O'Hanlon v Commissioners for HM Revenue & Customs

Judgment

LORD JUSTICE HOOPER :

Introduction

3. Mrs. O’Hanlon has been employed by the Respondents, the Commissioners for Her Majesty’s Revenue & Customs, since September 1985. She has suffered from clinical depression since 1988. It is accepted that she is suffering from a disability within the meaning of the Disability Discrimination Act 1995.

4. The Appellant started to take long periods of absence from work from 2001. There is an absence of 129 working days between the 4 June and the 20 November 2001. She was allowed to return on a part time basis between the 2 December 2001 and the 18 June 2002. Thereafter, there was a further absence of 84 working days until the 31 October 2002, and a second return on a part time basis from the 1 November 2002, gradually building up to full time from the 2 December 2002. In total, in the four years prior to the 15 October 2002, Mrs O’Hanlon had a total absence of 365 days of sickness, which comprised 320 relating to her disability and 45 of unrelated days of sickness absence.

5. Thereafter, from December 2002 she was only absent for three days between December 2002 and August 2003. That was for gastro-enteritis, and then two days due to an allergic reaction.

6. There was a further period of absence from the 4 September 2003. Part of her difficulty was the commuting involved in travelling to her office in Welwyn Garden City, so the employers transferred her to Hertford with effect from the 3 February 2004. The intention was to assist her because she had found the travelling to Welwyn Garden City a significant impediment.

7. In 2004 there were certain short absences unrelated to disability, but also a period of between three and five days which were attributable to her depression.”

65. ... In this case, there is no complaint by Mrs O’Hanlon that she has been put at any disadvantage by reason of her disability other than in the reduction of her pay. The evidence before us proves that the employers have not put her under any sort of unfair pressure to return to work from her lengthy absences, apart from the pressure which naturally results from reduced pay. On at least two occasions, they have assisted her return to work by reduced hours gradually built up by agreement. They have further assisted her by the transfer to a location which would reduce the pressures of commuting. It will be recalled that in the discussion about that transfer, the opinion was expressed, and not contradicted, that there was no need to make any special arrangements for her once she was back at work.

The employer’s sick pay rules

TG 1.8 – The main contractual rules about sick absence

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The main contractual rules about sick pay

If you fall ill while working full-time, and you satisfactorily self-certify your absence or let your manager have a satisfactory medical certificate, we will normally allow you to take paid sick absence. You may be allowed:

subject normally to an overriding maximum of 12 months’ paid sick absence in any period of four years.

After that you may be paid your equivalent pension rate of pay, or half pay, whichever is the less, unless you have less than two years’ pensionable service in which case the absence will be unpaid.

You will not qualify for paid sick absence if, exceptionally, it appears that your illness will prevent you from resuming your duties with us.

TG 5.8 – Additional paid sick absence

In certain circumstances your Manager in consultation with your HR/AOH team may allow you additional paid sick absence after you have used up your normal entitlements at full and half pay. This only applies when you have taken all your paid sick absence due to a long illness or injury and then after a return to work.

In these cases your Manager, in consultation with your HR/AOH Team, can allow you up to 40 days additional sick absence at full pay (including any Statutory Sick Pay to which you are entitled – see TG 5.11.

A further 20 days at full pay may be allowed by your HR/AOH Team for active medical treatment of your original illness or injury – but only where you have returned to work in the meantime and later need to be away from work to receive treatment or recover from its after-effects.

Remember that these concessions are designed to avoid you having to attend work when you are not fully fit to do so. You must apply as soon as you take any time off or as soon as you are aware that you may need to take time off whether in connection with your original illness or injury or in respect of an unrelated minor illness or injury. You will not be allowed to convert unpaid absence or absence at pension rate retrospectively into paid sick absence.

Requests for either of these concessions should be dealt with by HR teams without referral to the Department’s Occupational Health Advisers.

TG 16.3 – Pregnancy or disability related absences

If your absences are related to pregnancy, this will not count as unsatisfactory attendance. If your absences are related to disability then these might not count as unsatisfactory attendance if we accept that allowing some additional sickness absence constitutes a reasonable adjustment. In both cases your managers should speak to their Human Resources team for further help unless this has already been obtained.

If Disability Adjustment Leave has been granted to cover your absence, then that absence will not count as unsatisfactory attendance. …

PN 02/03 – Disability adjustment leave

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Background

The Disability Discrimination Act (DDA) 1995 brought in measures aimed at ending the discrimination that many people with disabilities face. The definition of a disabled person is a person who ‘has a physical or mental impairment which has a substantial and long term adverse effect on his or her ability to carry out normal day to day activities’. See appendix for a more detailed definition.

DDA introduced the concept of reasonable adjustments to avoid discrimination against disabled employees or prospective employees. We have a duty to make a reasonable adjustment if any physical feature of the premises occupied by the Department, selection arrangements, working terms and conditions or other arrangements cause a substantial disadvantage to a disabled employee compared with a non-disabled employee or a person with a different disability.

Disability Adjustment Leave (DAL)

TG 4.19 and 5.8 make provision for people to be allowed the time off they need through a mixture of special leave and sickness absence. The introduction of DAL allows us to regularise our arrangements for people with a disability and to improve consistency of application across the Department.

DAL is an example of a reasonable adjustment as it allows people with a disability to take reasonable absences during work time for medical treatment, assessment of a medical condition and assessment of any adjustment required.

Note that DAL is not intended to cover sickness absence.

DAL may be a reasonable adjustment in the following circumstances:

The Use of Trigger Points and Their Possible Legal Implications

HRD Main (05)

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MANAGING ATTENDANCE FOR DISABLED STAFF

Departments and agencies were provided with best practice guidance in January 2003 for managing the attendance of disabled staff (HRD Main 03 (02), Small 03 (01), NDPB 03 (01)). This advised departments and agencies that they might leave themselves open to claims of discrimination if sickness absence procedures were followed mechanically.

The guidance advised that absences which were as a result of the individual’s disability should be disregarded when considering trigger points for inefficiency action or the entitlement to contractual sick pay. Absences as a result of a condition not relating to the individual’s disability should be considered to be counted in the usual way. Departments were further advised that they might wish to consult their Occupational Health Advisor to confirm whether a specific trigger point should be set for the individual concerned.

