Bonus Linked to Attendance Record Amounted to Discrimination
The Employment Appeal Tribunal (“EAT”) in the case of Land Registry v Houghton, was tasked with deciding whether an employer had committed an act of discrimination by withholding a bonus payment based on the attendance record of a handful of disabled employees.
By way of background, the Equality Act 2010 prohibits discrimination which arises from an employee’s disability. Such discrimination can take place where an employer treats an employee unfavourably because of something arising in consequence of the employee’s disability, and where the employer cannot show that the treatment of such an employee is a proportionate means of achieving a legitimate aim.
For conduct of this nature to be found unlawful, there needs to be a connection between the disability itself, and whatever led to the unfavourable treatment in the first place. There also needs to be knowledge on the part of the employer, of the employee’s disability.
In Land Registry v Houghton, the employer operated a discretionary bonus scheme, which excluded those employees who had received an absence related disciplinary warning during the relevant reference period.
Whilst the employer did amend the trigger points that would lead to a disciplinary warning being issued for absence related issues, as far as the bonus entitlement was concerned, the employer gave itself no discretion to ignore an absence related warning in determining whether an employee was entitled to a bonus or not. Conversely, it did give itself such discretion to ignore disciplinary warnings related to an employee’s conduct.
The result was that the affected employees failed to receive a bonus. They brought Employment Tribunal claims citing discrimination arising from disability, and the claims succeeded before the Employment Tribunal.
The Land Registry appealed, arguing amongst other things, that the connection between the employees’ disabilities and the payment of their bonuses was too remote, and that the disciplinary warning issued could equally have been issued to non-disabled employees.
The EAT dismissed the appeal and upheld the original decision of the Employment Tribunal. It was found that the ineligibility to receive a bonus amount to unfavourable treatment as a direct consequences of the employees’ disabilities, and that had they not suffered from such disabilities, their attendance record would have been better and would have entitled them to receive the bonus.
Had the Land Registry afforded itself more discretion in being able to ignore the absence related disciplinary warning, there may have been a greater chance of them showing that the unfavourable treatment of the disabled employees was nevertheless, a proportionate means of achieving a legitimate aim.
As they were unable to do so however, the claims succeeded. The case is a good reminder for employers who operate bonus schemes, to ensure as far as possible, that the bonus eligibility criteria do not produce potentially discriminatory decisions where the payments are not made to some individuals within the workforce. Ensuring a level of flexibility within such criteria is often of crucial importance as the Land Registry discovered on this occasion.