In an important judgment in a case concerning the application of sick pay policies to disabled employees (O’Hanlon v HM Revenue and Customs), the Court of Appeal has held that a sick pay policy that did not provide unlimited full pay for a disabled employee who was absent from work for long periods was not discriminatory under the Disability Discrimination Act 1995 (DDA).
Mrs O’Hanlon had been employed by HM Revenue and Customs (HMRC) since 1985. Since 1988 she had suffered from clinical depression and it was accepted that this was a disability within the meaning of the DDA. From 2001 onwards she began to take long periods of absence from work so that in the four years prior to 15 October 2002 she had a total absence of 365 days of sickness of which 320 days related to her disability.
HMRC allowed all employees six months’ full pay if they were absent from work on health grounds, followed by six months on half pay, subject normally to an overriding maximum of 12 months’ paid leave in any period of four years. After that, employees were paid the equivalent of their pension rate of pay or half pay, whichever was less.
Mrs O’Hanlon claimed in the Employment Tribunal (ET) that she was substantially disadvantaged by these rules and that the failure to pay her full pay during her absence was a failure to make a reasonable adjustment to counter that disadvantage. She also claimed that she had been the subject of unjustified disability-related discrimination. Because she was not receiving full pay she was experiencing financial hardship which placed her under additional pressure, which in turn worsened her depression.
The ET held that although the effect of the sick pay rules was to subject Mrs O’Hanlon to a substantial disadvantage within the meaning of section 4A(1) of the DDA, the adjustment she sought was not a reasonable one. The ET also found that there was no disability-related discrimination, but even if there was, it was justified.
The EAT found that it would be rare to find a case where the duty to make reasonable adjustments would entail paying a disabled employee who is absent from work a higher rate of sick pay than would be payable to a non-disabled absentee. This would amount to positive discrimination in favour of the disabled employee rather than prevention of discrimination against them. The DDA is intended to recognise the dignity of disabled people and to require modifications to enable them to play a full part in the world of work, not to treat them as ‘objects of charity’, which could in fact act as a positive disincentive to return to work.
Although the ET had erred in law in concluding that there was no disability discrimination when reducing the pay of someone absent from work on account of their disability, it was entitled to find that any such discrimination was justified if the normal rule in that place of employment is to reduce an employee’s pay if he or she is absent from work. There had not therefore been a breach of the DDA.
The Court of Appeal judged that the EAT was right to dismiss Mrs O’Hanlon’s appeal. In its view, it would be wholly invidious for an employer to have to decide 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.
Employers will not be guilty of unlawful discrimination for applying their standard sick pay policy to disabled employees who are absent on account of their disability. For advice on all discrimination issues, please contact us.