish
to put forward to defend it.
The second type of disability discrimination is referred to as
disability related discrimination. This would occur where an
employee is treated less favourably for a reason related to his or
her disability. An example would be where an employee, disabled as
a result of a back condition, is dismissed for being unable to
perform heavy lifting duties. That dismissal would be deemed to be
for a reason related to the employee's disability given that it is
the back condition that has restricted the duties that the employee
is able to perform. Disability related discrimination can be
justified, so the employer in the example will have a defence if it
can be established that the reason for the dismissal was both
material and substantial. Disability related discrimination cannot
however be justified if the employer has failed to comply with the
duty to make reasonable adjustments.
The duty to make reasonable adjustments is the third type of
disability discrimination. The duty arises where, either the
arrangements made by or on behalf of any employer, or any physical
features of the premises occupied by the employer, place the
disabled employee at a substantial disadvantage when compared to
employees who are not disabled. The 1995 Act provides examples of
the steps that may require to be taken in order for the duty to be
complied with. Those include making adjustments to the premises,
altering the employee's hours and providing additional training
and/or supervision. So in the case of an employee rendered disabled
as a result of a back condition, the sort of adjustments that may
be considered reasonable would include transferring the heavy
lifting duties to a fellow employee and providing mechanical
lifting equipment. It is to be borne in mind that the duty to make
reasonable adjustments can require employers to take positive steps
which would involve treating disabled employees more favourably
than non-disabled employees.
There is no defence of justification available in respect of a
failure to make reasonable adjustments. If it is established that
an adjustment was reasonable and was not taken then it will follow
that the employer is guilty of unlawful discrimination.
Turning back to the O'Hanlon case, it is relevant to
note that her employers had made three attempts to assist her back
to work. They had twice reduced her hours to part-time employment
and they had also changed her place of work to reduce the stress of
commuting. It was also found by the Employment Tribunal that Mrs
O'Hanlon's absence from work could not be attributed to any failure
on the part of her employers to make reasonable adjustments. This
distinguishes the case from the Meikle case. In that case,
the Court of Appeal held that, had the Council made adjustments to
her job, Mrs Meikle would have been able to return to work.
The Employment Tribunal rejected Mrs O'Hanlon's claim and she
pursued an appeal to the Employment Appeal Tribunal. The EAT dealt
first with the duty to make reasonable adjustments. Having
concluded that the sick pay scheme operated by HM Revenue and
Customs did place Mrs O'Hanlon at a substantial disadvantage in
comparison to non-disabled employees, the EAT then considered
whether paying her full pay during her sickness absences would have
constituted a reasonable adjustment. It held that it would not. In
reaching this conclusion, it had regard to evidence given before
the Tribunal to the effect that it would cost HM Revenue and
Customs just under £6 million a year to pay disabled employees full
pay during sickness absences.
Helpfully for employers, the EAT then went on to state that
"it will be a very rare case indeed" where the duty to
make reasonable adjustments requires disabled employees to receive
higher levels of sick pay than non-disabled employees. Not only
would that amount to a form of wage fixing but it would fall foul
of the stated objective of the Disability Discrimination Act, which
is to assist disabled employees to integrate into the workforce.
The EAT expressed the opinion that paying disabled employees full
pay during sickness absences would act as a disincentive to them
returning to work.
How does this conclusion fit with the decision in the
Meikle case? According to the EAT, what was important to
note was that the Court of Appeal had not suggested that the
failure to pay full pay to Mrs Meikle was, by itself, a failure to
make reasonable adjustments. Rather, the discrimination against Mrs
Meikle lay in the Council's failure to get her back to work and
that failure had the knock-on effect of rendering the failure to
pay her full pay unjustified. In other words, the reduction in Mrs
Meikle's pay was a consequence of her being discriminated against.
With Mrs O'Hanlon, there was no failure to get her back to work and
reducing her pay was an acceptable step for her employers to
take.
The EAT then considered whether Mrs O'Hanlon had been
discriminated against for a reason related to her disability. It
decided that she had on the basis that she had received less than
full pay because of the period of her sickness absence and that the
underlying reason for her absence was her disability. The
disability related discrimination was however justified so HM
Revenue and Customs were not guilty of unlawful discrimination. Mrs
O'Hanlon's appeal was accordingly dismissed.
It would therefore appear that, provided the reason for a
disabled employee's absence is not a failure on the part of the
employers to make reasonable adjustments then, paying that employee
less than full pay will not amount to unlawful discrimination.
Clearly, this places an even greater emphasis on ensuring that
steps are taken to get disabled employees back to work as soon as
is reasonably practicable.