Some departments also have a provision for the entitlement to Disability Leave. This can be used when a disabled individual is fit to return to their duties but as a result of a reasonable adjustment not having been made is unable to do so. Departments and agencies might wish to consider introducing this provision.

AMENDED GUIDANCE ON MANAGING ATTENDANCE FOR DISABLED STAFF

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Background

1. Several departments have sought clarification following the issue of HRDG (Main) (05) 16 [see above] on managing attendance for disabled staff. This is to clarify that departments should not automatically disregard any sickness absence related to a disability when considering whether inefficiency/unsatisfactory attendance procedures should be put in place or when reducing pay when either full or half pay has been exhausted as a result of absence.”

64. ... [I]t is plain that the case advanced before the employer was that the policy was unjust to the disabled (or at least those who would have to take disability related sickness absences).

A summary of the appellant’s submissions

72. ... The step proposed by Mr Toms is that for however long Mrs O’Hanlon is absent from work, she should always receive full pay.

You will not qualify for paid sick absence if, exceptionally, it appears that your illness will prevent you from resuming your duties with us.

21. The sum which would be payable to Mrs O’Hanlon to restore her to the position she would have been in if she had received full pay instead of reduced pay is £4,722.87, subject to tax and national insurance, which would make her net claim £3,261.77.

32. Reasonable adjustments would be:

Statutory provisions

4A Employers: duty to make adjustments

places the disabled person concerned at a substantial disadvantage in comparison with persons who are not disabled,

it is the duty of the employer to take such steps as it is reasonable, in all the circumstances of the case, for him to have to take in order to prevent the provision, criterion or practice, or feature, having that effect… .

3A Meaning of “discrimination”

(a) for a reason which relates to the disabled person’s disability, he treats him less favourably than he treats or would treat others to whom that reason does not or would not apply, and

(b) he cannot show that the treatment in question is justified.

(4) But treatment of a disabled person cannot be justified under subsection (3) if it amounts to direct discrimination falling within subsection (5).

(5) A person directly discriminates against a disabled person if, on the ground of the disabled person’s disability, he treats the disabled person less favourably than he treats or would treat a person not having that particular disability materially different from, those of the disabled person.

(6) If, in a case falling within subsection (1), a person is under a duty to make reasonable adjustments in relation to a disabled person but fails to comply with that duty, his treatment of that person cannot be justified under subsection (3) unless it would have been justified even if he complied with that duty.

18B: Reasonable adjustments: supplementary

(a) making adjustments to premises;

(b) allocating some of the disabled person’s duties to another person;

(c) transferring him to fill an existing vacancy;

(d) altering his hours of working or training;

(e) assigning him to a different place of work or training;

(f) allowing him to be absent during working or training hours

for rehabilitation assessment or treatment;

(g) giving, or arranging for, training or mentoring (whether for

the disabled person or any other person);

(h) acquiring or modifying equipment;

The three kinds of disability discrimination

20. Section 3A identifies three kinds of disability discrimination. First, there is direct discrimination. This is the situation where someone is discriminated against because they are disabled. This particular form of discrimination mirrors that which has long been found in the area of race and sex discrimination. As with other forms of direct discrimination, such discrimination cannot be justified. Here, where all employees are subject to the same rules irrespective of their disability, there can be no basis for a claim of direct disability discrimination and none is alleged.

21. Second, there is disability related discrimination: section 3A(1). This is in some respects similar to indirect discrimination found in other discriminatory legislation, but there is no requirement here that the discrimination should have a disparate impact on the disabled as a body. It is enough that the employee is treated less favourably for a reason related to his or her particular disability. This form of discrimination can be justified. However, justification can only be established if the employer shows that the reason for the treatment is both material to the circumstance of the particular case and substantial: section 3A(3).

22. Third, there is the failure to make reasonable adjustments form of discrimination in sub-section (2). Here, the employer can be liable for failing to take positive steps to help to overcome the disadvantages resulting from the disability. However, this in only once he has a duty to make such adjustments. That duty arises where the employee is placed at a substantial disadvantage when compared with those who are not disabled.

23. There is a close relationship between these two latter forms of discrimination. Section 3A(6) provides that treatment can only be justified under sub-section (1) if it would have been justified even if the employer had complied with any duty to make reasonable adjustments. It follows that logically it makes sense to consider the question of reasonable adjustment disability discrimination first. That was made clear by Lord Rodger of Earlsferry in the case of Archibald v Fife Council[2004] ICR 954para.32, a case which we consider below.

The full pay argument- reasonable adjustments

44. The Tribunal made certain preliminary observations before focusing on the questions we have set out.

45. First, they noted that the statutory provisions of the Code of Practice are aimed to assist disabled people to return to work or to remain at work. They are not, in general, designed to encourage people to remain away from work. In this case, as the Tribunal noted, the employers had made adjustments on three occasions to assist the return to work of this Appellant. They had twice reduced her hours so as to enable her to come back to work without facing the immediate strain of full time employment, and they changed her location so as to reduce the pressures from commuting. They also noted that it was not suggested in any way that her absence could be attributed to any failure on the part of the employer to take steps to assist her in her return to work, and they observed that although any financial pressures might be a detriment to the employee, at the same time they also amount to an incentive to return to work.

46. The Tribunal then concluded that the pay scheme did place the Claimant at a substantial disadvantage. ...

47. However, they went on to find that the Respondents had taken such steps as were reasonable in all the circumstances. They first identified the various steps that had been taken to assist the disabled to overcome the disadvantages resulting from their absence as follows (para 70):

“For the reasons we have set out in our preliminary comments, it seems to us that we must consider this issue in the broad context of the range of the Respondent’s policies. The principal ways in which the Respondents have sought to reduce the financial disadvantages of long term absence are two fold. Firstly, they have done all they can to enable Mrs O’Hanlon to return to work so that her absences are no longer than they need to be. Secondly, they have not added to her causes of depression by the threat of any disciplinary proceedings.”

