An undertaking to give an employee a severance package can be a reasonable adjustment

An undertaking to give an employee a severance package can be a reasonable adjustment

Beneficial variations to an employment contract held to be void where the principal reason is a TUPE

The Employment Appeal Tribunal (EAT) confirmed in the recent case of Hill v Lloyds Bank plc that an employer’s undertaking to offer a severance package to its employee - where it was not possible to comply with the employee’s request not to work with certain colleagues - was a reasonable adjustment for the purposes of the Equality Act 2010.

 

Background

Under the Equality Act, employers have a duty to make reasonable adjustments where a disabled employee is placed at a "substantial disadvantage" by the employer’s provision, criterion or practice.

The facts

In this case, Mrs Hill, an employee of Lloyd’s Bank (Lloyds) for over 30 years, took a period of sick leave for stress which she claimed to have been a result of bullying and harassment by two colleagues, anonymised as Ms M and Mr B.

Upon her return to work, Mrs Hill did not work with either Ms M or Mr B, but the prospect of doing so filled her with “absolute dread and fear”. She made two requests to Lloyds. Firstly, she sought an undertaking that it would not rearrange its current job roles so that Mrs Hill would have to work with either of them. Secondly, in the event there was no practical alternative to working with them, that Lloyds would offer her a severance package equivalent to the sum that she would have been entitled to receive on redundancy.

Whilst Lloyds confirmed that it would make "some efforts" to ensure that Mrs Hill would no longer work or report to Ms M and Mr B, it could not provide Mrs Hill with an absolute guarantee. Lloyds also refused to fulfil Mrs Hill’s second request, informing her that it would be unable to offer a severance package in this scenario on the basis that her role would not actually be redundant.

The claim

Mrs Hill brought a claim to the Employment Tribunal (ET) for failure to make reasonable adjustments, which she won. Mrs Hill was disabled, suffering from reactive depression. The ET found that Lloyds had “a practice of not giving undertakings in such situations, only words of comfort” and held that this practice placed Mrs Hill at a substantial disadvantage (when compared with a non-disabled person who had been bullied). The ET found that giving an undertaking in the form proposed by Mrs Hill would have alleviated this disadvantage.

On appeal, the EAT rejected Lloyds’ argument that the refusal to give an undertaking was not a practice, but a one-off decision. It also rejected the argument that it was unreasonable for Lloyds to commit to making a substantial severance payment at some point in the future. The EAT said that it could be reasonable too given an undertaking to provide a disabled employee with certain benefits in the event of certain circumstances arising in the future.

Lloyds also argued that the purpose of the reasonable adjustment should be to keep an employee in work, not to agree on something to assist her to leave. The EAT said that the undertaking would allow Mrs Hill to continue to work without fear, so its underlying purpose was to keep her at work.

Comment

The duty to make reasonable adjustments can be very broad in its reach. This case shows that employers may have to go as far as giving formal undertakings to disabled employees to pay them severance payments in certain circumstances. The EAT did however say that the circumstances that would require such an undertaking would be rare.

It is relatively common for grievances to be brought where relations have broken down between colleagues. Employers should ensure that any genuine concerns are given thorough consideration, in particular, where such concerns are raised by a disabled employee. Early informal resolution of such concerns may avoid it becoming the formal litigious issue that this case did.  

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