Employers often want to know whether there are any circumstances in which the duty to make reasonable adjustments for disabled employees might extend to adjusting their pay. Previous case law has suggested that the duty to make reasonable adjustments does not usually extend to pay related matters, but in this case the EAT said that there was no reason in principle why pay protection, in conjunction with other measures, could not be a reasonable adjustment. The case also makes an important point about varying a contract when a reasonable adjustment is under discussion.
Mr Powell worked for GCSU Ltd as an engineer responsible for maintaining cash machines. He developed back problems and, by 2012, was having problems with lifting and working in small spaces. He started work in a newly created role of ‘key runner', driving from GCSU Ltd's depot to deliver parts and keys to its engineers. He continued to receive his original engineer's salary for the key runner role and understood this to be a long term arrangement.
In May 2013 GCSU Ltd told Mr Powell that the role was not permanent. It gave him a list of alternative vacancies to consider, stating that if none was suitable he might be dismissed on medical grounds. Mr Powell raised a grievance about what he considered to be an attempt to change his terms and conditions. GCSU Ltd responded by making the key runner role permanent, but at a lower rate of pay. Unwilling to accept a 10 per cent pay reduction, Mr Powell was dismissed and brought tribunal proceedings.
The tribunal rejected Mr Powell's claim that his contract of employment was varied when he began the key runner role, to the effect that he was entitled to continue in that role at his original salary on a permanent basis. However, it also decided that GCSU Ltd was required, as a reasonable adjustment, to employ Mr Powell as a key runner at his original rate of pay. GCSU Ltd appealed against this finding and Mr Powell appealed on the contractual variation point.
The EAT held that the tribunal had made its decision on the assumption that an employer can impose a variation without agreement when making a reasonable adjustment. That was not correct – if an employer proposes an adjustment which cannot be reconciled with the terms of the employment contract, the employee is entitled to refuse it and the adjustment will not be effective unless and until there is a clearly agreed variation. In this case there was a lack of clarity about key issues such as how long the new role was to last and there was no clear variation as a result.
The EAT also held that there was no reason in principle why the duty to make reasonable adjustments should exclude a requirement to protect an employee's pay. The question will always be whether it is reasonable for the employer to have to take a particular step with a view to meeting the purpose of the reasonable adjustments duty which is getting an employee back to work or keeping the employee in work. Some adjustments, such as extra training or support, may involve cost to the employer and pay protection is simply another form of cost.
This might seem something of a radical departure in the law on reasonable adjustments, but it is difficult to argue with the EAT's logic. The EAT did acknowledge that an employer's circumstances may change and that pay protection might cease after a time to be reasonable, for example if the need for a job were to disappear or the economic circumstances of the business changed. As a result of the case however employers should not close their minds to the possibility of pay protection when deciding how to make adjustments for an employee's disability.