48. They then further analysed the issue of reasonableness having regard to all the factors identified in section 18B as follows (paras 71- 72):

“We accept that the Respondents are entitled to have a pay policy based on the fundamental premise that employees should normally be paid for the work they do. It should not be treated as a normal obligation on an employer to pay people when they are absent from work. Once a scheme is introduced and operated which provides the benefit of full pay to those who are absent from work, it is entirely reasonable to have limits placed upon it, especially when those limits are graduated so that there is a reduction to half pay, and then a lower rate of pay, rather than a sudden absence of pay. This scheme is also reasonable in that it contains, as we have noted, provisions for the exercise of discretion in clearly defined circumstances.

It is appropriate to this point to remind ourselves of the provisions of section 18B, taking each of the relevant subparagraphs:

(f) The nature of the activities of the Respondent, and the size of the undertaking, obviously provide the basis for a very large budget. However, on the evidence before us from Mr Grace, we must also take into account that at the level at which Mrs O’Hanlon works, if she is not there to do her job then someone else has to do it for her. If that position is expanded to take account of all of those who are disabled being absent from work, on full pay, then the overall effects on other employees are significant. We are bound to take into account that fact that it is government policy at present that the size and cost of the civil service should be confined, so far as possible. We should not proceed on the basis that absences will be dealt with simply by hiring in temporary staff.”

49. They therefore concluded that although Mrs O’Hanlon was placed at a substantial disadvantage, the employers had made reasonable adjustments and it was not reasonable to expect them simply to pay the salary in full.

Did the employers make reasonable adjustments?

58. Mr Toms accepts that the Tribunal set out in some detail the reasons for their finding that it was not a reasonable adjustment. But he makes a number of detailed submissions taking issue with some of the particular matters identified by the Tribunal. For example, he says that the Tribunal were not entitled to conclude that it would sometimes be difficult to distinguish disability and non-disability absences, or that the differential treatment would be likely to sow dissension amongst the staff; that the Tribunal erred in saying that there was normally no obligation to pay sick pay for employees absent from work, it being contended that there is generally a presumption that sick pay will be paid (Mears v Safecars Securities Ltd [1982] IRLR 183); that it was unjustified to say that making full payments would discourage a disabled employee from returning to work; and that the evidence of Mr Grace was suspect and could not properly be relied upon.

59. The Respondent contends that the Tribunal was fully entitled to refer to the matters which it did. In particular, since the purpose of adjustments is to help employees to obtain work or remain in employment, it was material to note that the proposed adjustment here would have the opposite effect and would provide a disincentive to return. The observation that giving management a discretion to determine whether an absence was disability related or not could sow dissension was plainly a proper one, and the Tribunal cannot be criticised for so commenting. It was for the Tribunal to give such weight to Mr Grace’s evidence as it thought appropriate. Finally, Mr Craig submits that the Tribunal was in fact right to say that the default position is that in the absence of an express term there is no right to sick pay.

60. We reject these grounds of appeal. In our judgment these were all matters to which the Tribunal could properly have regard. The central issue went to the cost, and on the whole these matters were relatively peripheral, but they were not immaterial. The Tribunal may arguably have erred in its analysis of sick pay, but whether it did or not – and the case law on the common law right to sick pay is not entirely easy to interpret, and it is in particular far from clear that there is a right to full pay indefinitely - it plainly had only the most marginal impact on the Tribunal’s analysis. The question of whether any reasonable adjustment was required over and above what had already been provided depends on an objective assessment of what could be done to ameliorate the disadvantage in fact created. The fact - if it be a fact - that there would have been no disadvantage if the common law rules had applied does not assist in that analysis. The Tribunal had to deal with the case before it, focusing on the sick pay rules which did in fact create a disadvantage.

61. The argument that the Tribunal was not entitled to rely on the evidence of Mr Grace is in our view hopeless. The Tribunal observed that Mr Grace himself recognised certain limitations in his evidence, but they were fully entitled to accept that evidence as reliable and providing them with some, albeit inevitably general, information about the cost implications of the Appellant’s argument.

Two broader challenges

62. Apart from these detailed points, Mr Toms made two broader challenges to the Tribunal’s analysis. First, he contended that the Tribunal should only have focussed on the particular needs of this employee. Accordingly, his original submission was that the wider cost implications had effectively to be ignored. The financial implications for Mrs O’Hanlon should have been considered quite independently of any other similar claims which might follow a successful challenge.

63. Subsequently Mr Toms modified his argument and accepted that it is in principle appropriate for an employer, faced with a claim of this kind, to have regard to the cost of applying the policy across the board. But he submitted that even if there is a proper justification for adopting such a policy as a general rule, it would still be necessary in each case to consider the individual circumstances. He contended that this was not done on this occasion; the employer merely said that its policy precluded the payment claimed, and no further particularised assessment was made. He suggested, for example, that the employers ought to have considered how long the anticipated absence might be (on the assumption that it would be more justified to make a payment if the prognosis was for a long absence); what hardship the employee was suffering as a result of the reduction in pay; and whether this might have been causing any additional stress.

64. We accept of course that in the usual case the focus must be on the particular disability and the steps taken to alleviate the disadvantages to the individual. But that is because each case is generally unique. The adjustments depend on the particular way in which the disability manifests itself. Here it is plain that the case advanced before the employer was that the policy was unjust to the disabled (or at least those who would have to take disability related sickness absences). It was suggested that she would suffer hardship as a result of the reduction in pay, but it was not alleged that she was in any essentially different position to others who were absent because of disability related sickness. In these circumstances, where the employers responded to the claim as it was advanced, it would be quite unjust and unrealistic to say that the employers should now be found to have failed to establish justification because they did not have regard to other unstated factors relating to this Appellant. In any event, it seems to us that it would be wholly invidious for an employer to have to determine whether to increase sick payments by assessing the financial hardship suffered by the employee, or the stress resulting from lack of money - stress which no doubt would be equally felt by a non-disabled person absent for a similar period.

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Discussion: is the claim for enhanced sick pay ever sustainable?

