Is it a reasonable adjustment for an employer to provide an undertaking to make a severance payment equivalent to redundancy?

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06 July, 2020

In Hill v Lloyds Bank plc, the Employment Appeal Tribunal (EAT) upheld the Tribunal's decision that it would have been a reasonable adjustment for the employer to promise the employee that she would not be required to work with two colleagues identified in this case that had a negative impact on her mental health. The promise that the employee requested from the employer would amount to a binding agreement if this were implemented. However, the employer refused to make this promise.

The employee subsequently brought a claim for disability discrimination, based on a failure to make reasonable adjustments under S.20 of the Equality Act 2010. The failure to give this promise, known and referred to as an undertaking formed the basis for the employee's successful disability discrimination claim.

Summary of Facts

The employee had been employed for over 30 years and had a period of long-term sickness absence for stress, which she claimed was due to being bullied and harassed by two colleagues. She raised a grievance against these colleagues that was not upheld.

Upon her return to work she requested an undertaking that she would not be required to work with those colleagues and that, if there was no alternative, the employer would offer her a severance package equivalent to the redundancy package. She explained that the prospect of working with those colleagues filled her with dread and fear.

The Tribunal considered that the employee was placed at a substantial disadvantage in that she suffered a level of anxiety and fear about work that would not have been suffered by a non-disabled person who had been bullied and harassed, which exacerbated her physical and mental condition. The Tribunal considered that by giving an undertaking the employer would have alleviated that fear and anxiety and in turn, the disadvantage. However, the employer refused to provide this.

Tribunal Findings

The Tribunal found that the employer had a "practice" of not giving undertakings and that this practice placed the employee at a substantial disadvantage. As such, it was considered that the undertaking would have been a reasonable adjustment in the circumstances.

In addition to awarding compensation, the Tribunal also made an initial recommendation, requiring the employer to undertake to ensure that the employee would not have to work with the alleged perpetrators and in the event, this was not possible, that it would consider suitable alternative employment and if none was available, it should use its "best endeavours" to agree a severance package with the employee.

However, on reconsideration, the Tribunal felt it was not appropriate to make a recommendation requiring the severance package, particularly without time limits and other conditions imposed.

Unsurprisingly, the employer appealed against the liability decision and the original recommendation and the employee also appealed against the reconsideration!

EAT Findings

The EAT dismissed the employer's appeal on liability and rejected the argument that its refusal to give the undertaking was a one-off decision rather than a "practice". Furthermore, the EAT held there was no reason why the employer could not give an undertaking to provide a disabled employee with certain benefits if, in future, certain circumstances arise. The purpose of the recommendation relating to the severance payment was to give a "backstop" that would alleviate the substantial disadvantage to the employee.

Therefore, while the original recommendation is to be set aside, the EAT confirmed that the Tribunal erred in concluding that no recommendation should be made on reconsideration. In particular, the EAT said there was nothing stopping the Tribunal from making a recommendation with financial implications, where an employee should be treated as redundant in certain circumstances.

The EAT has remitted the question of what recommendation should be made to the same Tribunal. The Tribunal recommended in this matter that the employer provides the employee with the promise that she would not work or interact in any capacity with the two colleagues concerned. In the event that this is not possible, the employer and employee should explore suitable alternative employment, and if this is not possible, the employer uses its best endeavours to ensure that the employee leaves the employer with a severance package equivalent to its redundancy payment scheme applicable at the time of her departure.

Therefore, employers need to be cautious when considering refusing an employees' request for adjustments in the event that this could amount to a PCP as detailed in this case, the threshold for placing an employee at a substantial disadvantage is low, and therefore carries more risk for employers that refusal could amount to refusing to make reasonable adjustments for an individual, which will inevitably bring the potential of an employee successfully bringing a claim for discrimination.

For more information contact Trishna Modessa-Parekh in our Employment & HR department via email or phone on 01772 220215. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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