What happened?
In the recent case of Land Registry v Houghton the Employment Appeal Tribunal (EAT) ruled that an employer had discriminated against disabled employees by operating a bonus scheme which disqualified employees who had received a warning for sickness absence.

The Land Registry operated a discretionary bonus scheme which prohibited employees from receiving a bonus if they had received a formal warning during the relevant financial year. When determining bonus entitlement, managers had discretion to ignore warnings linked to conduct, however there was no such discretion in relation to warnings for sickness absence. The claimants were disabled for the purposes of the Equality Act 2010. Although the Land Registry had implemented various reasonable adjustments to assist the claimants, including adjusting the trigger points leading to a warning, each of the claimants eventually received a warning for disability-related sickness absence and so they were ineligible for a bonus.

The claimants brought claims for discrimination arising from a disability which succeeded before the Employment Tribunal. The Land Registry appealed to the EAT on a number of grounds. The EAT also ruled in favour of the claimants stating that automatically disentitling employees to a bonus due to absences resulting from their disability was clearly unfavourable treatment arising from a disability. Without a disability the claimants would not have such high levels of sickness absence and therefore would not have received a warning, which was why the bonuses were not paid.

What does this mean?
Employers should be wary when designing bonus schemes which could discriminate against employees with a disability. In this case failure to pay a bonus due to disability-related absences was deemed to amount to unfavourable treatment arising from a disability. Employers are able to justify this type of treatment if they can show that the treatment is a proportionate means of achieving a legitimate aim. The Land Registry’s legitimate aim was acknowledging employees’ contributions and encouraging and rewarding good attendance. However, the EAT ruled that the bonus scheme in place was not a proportionate means of achieving this aim. The scheme did not grant managers discretion to ignore absence warnings when deciding upon bonuses and there was no scope to recognise an improvement in attendance following a warning (which some of the claimants had demonstrated). If the bonus scheme had been flexible enough to address these issues then the case may have been decided differently.

What should we do?
Employers operating bonus schemes which include attendance as a performance metric should ensure that the schemes are sufficiently flexible to allow management to exercise discretion when considering disability-related absence. Applying a rigid policy to all cases is more likely to give rise to successful discrimination claims.