67. In our view, it will be a very rare case indeed where the adjustment said to be applicable here, that is merely giving higher sick pay than would be payable to a non-disabled person who in general does not suffer the same disability related absences, would be considered necessary as a reasonable adjustment. We do not believe that the legislation has perceived this as an appropriate adjustment, although we do not rule out the possibility that it could be in exceptional circumstances. We say this for two reasons in particular.

68. First, the implications of this argument are that Tribunals would have to usurp the management function of the employer, deciding whether employers were financially able to meet the costs of modifying their policies by making these enhanced payments. Of course we recognise that Tribunals will often have to have regard to financial factors and the financial standing of the employer, and indeed section 18B(1) requires that they should. But there is a very significant difference between doing that with regard to a single claim, turning on its own facts, where the cost is perforce relatively limited, and a claim which if successful will inevitably apply to many others and will have very significant financial as well as policy implications for the employer. On what basis can the Tribunal decide whether the claims of the disabled to receive more generous sick pay should override other demands on the business which are difficult to compare and which perforce the Tribunal will know precious little about? The Tribunals would be entering into a form of wage fixing for the disabled sick.

69. Second, as the Tribunal pointed out, the purpose of this legislation is to assist the disabled to obtain employment and to integrate them into the workforce. All the examples given in section 18B(3) are of this nature. True, they are stated to be examples of reasonable adjustments only and are not to be taken as exhaustive of what might be reasonable in any particular case, but none of them suggests that it will ever be necessary simply to put more money into the wage packet of the disabled. The Act is designed to recognise the dignity of the disabled and to require modifications which will enable them to play a full part in the world of work, important and laudable aims. It is not to treat them as objects of charity which, as the Tribunal pointed out, may in fact sometimes and for some people tend to act as a positive disincentive to return to work.

70. Mr Toms relied upon the Meikle case, to which we have made reference, in support of his case that payments are appropriate. But in fact a careful analysis of that case suggests that it is, if anything, at odds with his claim. The claimant was a teacher who suffered from deteriorating vision. The employers were asked to make various adjustments to accommodate her difficulties, such as providing enlarged written materials and providing her with more non-contact hours to enable her properly to prepare her classes, but they failed to do so. She was absent for lengthy periods because of eyestrain and was suspended because of these absences. She was put on half pay because, as in this case, the policy of the employers was to reduce the pay after a certain length of sickness absence. She claimed, amongst other matters, that the failure to keep paying her full pay when she was absent sick constituted a failure to make a reasonable adjustment and therefore constituted a breach of the Disability Discrimination Act.

“In the present case Mrs Meikle claimed that the reduction in sickness benefit to half-pay because of her absence from work amounted to both forms of disability discrimination. The cause of her absence from work was the employer’s failure to make reasonable adjustments and the placing of her on half-pay put her at a substantial disadvantage. A reasonable adjustment then would have been to retain her on full pay, by way of sickness benefit, but the employer failed to comply with its section 4A duty and made no such adjustments. That was unjustified and so there was section 3A(2) type discrimination. In addition, there was “direct” section 3A(1) discrimination, in that putting her on half-pay was less favourable treatment for a disability related reason, and this was unjustified”.

(We have substituted the current statutory provisions, and note that when this decision was reached a failure to make reasonable adjustments could be justified, but that is no longer the case.)

72. The Employment Tribunal held that there could be no such discrimination because the payment of sick pay fell outside the scope of section 6 (now section 4) by virtue of section 6(11) (now 4(11)). It is not necessary to rehearse the arguments about that subsection. Suffice it to say that the Court of Appeal agreed with the EAT that this was a misconstruction of that sub-section; it did not apply to payments made directly from the employer to the employee. Accordingly, reasonable adjustments had to be made even where the effect of failing to do so was to affect the level of sick pay.

73. The EAT had upheld the appeal. The employers conceded that the reduction to half pay constituted less favourable treatment by reason of her disability. The question was whether it was justified. Because of what is now section 3A(6), that had to be considered on the assumption that any relevant reasonable adjustments had been made. Had they been made in this case, Mrs Meikle would not have been absent for anything like as long as she was and the reduction in pay would not have occurred. Accordingly, the EAT held that the employers were not justified in reducing the pay to half pay. The Court of Appeal agreed with this analysis. (Query whether an alternative analysis might have been that there was a failure to make reasonable adjustments and the loss flowing from that breach was the loss of pay flowing from the fact that she was absent sick.)

74. It is important to note, however, that the Court did not find that the payment of full pay was a reasonable adjustment independently of the other specific adjustments which ought to have been made and would have resulted in the employee returning to work without having to take such lengthy absences. It was never suggested that the adjustment lay simply in granting full pay. Liability arose because of the failure to make reasonable adjustments to accommodate her back into the classroom. This had the knock-on effect of rendering the failure to give her full pay unjustified. Admittedly there was no express finding that the case could not have been put in that way, but it was not even suggested that this might have been a more straightforward route.

75. For all these various reasons, in our view the Tribunal’s decision on this aspect did not display any material error of law, and this part of the appeal fails.

that the appellant would suffer hardship as a result of the reduction in pay, but it was not alleged that she was in any essentially different position to others who were absent because of disability related sickness.

TG 5.8 Additional paid sick absence

As you will be aware from my records due to a long-term illness covering a period of approximately 4 years I no longer get paid for sick leave.

I confirm that I still suffer from depression and still on medication. As you will also be aware I am covered by the Disability Discrimination Act.

Not being paid during periods of illness can only add and does, to my illness. I feel that financial worries are making matters worse.

It has been brought to my attention that sick pay can be extended for a period of up to 40 days. I confirm that as in TG 5.89 the illnesses have been unrelated to my depression.

I would ask that you consider extending my sick leave by 40 days at full pay and making the necessary amendments to the deductions that have already been made from my salary.

I am afraid it is not possible to allow the additional paid absence referred to at TG5.8 retrospectively. However, I am able to allow up to 40 days paid sickness absence in the future for absences unrelated to your depression.

I have copied this letter to your manager who will ensure that Human Resources is advised promptly of any future absences in order that we may ensure that your pay is amended appropriately.

