How to avoid unfavourable treatment

Employers received some welcome guidance on a tricky topic from a recent Supreme Court ruling, as Matthew Smith explains

Under Section 15 of the Equality Act 2010, ‘discrimination arising from disability’ occurs where:

  • 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.

Other parts of EqA 2010 refer to concepts such as ‘disadvantage’ or ‘detriment’.

In its landmark decision in Williams v The Trustees of Swansea University & Assurance Scheme, the Supreme Court considered the meaning of ‘treats unfavourably’.

Mr Williams had a disability and had originally worked full-time. When he later applied for his ill-health retirement pension (at age 38) he was working part-time following reasonable adjustments for his disability and received:

  • A lump sum and annuity, calculated on his actual salary at the relevant times.

  • An enhancement to the lump sum and annuity, calculated on his actual salary at the date of retirement.

Mr Williams argued that, as the enhanced element was calculated on his part-time salary, this constituted ‘unfavourable treatment’ under Section 15 which could not be justified. The university and pension trustees argued that Mr Williams had not been treated unfavourably. He had not received a lower or lesser pension than would have been available to him if he had not been disabled. If Mr Williams had been able to work full-time, the consequence would not have been calculation of his pension on a more favourable basis, but loss of entitlement to any pension at all until his normal retirement date (age 67).

Mr Williams' case was upheld by the employment tribunal but rejected by the EAT and Court of Appeal. 

The Supreme Court identified two simple questions of fact. What was the relevant treatment? And was it unfavourable to Mr Williams? The treatment was the pension award and there was nothing intrinsically unfavourable about that. Indeed, the Supreme Court cautioned against “an artificial separation between the method of calculation of an award and the award to which the calculation gives rise”. 

Guidance for employers

These two key questions will be helpful for HR professionals and employers in many other situations where unfavourable treatment is alleged. The starting point is the treatment itself. Is it favourable (eg, the award of a pension or other benefit in cases of disability) or unfavourable (eg, the award of a lower attendance or performance bonus than a non-disabled person because of an employee's disability related absence)? 

If the treatment is favourable, such as Mr Williams' ill-health pension, it will not be potentially discriminatory and need not be ‘justified’ under EqA 2010. 

By contrast, a disabled employee may have a high level of sickness absence that triggers formal absence management procedures. Potential claims could be avoided by making reasonable adjustments, such as extending the trigger points, disregarding any days of absence that are disability related or allowing more time off work than would be available to non-disabled employees. If absence management procedures then still remain appropriate, the question will be whether that unfavourable treatment can be ‘justified’ – is it a proportionate means of achieving a legitimate aim? 

If that employee might also receive no – or a lower – attendance bonus, the employer should again make reasonable adjustments (for example, amending the bonus criteria to introduce a lower attendance threshold or excluding disability-related absences) and, if the bonus award would still be affected, the question will then be whether that unfavourable treatment can be ‘justified’.

Although having appropriate attendance levels among staff is likely to be a legitimate aim, employers will need to carefully assess whether their chosen way of achieving this is proportionate – and it is not likely to be if there is a less discriminatory way of achieving the same aim.

Matthew Smith, is an employment partner at Blake Morgan who acted for the trustees and university