Do you have to pay disabled employees full pay when they are off sick?
In a recent case the Employment Appeal Tribunal (EAT) considered whether an employer was required to maintain full pay for a disabled employee who was absent from work due to her disability.
Mrs O'Hanlon worked for Her Majesty's Revenue and Customs (HMRC). Under HMRC's sick pay scheme, employees received full pay for 26 weeks' and half pay for the next 26 weeks. The standard limit was 12 months sick pay in any four-year period. Mrs. O'Hanlon was on sick leave for 365 days in a four-year period, mostly due to depression. She argued that the failure to pay her was either a failure to make a reasonable adjustment to compensate for her disability or unjustified disability-related discrimination. It was agreed that she was disabled for the purposes of the Disability Discrimination Act 1995 (DDA).
Failure to make a reasonable adjustment
The duty to make reasonable adjustments under the DDA arises when a provision, criterion or practice places the disabled employee at a substantial disadvantage when compared with a non-disabled employee. The duty is to take such steps as are reasonable in all the circumstances.
The appropriate comparator in a case such as this is an employee who is not disabled who is not off sick. It is clear that a non-disabled employee who had not been off sick would be paid full pay. Mrs O'Hanlon was therefore at a substantial disadvantage (as she received reduced pay or no pay) when compared with the non-disabled employee. Once there is a substantial disadvantage, the onus is on the employer to show that they have made reasonable adjustments and this is judged on an objective basis.
In Mrs. O'Hanlon's case, the EAT took the view that it will be 'a very rare case indeed' where the duty to make reasonable adjustments entails paying a disabled absent employee more than a non-disabled absent employee. The alternative would mean that tribunals enter into a form of 'wage fixing for the disabled sick.' It would also fall foul of the DDA's policy objective of assisting disabled employees to obtain employment and to integrate them into the workplace. The EAT therefore held that it was not reasonable for the employer to be required to pay an absent disabled employee full pay.
HMRC had made a number of adjustments to Mrs. O'Hanlan's working arrangements, including changing her hours and relocating her to ease her commute. The EAT found that these were reasonable adjustments in this case.
Unjustified disability-related discrimination
Disability-related discrimination occurs where the employer treats an employee less favorably for a reason related to the employee's disability. Discrimination can be justified if the employer can show that the reason for the treatment is substantial and material to the circumstances.
HMRC sought to argue that it was the sick pay policy (that applied equally to non-disabled employees who were absent due to sickness) rather than Mrs. O'Hanlon's disability that caused the difference in treatment. However the EAT found that the reason for cutting pay was the fact that Mrs. O'Hanlon was absent due to sickness. Therefore it cannot seriously be disputed that the absence was disability related and the reason was therefore a disability related reason.
The question then was whether such discrimination could be justified. The EAT accepted that the cost of paying all disabled employees on sick leave would be very significant. Therefore justification could simply be the fact that the employer considered it appropriate to pay those who attended work and contributed to the operation of the business more than those who were absent.
So, although the EAT found that there was disability-related discrimination, it was justified, and HMRC was not required to pay Mrs. O'Hanlon full pay for her periods of absence on sick leave due to her disability. This is good news for employers (for a change)!
Age Discrimination
Don't forget that the age discrimination legislation came into force on 1 October 2006. Hopefully by now you have considered any changes you need to make to your policies and benefits. If not, please contact one of the employment team who will be happy to help you. Also, if you have any employees who are due to retire in the next few months, please do get in touch with us and we will help you through the complicated transitional retirement procedure.