Acting on advice from PCS HQ I wish to submit an equal opportunities complaint on behalf of Mrs Kate O’Hanlon (East Herts West Essex C) Hertford Office. Kate has suffered from clinical depression on and off since she was 22 years old. Since 2001 Kate has suffered some particularly severe episodes which resulted in 6 months off in 2001 and 2002 and a period of six weeks in 2003. Due to the length of her sickness absences she is now being paid at pension rates of pay. During the period March 2001 and May 2004 Kate has actively sought help for her depression from her GP, a psychiatrist, psychologist therapist and counsellor. Kate has been covered by the DDA since 2002.

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Our desired outcome from this complaint would be that said reasonable adjustment be made and any entitlement to full pay be calculated, and that restitution be made to Kate as necessary.

that being on less that full pay puts her under pressure. This is an additional stress feeding into her depression. If she did not have the financial worry, it would ease the pressure.

Thank you for agreeing the notes of our meeting. I have now had time to consider all the information and am in a position to make my decision.

Your PCS representative, Rose O’Mahoney, wrote to me 24 February and submitted an equal opportunities complaint on your behalf.

Your complaint was that you suffered depression and as a result of this illness you had had six months off in 2001 and 2002 and six weeks in 2003. Due to the length of your sick absence, you were now being paid at pension rate. You are protected by the Disability Discrimination Act and you ask that as a reasonable adjustment the Department separates your disability related sick absence so that it does not affect your sick absence records or your entitlement to sick pay.

Your desired outcome would be that this reasonable adjustment be set in place, any entitlement to full pay be calculated and restitution be made as necessary.

Under normal circumstances on an Equal Opportunities complaint, I would have arranged for a trained Equal Opportunities investigator to be appointed. The investigator would have interviewed yourself and any other person relevant to the complaint and sought to obtain documentary evidence to corroborate the facts. The investigator would then provide me with a report pulling together the evidence to support your case and that which conflicts before I made my decision. As I explained to you at our meeting, I don’t believe there is any dispute as to the facts, so the matter has not been investigated in this way. Thank you for agreeing my approach.

I wrote to Rose, inviting you to meet me to make any oral representations before I came to my decision. Unfortunately, this meeting was postponed on one occasion as Rose had urgent business that had cropped up unexpectedly but we finally arranged a date after a couple of unsuccessful attempts on my part on 23 June 2005.

I have considered carefully the case you put forward to me at that meeting and I can see that you have had to overcome a lot of difficulties in managing your illness and this has been distressing for you. I accept that you are undertaking all the treatment that you feel you can manage at this time.

You will be aware that it is not Departmental policy to separate and distinguish disability related sick absence and treat it differently for absence record and pay purposes.

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On that basis I am unable to uphold your complaint that you have been discriminated against. I know that this will be disappointing for you.

I have been suffering from clinical depression on and off since I was 22 years old. In the last few years I’ve suffered from quite severe episodes. This has resulted in me having a considerable sickness absence record, and I no longer get paid for sick leave. ...

My desired outcome is that ... my absences for my depression are not included in my overall sickness absence. The knock on effect of you not doing this causes me more stress and financial hardship.

10. I think that the Respondent’s policy of including disability related absences in calculating sick pay, which is subject to a copy of 365 days in a 4 year period, is discriminatory and very unfair. Someone in my position is put in a very difficult situation. After exhausting their entitlement to six months at full pay and half pay for a further six months, should they take any time off for up to three years afterwards the time taken will not count towards their service. In addition, they will only be paid at the pension rate, rather than at the full rate. Essentially I have been penalised as a result of my disability.

11. I recognise that the Respondent’s sickness policy permits further paid sick leave on a discretionary basis. The important word is discretion – it is not a contractual right and a person with a disability cab still be left vulnerable or subject to detriment, as I have been.

16. I also believe that I should have been paid my normal salary for the periods of absence which were related to my disability. I believe the Respondents should have made a reasonable adjustment to the sick pay policy to pay me for any disability related sickness.

17. I do not believe that my disability related absences should be included in the calculation of my sickness absences. I consider their inclusion in the calculation to be discrimination contrary to the Disability Discrimination Act 1995. I am experiencing financial hardship as a result of this discrimination which places me under additional pressure. I find that the stress caused by the additional pressure feeds into my depression. (Underlining added)

64. ... It was suggested that she would suffer hardship as a result of the reduction in pay, but it was not alleged that she was in any essentially different position to others who were absent because of disability related sickness. ... [I]t seems to us that it would be wholly invidious for an employer to have to determine whether to increase sick payments by assessing the financial hardship suffered by the employee, or the stress resulting from lack of money - stress which no doubt would be equally felt by a non-disabled person absent for a similar period.

On the one hand, she would suffer no financial detriment whatsoever, but on the other hand she would have no incentive to return to work and earn her salary. We do not see that this is a desirable outcome.

The Respondents would have to change their pay policy, either to provide the same benefits to all disabled people; or to create an area of discretion for managers to allow some employees to have such benefits, and others not to receive them. There would therefore be the potential for animosity and a sense of unfairness as between disabled and non disabled employees.

It is unlikely to be a valid defence to a claim under the Act that staff were obstructive or unhelpful when the employer tried to make reasonable adjustments.

In respect of those accepted to be disabled it can be difficult, as the evidence in this case revealed, to distinguish between absence related to the disability and that not so related. There may be concurrent causes for absence or over lapping symptoms.

The non-aggregation argument- reasonable adjustments

65. His second broad objection to the decision was his submission that the Tribunal focused only on part of his case. He had put his case in two ways; first, his primary case was that the employers should disregard Mrs O’Hanlon’s disability and pay in full for all sickness absences. Alternatively, he argued that they should separate out the disability and non-disability related absences and pay in full for the latter only (unless, presumably, the length of absences exceeded the limits for full pay even when considered on their own). He says that whilst the Tribunal originally noted that the case had been put in the alternative, in fact they never did address this alternative issue, except to comment that it might be difficult to separate out the two types of sickness absence.

66. We accept that the Tribunal has not in terms dealt with this alternative argument. Had we any doubts as to how it would be resolved, it would be appropriate for us to send it back to the Tribunal for further consideration and reasons. But we have no such doubts. It is true that the cost of this method of adjustment would be likely to be less overall, but in our view the basic objections which the Tribunal had to the principal claim would apply equally here. Moreover, it is difficult to see the rationale behind this way of formulating the claim. Why, we ask rhetorically, should it be consistent with the principles of the legislation to allow the non-disability related absence to be treated more favourably than the disability related absence?

