266: Can promising to offer a severance payment be a reasonable adjustment?

Employers are under a duty to make reasonable adjustments where a disabled employee is put at a substantial disadvantage by a provision, criterion or practice. A tribunal will decide what is reasonable in the circumstances by looking at factors such as financial resources, practicality and effectiveness. If an employee succeeds in a reasonable adjustments claim, the tribunal may award compensation or make a recommendation that the employer takes steps to reduce or remove the disadvantage. Failing to comply with a recommendation could result in the employee being awarded increased compensation.

In Hill v Lloyds Bank plc, the Employment Appal Tribunal (EAT) considered a decision made in the Employment Tribunal that it would have been a reasonable adjustment for Lloyds Bank to give an undertaking to a disabled employee who claimed to have been bullied by two colleagues, that she would not be required to work with them going forward, and that if there was no alternative, it would offer her a redundancy severance package.

Mrs Hill has worked for Lloyds Bank for over 30 years. She went on long-term sick leave as a result of reactive depression which she asserted was due to bullying and harassment by two colleagues, M and B. This condition meant that she was disabled for the purposes of the Equality Act 2010. On her return, it was agreed that she would no longer work with them, but she remained highly anxious that this might be required in future. She therefore requested an undertaking that she would not be required to work with or report to M or B, and that if there was no practical alternative, she would be offered a severance package equivalent to redundancy. The Bank refused and Mrs Hill brought a disability discrimination claim. She alleged that failing to provide the undertaking placed her at a substantial disadvantage compared to a non-disabled person because she was constantly fearful that she would be required to work with M or B, which exacerbated the physical and mental symptoms associated with her reactive depression.

The Employment Tribunal upheld Mrs Hill’s claim. It found that Lloyds Bank’s practice of not giving similar undertakings, only words of comfort, placed Mrs Hill at a substantial disadvantage since it caused her to suffer a level of anxiety and fear which a non-disabled person who had been bullied and harassed would not suffer. The undertaking requested by Mrs Hill would have alleviated this disadvantage and it would have been reasonable for the Bank to provide it. She was awarded compensation of £7,500 for injury to feelings and the Tribunal made a recommendation requiring Lloyds Bank to give a similar undertaking, although this was subsequently set aside.

On appeal, Lloyds Bank argued that it could not be liable because its refusal to give an undertaking was a one-off decision, not a ‘practice’. The EAT rejected this argument because the Tribunal had clearly concluded from the witness evidence that Lloyds Bank had a practice of not giving such undertakings. It also agreed that the undertaking would have alleviated Mrs Hill’s anxiety, and it would have been a reasonable adjustment for Lloyds Bank to give the undertaking in the form she had requested.

Lloyds Bank also argued that it was unreasonable to be required to give an open-ended commitment to pay a sizeable severance payment since Mrs Hill might not be redundant, and because the point of a reasonable adjustment is to keep a disabled employee in work, not make provision for them to leave. The EAT rejected these arguments, noting that the purpose of this undertaking was to enable Mrs Hill to continue her employment without fear that she would need to work with M and B, by giving her a comfort ‘backstop’. There was no objection in principle to an Employment Tribunal making a recommendation that an employer give a written undertaking with financial implications that would remain in place indefinitely. The question of what recommendation should be made was remitted to the Employment Tribunal.

The EAT’s decision means that giving a written undertaking about a future severance package may be considered a reasonable adjustment if it is linked to keeping a disabled employee in work.

This case may result in more employees requesting written undertakings, particularly where they claim to be working in fear of a manager, and even where allegations about that manager have not been upheld in internal grievance procedures or tested in Tribunal proceedings. However, the size and resources of an employer are likely to be relevant to reasonableness. It will be interesting to see the final recommendation ordered by the Tribunal in this case and the rationale for it, not least because the redundancy scheme payment requested by Mrs Hill was around £130,000, and she would not actually be redundant in these circumstances or otherwise entitled to that amount.