• Linking of Bonus to Sickness Record May be Disability Discrimination

    In Land Registry v Houghton and ors, the EAT has upheld a tribunal’s decision that a bonus scheme that excluded those who had received a formal warning in respect of sickness absence during the relevant financial year occasioned discrimination arising from disability under S.15 of the Equality Act 2010. The rule clearly gave rise to unfavourable treatment in consequence of disability, given that the exclusion was automatic even for disability-related absences, and it could not be objectively justified because, among other things, managers had no discretion under the scheme.

    LR operated a bonus scheme that paid out £900 to eligible employees in 2012. One of the rules of the scheme was that any employee who received a formal warning in respect of sickness absence during the relevant financial year was ineligible to receive the bonus. H and four other employees brought claims of disability discrimination when they were excluded on this basis. All five were ‘disabled’ within the meaning of the EqA and had accrued sickness absence because of their disabilities. They argued that their exclusion meant that they were treated ‘unfavourably because of something arising in consequence of’ their disabilities within S.15(1), and that such treatment could not be objectively justified.

    The employment tribunal noted that LR had already made reasonable adjustments to assist the claimants in overcoming their disabilities and in adjusting the usual trigger points at which the sickness warning procedure became engaged. The tribunal thought it anomalous that whereas a warning for misconduct could, at managers’ discretion, be ignored for the purpose of entitlement to the bonus, no such discretion existed in relation to a warning for sickness absence. The tribunal concluded that each claimant had received a formal warning for disability-related absence, which automatically excluded them from the bonus scheme. Thus, the non-payment of bonus was the consequence, result, effect or outcome of each claimant’s disability and so the causal link in S.15(1) EqA was established. As to justification, the tribunal took into account the anomalous lack of managerial discretion, and the fact that three of the claimants had improved their absence record after receiving the warning, something which could not be taken into account under the scheme. It concluded that the scheme was not objectively justified and so upheld the claims. LR appealed to the EAT.

    The EAT dismissed the appeal. On the question of causation, where the absences leading to the warning were disability-related, and the warning automatically disentitled the claimants to the bonus, that was plainly sufficient to amount to unfavourable treatment in consequence of disability. The EAT also rejected LR’s argument that, since the exclusion from the scheme was an administrative act done automatically by HR without knowledge of an individual’s disability, there was no causative link between the disability and the unfavourable treatment. This was not a case where the motivation of the decision-maker had to be established – it was clear that the reason why the claimants were ineligible for the bonus was their disability-related absences. As to justification, the EAT considered that the tribunal had reached a permissible conclusion. It was entitled to take into account the lack of managerial discretion under the scheme, and the fact that this meant that no credit could be given for any improvement in attendance following the warning, in circumstances where the legitimate aim of the bonus scheme was to reward good performance and attendance.

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