Consider the position of Employee A who has a disability (consisting in, say, a form of depression which is found to satisfy the definition of disability under the Disability Discrimination Act 1995) and has the benefit of a sick pay scheme which provides for 6 months full pay and 6 months half pay. Under the disaggregation adjustment the employer is required to have a separate and parallel scheme for disability related absences.

On 13 March 2007, Employee A exhausts his sick pay entitlement for disability related absences (6 months full pay and 6 months half pay).

Assume that he then returns to work on 14 March 2007.

The following week he has a 2 day absence for depression. The absence is disability related and therefore Employee A will not be paid for this absence on the basis of the “disaggregation adjustment” for which the claimant contends, because he has used up his disability-related absence tariff.

.....

The result is that (although the employer can clearly afford to pay for a further 2 days of sickness absence), the “disaggregation adjustment” means that he treats the disability related absence less favourably than non-disability related absence. Employee A is only paid if his absence is not caused by his disability. The “disaggregation adjustment” would therefore result in the less favourable treatment of disability.

The full pay argument and the non-aggregation argument- section 3A(1), disability discrimination

89 ... The challenge to the Tribunal’s finding on justification was effectively doomed to fail once the Tribunal found that increasing sick pay was not in the circumstances an adjustment a reasonable employer would be required to make. If the objective test for imposing the duty did not bite, then there was never any real possibility that the more subjective test of justification would not be satisfied. That is not inevitably so in all cases, but in our view it is here where the same failure to make full pay lies directly behind both discrimination claims.

On the other hand, the question of whether justification is established is essentially a subjective one, the ET may not substitute its own view for that of the employer and is limited to considering whether the reason for the treatment relied upon by the employer can properly be described as both material to the circumstances of the particular case and substantial: Jones v Post Office[2001] ICR 805 at paragraphs 25, 26, 37 and 39. However, precisely because the ET’s role in relation to justification is to conduct an evaluation of the employer’s subjective reasoning process (rather than to arrive at its own conclusions as to the validity of the reason relied upon), this may involve an assessment of whether there was evidence upon which the employer’s decision could properly have been taken and/or whether it went beyond the band of reasonable responses in the circumstances: see paragraph 26 in Jones. Thus, an employer’s failure to make any reasonable inquiries/apply his mind to the relevant factors before arriving at a decision may not be fatal to the question of whether an adjustment is reasonable (if by the time of the ET hearing there is evidence to show that it would not be) but may be fatal to a contention of justification.

Secondly, the statutory test for justification requires in terms that the circumstances relied upon by the employer be ‘material to the circumstances of the particular case’. Thus an employer who has failed to apply his mind to the claimant’s particular circumstances may find difficulty in establishing justification. The ET recognised this point at paragraph 77 of their reasons [79], but failed to appreciate that their earlier finding that R had not considered exercising a discretion in A’s case but had simply treated the situation as covered by a pre-determined policy (see paragraph 9 above) impacted on this issue. (Underlining added)

You will be aware that it is not Departmental policy to separate and distinguish disability related sick absence and treat it differently for absence record and pay purposes.

Upon a consideration of the wording of section [3A(3)] in context I conclude that the employment tribunal are confined to considering whether the reason given [by the employer when he reached his decision] for the less favourable treatment can properly be described as both material to the circumstances of the particular case and substantial.

Substantial disadvantage (section 4A)/less favourable treatment (section 3A)

46. The Tribunal then concluded that the pay scheme did place the Claimant at a substantial disadvantage. They noted that the Revenue kept the disabled outside the unsatisfactory attendance procedure in the sense that absence by reason of disability was not treated as part of the relevant absence period. This was therefore to their advantage but nonetheless the Tribunal concluded that overall the employee was placed at a substantial disadvantage.

Was the Appellant substantially disadvantaged?

54. The employers submit in the cross appeal that Mrs O’Hanlon was treated in all respects in precisely the same way as other employees; the sick pay scheme was applied to all alike in the same manner. Accordingly, they say, there was no proper basis for saying that she suffered a substantial disadvantage. Mr Craig, counsel for the employer, further observes that it was curious for the Tribunal to find that there was no disability related discrimination and yet to find a substantial disadvantage. They should have found neither.

55. Mr Toms, counsel for Mrs O’Hanlon, contends that the argument is fundamentally misconceived and that the whole point of the section 6 duty is to recognise that there will sometimes be situations where the disabled will as a consequence of their disability be disadvantaged by general rules or policies ostensibly applicable to all. He also makes a similar observation to Mr Craig as to the apparent incompatibility of the findings on substantial disadvantage and disability related discrimination. However, whilst the employers suggest we draw the inference that the Tribunal’s finding on substantial disadvantage is wrong, he contends conversely that it suggests that the finding on disability related discrimination is incorrect. He submits that there was a plain disadvantage here in financial terms, and the Tribunal could not have sensibly come to any other finding.

56. We agree with those submissions. In our judgment there is no basis for saying that the Tribunal erred in law in reaching this conclusion. It is plainly no answer to a claim of this kind to assert that the same rules apply to all. The whole premise of this provision is that the disabled employee may be disadvantaged by the application of common rules. Unlike other forms of discrimination, the employer may be obliged to take positive steps which involve treating the disabled employee more favourably than others are treated to remove or alleviate the consequences of the disability. Section 18B(3) provides many examples of the kinds of steps which may be appropriate. So in Archibald, for example, the employer had to consider taking positive steps to appoint the employee to a position for which she would not otherwise have been appointed in order to overcome the disadvantages resulting from the fact that she was not fit enough to carry out her original job. This was despite the fact that risk of dismissal facing an employee who was incapable of carrying out his or her functions was equally applicable to all staff.

