403: Can inadequate dismissal pay for sickness cause disability discrimination?

In McAllister v Commissioners for Her Majesty’s Revenue and Customs (HMRC), the Employment Appeal Tribunal (EAT) recently upheld a Tribunal’s decision that dismissing an employee on long-term sickness absence and reducing his payment under the Civil Service Compensation Scheme (CSCS) did not amount to discrimination arising from disability.

Under section 15 of the Equality Act 2010, ‘discrimination arising from disability’ may occur where an employer treats an employee unfavourably because of something arising in consequence of the employee’s disability, and the employer cannot justify the treatment by showing that it is a proportionate means of achieving a legitimate aim.

Mr McAllister worked as an administrative officer for HMRC from 2011 until his dismissal in 2018. He suffered from anxiety and depression and was on sick leave for long periods of time. In the three years leading up to his dismissal, he was absent for 245 days on 23 different occasions. Eventually Mr McAllister was dismissed for capability reasons. This meant that he was entitled to a compensation payment under the CSCS. However, this was reduced by 50% because he had been disruptive, failed to answer calls, delayed returning forms, and been late during a phased return to work. Mr McAllister appealed successfully to the Civil Service Appeal Board which increased his award from 50% to 80%. He also brought an Employment Tribunal claim alleging that his dismissal and the reduction in his CSCS payment amounted to discrimination arising from disability.

The Tribunal held that Mr McAllister had been dismissed for something arising in consequence of his disability (ie his absence from work). However, it accepted that HMRC could objectively justify this unfavourable treatment as a proportionate means of achieving its aims of ensuring satisfactory attendance, maintaining a fair sickness management regime, and using resources efficiently. Mr McAllister’s dismissal was therefore not discriminatory.

The Tribunal also held that although the aims of distributing the CSCS fund fairly and economically in line with the applicable guidance were legitimate, reducing Mr McAllister’s CSCS payment by 50% was disproportionate given that a less discriminatory reduction of 20% could have been awarded. His claim for discrimination arising from disability was therefore upheld on the basis of the original reduction, although the Civil Service Appeal Board’s later award of 80% was held to be proportionate and not a breach of section 15.

The EAT rejected Mr McAllister’s appeal against the decision that his dismissal was not discriminatory. The Tribunal had properly concluded that his dismissal was objectively justified. It was clear that McAllister’s continued absences had a real adverse impact on staff morale and resources, and the Tribunal had undertaken the required balancing exercise by considering the discriminatory impact of his dismissal.

The EAT also rejected Mr McAllister’s appeal against the finding that a CSCS payment of 80%, rather than the full 100%, was objectively justified. Mr McAllister’s entitlement to a payment under the CSCS arose because of his dismissal due to disability-related absences. However, the CSCS payment was a benefit, not unfavourable treatment. Mr McAllister was in fact treated more favourably than if he had been dismissed for a reason other than his disability, and the reduction in his CSCS payment did not alter this.  His claim, therefore, fell at the first hurdle.

For a section 15 claim to succeed, an employee must show that they have been treated unfavourably because of something arising in consequence of their disability. As this case illustrates, the treatment must be genuinely unfavourable. Advantageous treatment (such as compensation for dismissal) cannot be unfavourable just because it might have been more favourable. Even if reduced, compensatory payments such as a CSCS award or an enhanced disability pension still constitute advantageous treatment.

This judgment helpfully confirms that ensuring satisfactory attendance, limiting adverse impacts on staff morale, and applying absence policies fairly and consistently are all legitimate aims to consider when dealing with long-term sickness absence. However, employers will still need to show that they have considered all relevant medical evidence and followed a fair procedure.

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