The EAT has confirmed that automatically excluding workers on a formal attendance warning from a bonus scheme was unfavourable treatment that constituted disability discrimination.
In Land Registry v Houghton & Ors, the Claimants were issued with formal warnings as a result of disability-related sickness absences. As a result, they were automatically excluded from participating in a bonus scheme that paid out £900 to eligible employees for the year 2012. This was held to be unfavourable treatment that needed to be objectively justified in order to be lawful, which the Land Registry failed to demonstrate.
Whilst it was held that there was a legitimate aim to reward good performance and attendance, the operation of the bonus scheme undermined this, for the following reasons:
Firstly, there was no managerial discretion available in relation to sickness warnings; however, managers were allowed to operate their discretion for employees who had received a formal warning for conduct issues.
Secondly, it was held that this lack of discretion resulted in an inability to give credit to employees whose attendance had improved after a warning was issued.
The Land Registry also argued that there was a lack of causation – the non-payment of bonus being too remote from the fact of the Claimants’ disability to be legally actionable. However, both the Tribunal and the EAT agreed that it was clearly capable of constituting unfavourable treatment as a consequence of disability as, without the disability, there would have been no absences and no formal warning thereafter. A further argument was also given short shrift by the EAT; namely, that the exclusion of the Claimants from the scheme was an automatic, administrative act taken by persons without knowledge of the Claimants’ disabilities, such that there was no causative link between the disability and the unfavourable treatment.
This case is a helpful reminder of the importance of carefully formulating the terms and remit of bonus schemes (and other incentives). A major difficulty faced by the Land Registry was that those employees whose own conduct had resulted in a formal warning could still be permitted to participate in the bonus scheme if their manager deemed it appropriate; but staff who had been absent because of disabilities beyond their control, could not, even if their attendance had improved. This is clearly inequitable, irrespective of how frequently any discrepancy may have arisen in practice, but it is easy to see how the situation arose at the drafting stage and how, presumably, this was not the specific outcome intended.
Careful consideration should always be given prior to implementation as to how the operation of a scheme will work in practical terms, and special attention given to how disabled individuals in particular may be affected.
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