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Non-payment of bonus due to warning for disability-related sick absence was discrimination

Under S.15 of the Equality Act 2010 (EA 2010) discrimination occurs where a disabled person is treated unfavourably not because of the person’s disability itself but because of something arising from, or in consequence of, his or her disability, such as the need to take a period of disability-related absence. However, such treatment can be justified if it can be shown to be a proportionate means of achieving a legitimate aim.

In Land Registry v Houghton and others, the EAT agreed with an employment tribunal that the Claimants had been treated unfavourably because of something arising in consequence of their disability. The Claimants were not paid a bonus of £900 in 2012 because under the terms of the scheme an employee who received a formal warning in respect of sickness absence during the relevant financial year was ineligible to receive the bonus and each had a number of sick absences, in every instance attributable to their disability. Therefore, non-payment of the bonus was the consequence, result, effect or outcome of each Claimant’s disability.

Turning to justification, it was accepted that the employer had a legitimate aim, i.e. acknowledging employees’ contributions towards corporate achievements and specifically to encourage and reward good performance and attendance. But the scheme was not a proportionate means to achieve that aim because: (a) having decided to issue a warning for sick absence the manager had no discretion to decide that the employee would not be excluded from receiving the bonus, unlike the position with a warning for conduct, and no explanation for that anomaly was forthcoming; and (b) no account could be taken of any improvement in performance post-warning in circumstances where the legitimate aim of the bonus scheme was to reward good performance and attendance, but yet three of the Claimants had improved their absence record after receiving the warning.

This case provides a good example of how S.15 EA 2010 works in practice. Employers need to be conscious of the fact that any action taken (whether policy-driven or not), which arises from, and is therefore a consequence of, disability, such as a poor sickness absence record, is open to challenge where it has a negative impact. Where there is a negative impact, then employers need to decide whether to take any action at all. If there are factors which relate to an employee’s disability then employers must ensure there is justification, i.e. there is a legitimate business aim and the means chosen to achieve that aim demonstrate that the benefits to the business outweigh the discriminatory effect and there is no other less discriminatory way.

Content Note

The aim is to provide summary information and comment on the subject areas covered. In particular, where employment tribunal and appellate court cases are reported, the information does not set out full details of all the facts, the legal arguments presented by the parties and the judgments made in every aspect of the case. Click on the links provided to access full details. If no link is provided contact us for further information. Employment law is subject to constant change either by statute or by interpretation by the courts. While every care has been taken in compiling this information, SM&B cannot be held responsible for any errors or omissions. Specialist legal advice must be taken on any legal issues that may arise before embarking upon any formal course of action.

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