New case highlights risk to employers of discrimination arising from disability claims

A recent case against the Land Registry highlights a risk that may not be so obvious to employers – the threat of claims by disabled employees on the grounds of discrimination arising from their disability, under the Equality Act 2010. In the Land Registry v Houghton and others case, the Employment Appeal Tribunal considered whether the company’s decision to withhold a bonus payment from disabled employees with high levels of sickness absence, was prejudiced.

What is discrimination arising from disability?

Discrimination arising out of a disability is where an employer treats an employee unfavourably because of something arising in consequence of the employee’s disability and the employer cannot show that the treatment is a proportionate means of achieving a legitimate aim. In other words, the employer must demonstrate that measures taken were "reasonably necessary" in order to achieve its aims – such as a business need or health and safety.

Discrimination arising out of a disability cannot occur unless the employer knew or should have known about the employee’s disability at the relevant time.

Unfavourable treatment need not be due to a person’s disability for there to be discrimination arising from disability but, as the Equality and Human Rights Commission Code (EHRC) acknowledges, "The unfavourable treatment must be because of something that arises in consequence of the disability. This means that there must be a connection between whatever led to the unfavourable treatment and the disability."

Perhaps the most obvious example is where an employee is treated unfavourably because of a period of disability-related absence.

Case Study Examples

• An employee has a visual impairment which means that they cannot work as quickly as other colleagues. Their employer is aware or should be aware of the situation but subsequently dismisses that employee due to low output.

This dismissal will be discrimination arising from disability, unless it is objectively justified.

• A woman is disciplined for losing her temper at work. However, this behaviour was out of character and is a result of severe pain caused by cancer, of which her employer is aware. The disciplinary action is unfavourable treatment.

This treatment is because of something which arises in consequence of the worker’s disability, namely her loss of temper. There is, therefore, a connection between the ‘something’ (that is, the loss of temper) that led to the treatment and her disability.

Land Registry v Houghton and others – the Facts

The Land Registry operated a discretionary bonus scheme in which employees who received a formal warning during the relevant financial year were rendered ineligible for a bonus. Formal warnings that had been received for a conduct-related matter could be ignored, at a manager’s discretion, when determining bonus entitlement, but there was no such discretion to ignore a warning in relation to sickness absence.

The five claimants were all disabled, and each had been absent due to sickness during the 2012 financial year, in all cases as a result of their disabilities. The Land Registry had various reasonable adjustments in place that assisted the claimants in overcoming their disabilities, and adjusted the normal trigger points that would usually lead to a warning. However, despite these adjustments, each of the claimants eventually received a warning. These warnings rendered them ineligible for a bonus, and no bonus was paid to them.

The claimants brought a claim under section 15 of the Equality Act 2010 for discrimination arising from disability which was successful before the employment tribunal.

The tribunal rejected the Land Registry’s submission that the link between the disability and the non-payment of bonus was too remote and in the words of EHRC Code, the non-payment was the consequence, result, effect or outcome of each claimant’s disability.

In terms of justification, it was accepted that the Land Registry had a legitimate aim of acknowledging employee’s contributions and specifically encouraging and rewarding good performance and attendance. However, the tribunal held that the bonus scheme in place was not a proportionate means of achieving that aim. It could not take into account the fact that three of the claimants had improved their absence record after the warning, and there was an anomaly in the scheme where conduct-related warnings could be ignored, but not warnings for sickness absence.

The Land Registry appealed to the Employment Appeal Tribunal (EAT).

Decision

The EAT upheld an employment tribunal’s decision that an employer discriminated against disabled employees by operating a bonus scheme, which did not pay out to employees who had received a warning for high levels of sickness absence.

The employer had reasonable adjustments in place to delay the issuing of a warning to an employee who was absent due to a disability. However, the fact that receiving a warning led to an automatic disqualification from the bonus scheme meant this was an example of discrimination arising from disability. The Tribunal also decided that it was irrelevant that the HR officer who made the decision not to pay the bonus had no knowledge of the employees’ disabilities; what was important was that the disability-related absences had led to the non-payment.

Practical advice/commentary

• Employers with bonus schemes that are linked to attendance should ensure that there is sufficient flexibility within schemes to avoid withholding payment in circumstances where it is likely to be discriminatory.

• Employers should give careful consideration to any decisions it makes regarding a disabled employee’s conduct, performance or absence in the workplace, especially disability related absence and be able to justify, if necessary, its treatment of staff who might be able to argue that they have been treated unfavourably because of something arising out of their disability, on safe objective business grounds.

• The current case law on justification for discrimination arising from disability is not consistent, particularly with decisions concerning employees with mental health conditions and misconduct offences, so specialist advice should be sought in such circumstances.

Employers should consider their duties under the Code of practice under the Disability Discrimination Act 1995 published by the Disability Rights Commission (DRC) and The EHRC Employment Statutory Code of Practice, which came into force on 6 April 2011 when dealing with issues concerning disabled employees.