Disability discrimination & bonus payment

Can you withhold a bonus payment because of disability related sickness absence?

In a recent case decided by the Employment Appeal Tribunal the employer withheld a bonus payment from a disabled employee who had high levels of sickness. The question in this case was whether this was treatment was discrimination.

The Law

Employees who have a disability, as defined by the Equality Act 2010, qualify for protection from discrimination, including;

1) Direct Discrimination
2) Indirect Discrimination
3) Failing to make reasonable adjustments
4) Harassment
5) Victimisation
6) Asking inappropriate pre-employment health questions
7) Discrimination arising from disability

In this case it concerned discrimination arising from disability, which occurs where both:

A treats B unfavourably because of something arising in consequence of B’s disability; and
A cannot show that the treatment is a proportionate means of achieving a legitimate aim.

This means that the unfavourable treatment must be something that arises in consequence of the disability rather than because of the person’s disability.

One consequence of an employee’s disability could be high sickness absence.

The Facts

In this case the employer, the Land Registry operated a bonus scheme which excluded employees from receiving payment if they had received a warning because of high levels of sickness absence. Interestingly managers had the discretion to ‘ignore’ a conduct warning, and therefore pay an employee at their discretion if there was such a warning, but when it came to a sickness warning there was no discretion.

In this case 5 employees who were all disabled had received warnings for their absence and as a result did not receive a bonus.

The Land Registry had made reasonable adjustments to assist the employees in mitigating any disadvantage as a result of their disability. They also adjusted their sickness policy so that it took longer for those disabled employees to receive a warning than an employee without a disability.

The employees pursued claims in the Employment Tribunal for discrimination arising from disability as a result of their non-payment of bonus.

The Land Registry submitted various defences to the claims including that the link between the disability and the non-payment of bonus was too remote to constitute discrimination arising from disability. However the Tribunal decided that the non-payment was the consequence, result, effect or outcome of the employee’s disability.

The Land Registry also submitted a defence of justification for the policy stating that they had a legitimate aim of rewarding their employee’s contributions and encouraging good performance and attendance.

The Tribunal, however, decided that the bonus scheme operated by the Land Registry was not a proportionate means of achieving that aim. The key point was that there was no discretion, as compared to conduct warnings which could be ignored.

The Tribunal decided in favour of the employees, and the Land Registry appealed.

The Decision

The Land Registry submitted various arguments in their appeal, they were however unsuccessful and the Employment Appeal Tribunal decided in favour of the employees, agreeing with the Tribunal decision.

Crucially, the fact that the bonus scheme rules automatically meant an employee was not entitled to the bonus following disability-related absences was sufficient to amount to unfavourable treatment in consequence of the disability.

If the employee’s did not have a disability they would not have had the same level of sickness absence.

There was no valid justification submitted by the Land Registry and therefore their appeal failed.

Points to note

The key point to note from this case was that the Land Registry had no discretion in applying the scheme to disability related absences, if the managers had the ability to look at the circumstances and perhaps make a decision based on the overall picture then they may have been able to justify the policy as a legitimate way of achieving their aims.

This case serves as a reminder that you should take each case individually and avoid a broad-brush approach that could have a disproportionate impact on disabled employees.

Land Registry v Houghton and others 

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The information contained in this blog post is provided for guidance and is a snapshot of the law at the time it is written. It is provided for your information only and should not be used as a substitute for obtaining legal advice that it specific to your particular circumstances.

The guidance should not be relied upon in any decision making process. It is strongly recommended that you seek advice before taking action.

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