57. In our view the only conceivable basis on which it could be said that the Tribunal erred in law is if it could be argued that the duty to pay money to someone absent sick from work falls out with the scope of the section 4 duty. This has a superficial attraction if only because the claim that the Disability Discrimination Act may require employers to pay the disabled more generously than other staff is at least at first blush a surprising one. However, this was a matter considered and resolved in favour of the employee by the Court of Appeal in Meikle v Nottinghamshire County Council [2005] ICR 1. We return to consider this case below in the context the Tribunal’s finding on reasonable adjustment.

“When Mrs O’Hanlon is reduced to half pay, is she being treated less favourably for a reason which relates to her disability than the employer treats others to whom that reason does not or would not apply?”.

They answered it as follows:

“…her pay is being reduced because she is not at work after six months absence. She is thereby being treated in the same way as a non disabled person. The same reasoning would apply to absence 12 months away from work.”(para 75).

30. The approach which Tribunals must adopt when determining whether or not there is disability related discrimination was considered by the Court of Appeal in the important case of Clark v Novocold Ltd [1999] ICR 951. It is central to part of this appeal and therefore justifies detailed analysis. In that case, the employee was dismissed after he had become disabled following an accident at work. The employers were informed the likelihood was that he would be unable to resume work for about a year. The employers accepted that he was disabled within the meaning of the Disability Discrimination Act.

31. The Employment Tribunal found that there was no disability related discrimination because the employers would have treated any employee equally who had been sick for a similar length of time, whether he was disabled or not. In other words, the appropriate comparator was held to be someone absent for the same length of time, but for a reason other than disability.

32. The Employment Appeal Tribunal accepted that this was a correct approach when considering the appropriate comparator, but remitted the case on the grounds that the hypothetical comparator in this case had not been adequately identified.

33. The Court of Appeal upheld the employee’s appeal and held that this was an improper construction of the section. The proper approach to determining the question of whether or not there was disability related discrimination was identified in the following way by Lord Justice Mummery (at page 961 to 962, but substituting the current statutory provisions):

“The two questions posed by the statutory provisions are: (1) Was the applicant dismissed for a reason which relates to his disability? (2) If so, did the employers treat him less favourably that they would treat others to whom that reason would not apply?

Question (1) is one of fact. It is common ground that “dismissal” is caught by section [3A(1)]: see section 4(2)(d). The finding of the industrial tribunal on the reason for dismissal is stated above. It is clear that that was a reason which related to his disability. In order to answer question (2), it is necessary to compare the employers’ treatment of the applicant with the treatment of others to whom “that reason” would not apply. What is meant by “that reason?”

34. Mummery LJ then analysed the possible interpretations of “that reason” in what is now section 3A (1)(a). Did it simply mean the reason for the treatment and no more? In this case that would mean that the reason was the fact of being absent for the requisite period and thus the comparison would be with someone not absent for that period. Or did it mean the reason for the treatment but embracing the causal link to the disability? In this case that would mean that the reason was absence connected to disability and the comparison would be with those absent for the same period but for a reason not connected with any disability. The analysis is crucial. If the first interpretation is correct then there is less favourable treatment because a person not absent for the requisite period will still receive full pay. If, on the other hand, the second approach is right then there is no less favourable treatment since all absentees are treated alike (save where the absence stemmed from an accident which was work related.).

35. The Employment Tribunal and the EAT in that case had both preferred the latter interpretation. The Court of Appeal held that they were wrong to do so. Mummery LJ accepted that the term was ambiguous, but considered that it should be construed in the manner which would best give effect to the purpose of the legislation. He then continued as follows (p.963F to H):

“The result of this approach is that the reason would not apply to others even if their circumstances are different from those of the disabled person. The persons who are performing the main functions of their jobs are “others” to whom the reason for dismissal of the disabled person (that is inability to perform those functions) would not apply.

In the context of the special sense in which “discrimination” is defined in section [3A] of the Act of 1995 it is more probable that Parliament meant “that reason” to refer only to the facts constituting the reason for the treatment, and not to include within that reason the added requirement of a casual link with disability: that is more properly regarded as the cause of the reason for treatment than as in itself a reason for the treatment. This interpretation avoids the difficulties which would be encountered in many cases in seeking to identify what the appeal tribunal referred to as “the characteristics of the hypothetical comparator.”

36. In the course of giving judgment, Mummery LJ also referred to an example of what the Minister in Parliament had identified as disability related discrimination in the field of the provision of services. It concerned the café owner who refuses to have any dogs in the café, including guide dogs accompanying the blind. Lord Justice Mummery demonstrated that the employer’s preferred interpretation would not give such a disabled person a discrimination claim; the reason for the treatment was the fact that he had a dog, but all dog owners were similarly treated. However, the Minister envisaged that the blind man would be able to establish a case of prima facie discrimination in these circumstances i.e. discrimination which would be unlawful unless justified. That could only be on the assumption that the employee’s interpretation was correct. The comparison had to be with those who did not have dogs rather than non-disabled who did have dogs but for reasons wholly unconnected with any disability.

37. This case demonstrates that the approach to disability related discrimination is, as Mummery LJ pointed out, quite different from that which applies to other forms of indirect discrimination. However, it still requires the Tribunal to find the subjective reason why the employer acted as he did; that must be a disability related reason. It is not enough that the disability was causally relevant if the actual reason was not disability related: see the decision of the Court of Appeal in Taylor v OCS Group [2006] IRLR 613 per Lady Justice Smith at paras. 72-73.

Was there disability related discrimination?

76. The Tribunal found that there was no disability related discrimination, again essentially because all employees were treated alike.

77. The Respondent submits that the Tribunal reached the correct conclusion which was entirely in accordance with LondonClubs Management Ltd v Hood [2001] IRLR 719, a decision on which it heavily relies. In that case the payment of sick pay was discretionary. The employer was faced with a high level of sick pay absence and chose to exercise the discretion so as not to pay sick pay to anyone. The employee was absent with cluster headaches which it was accepted were related to his disability. He claimed that he had been subject to unlawful disability related discrimination. The Employment Tribunal found that he had been so discriminated against, but the EAT disagreed. However, this conclusion turned on a very narrow point relating to how the case had been pleaded.

78. The Employment Tribunal had concluded that there was a prima facie case of disability related discrimination because the employee was being treated less favourably than those not suffering from the disability who were not off sick and received full pay. The EAT held that this was wrong because the claim had never been for ordinary pay but for sick pay. The question which the Tribunal ought to have asked itself was whether the employee was denied sick pay for a reason related to his disability. The EAT concluded that had that question been asked, there was only one possible answer, namely that it had nothing to do with his disability at all. The reasoning of the EAT (Ms Recorder Elizabeth Slade QC) at para 16 was as follows:

“If the tribunal had asked the correct question, was Mr Hood refused sick pay for a reason related to his disability, on the facts found by it in paragraph 9 of its decision the only conclusion open to it would have been that the reason for the treatment was the application of the policy on sick pay. That reason does not relate to Mr Hood’s disability. Accordingly, the finding that LCM unlawfully discriminated against Mr Hood under [s.3A(1)] of the Disability Discrimination Act 1995 cannot stand. Because of the view that we take of the outcome of applying the correct question to the facts as found by the tribunal, a finding of discrimination under [s.3A(1)] would be perverse.” (Section numbers as now amended).

79. The Respondent relies strongly on this case and says that this applies equally here, as the Employment Tribunal found. The only reason the Appellant received what she did was because this was the effect of the sick pay policy. That was not related to her disability; it was not the disability related absence which caused the loss of pay but rather the policy of reducing pay after a particular period of illness absence. Were it otherwise, employers would be obliged to make what would effectively be “disability pay” to all disabled employees. Indeed, Mr Craig for the Respondent says that if the Appellant were right, it is misleading for her to suggest that she is seeking some modification of the sick pay scheme at all. Rather, she is claiming full pay for a period when she is not at work, at least provided the illness causing her absence to trigger the reduction in pay is disability related.

80. The Appellant does not dispute that she is effectively claiming full pay for the periods when she is not at work. But she says that on a proper analysis of the authorities it is plain that she suffered less favourable treatment for a reason related to her disability. Her case was different to that in London Clubs because she was claiming ordinary pay or sick pay in the alternative.

81. We do not dispute the correctness of the decision in London Clubs but it is a case which turns on the very narrow point indeed, namely that the claim was for sick pay, and it has no application where the claim, as here, is for pay, or alternatively for sick pay which is the equivalent to full pay (as it is here for the first twenty six weeks.). If the claim is for sick pay but no such pay is awarded to anyone, then the employee is not at a financial disadvantage as a result of being sick at all. The reason for the refusal to pay sick pay is not then the fact that the employee is absent sick; indeed, that would be a condition precedent to obtaining sick pay. Rather the reason is that the employer pays no-one sick pay when absent sick. That we think is what Ms Recorder Slade meant when she said that it was the employer’s policy which was the reason for the non payment of sick pay. That policy itself was not disability related and therefore the classification of the issue in dispute effectively determined the outcome of the case.

82. We have no doubt that the analysis in London Clubs cannot run when the claim is for ordinary pay, or indeed sick pay where full pay is given for a period of sickness. The decision of the Court of Appeal in Clark v Novacold then requires a comparison with someone who has not had the disability related sickness absence. Such a person would not have suffered the loss of pay since he would not have been absent for over twenty six weeks. It was the disability related sickness absence which took the Appellant over the sick pay threshold.

83. We think it is clear from the question which the Tribunal posed to itself and answered in the manner we have set out in para.50 above, that they fell into the trap of comparing the claimant with a non-disabled person also absent for the same length of time, rather than someone who would not have been absent at all. In so far as they were influenced by the London Clubs case they failed to recognise that it turned on its own unusual facts and ought not to have been followed in the very different circumstances of this case.

84. Furthermore, in such circumstances it is simply no answer at all for the employer to say, as he does in this case, that it was the policy rather than the disability which caused the difference in treatment. It obfuscates the real reason for the treatment simply to assert that it is the application of a policy. A policy is not an abstraction, disembodied from or independent of the rules or conditions of which it is comprised. When an employer says that he is acting in a particular way because that is what a policy requires, this is simply shorthand for referring to the particular rule or condition which dictates his response once relevant facts have been established. The issue is why subjectively he did what he did: see OCS v Taylor[2006] IRLR 613. In this case the reason for cutting pay is the fact that the employee is absent for 26 (and then 52) weeks. It cannot seriously be disputed that the absence was disability related and the reason was therefore a disability related reason.

85. Rules of such a kind are almost universally adopted as a policy because in general it is good industrial relations practice to apply rules equally to all and, as we have said, such equal application defeats any direct discrimination claim. But in this case it is the 26 week absence which, at the first stage, causes the reduction in pay. That is the reason for the reduction, not the policy; that merely dictates what is to happen once the relevant absence is established. Were the employer’s case correct then it would mean that whenever an employer had adopted a policy, he could avoid potential discrimination of this kind by asserting (which would be true) that the reason for the disputed treatment was the application of a policy and not the existence of the set of facts which caused the policy to bite in the particular case.

86. We do not see, for example, why the café owner who says “no dogs allowed” could not equally say that he was applying his policy and that it was this non-disability related policy which was the reason he acted as he did rather than the fact that the person had a dog. Yet it is plain from the Novacold case that there is disability related discrimination if the reason why the person has a dog is related to his disability.

87. It follows that in our judgment that this aspect of the appeal succeeds. There is what might be termed prima facie disability related discrimination and the only question therefore is whether it can be justified.

Q1. What has the employer done?

A. He has refused to allow the blind employee to come to work.

Q2. What was his reason for refusing to allow the blind employee to come to work?

A. Because the blind employee insisted that he would not come to work unless he was accompanied by his dog.

Q3. Was his insistence on being accompanied by the guide dog related to his disability?

A. Yes.

Q4. Would the employer have refused to allow other employees to come to work if they did not insist on being accompanied by a dog?

A. No.

Would the employer have refused to allow any employees to come to work with a dog?

The answer to that question being “Yes”, Mr Jeans submits that the blind person is not being treated less favourably.

LORD JUSTICE SEDLEY:

In cases where there is no direct discrimination, it will often be useful to take issue (c) before issue (b). The present case is an example.

LORD JUSTICE WARD: