Can offering a severance package be required as a reasonable adjustment?

In the recent case of Hill v Lloyds Bank plc the Employment Appeal Tribunal was asked to consider whether it would be required as a reasonable adjustment for Lloyds to give an undertaking to an employee that she would not be required to work with certain colleagues in the future, and that if there was no alternative it would offer her a severance package equivalent to redundancy.

The facts

Mrs Hill had been employed by Lloyds for over 30 years. She was on sick leave between July 2016 and October 2017 for stress, which she said was caused by bullying and harassment by two colleagues, M and B. She had raised a grievance in relation to M, but this was not upheld by the bank. When Mrs Hill came back to work, she did not want to work with M or B and this was agreed. However, she was worried that in the future she may have to work with them, and claimed that this prospect filled her with absolute dread and fear, to the extent that she felt physically sick. Mrs Hill sought an undertaking from her employer that she would not have to work with or report to either M or B, and that in the event that business demands left her employer with no practical alternative, it would offer her a severance package equivalent to what she would have received on redundancy.

Lloyds refused to give the undertaking and Mrs Hill brought an Employment Tribunal claim for failure to make reasonable adjustments under section 20 of the Equality Act 2010. It was accepted that Mrs Hill was a disabled person by reason of reactive depression. She argued that she was placed at a substantial disadvantage compared to a non-disabled person in that she was in a state of constant fear, worry and stress that she may be required to work with M or B, which exacerbated her physical and mental symptoms.

The duty to make reasonable adjustments

Section 20 of the Equality Act 2010 imposes a duty on employers to make reasonable adjustments where a disabled employee is placed at a substantial disadvantage by an employer’s “provision, criterion or practice”. It is for an Employment Tribunal to decide objectively what amounts to a reasonable adjustment in the circumstances. It will take into account matters such as whether the adjustment would alleviate the disabled person’s disadvantage, the cost of the adjustment in light of the employer’s financial resources, and any disruption that the adjustment might have on the employer’s activities.

The decision at Employment Tribunal level

The Employment Tribunal upheld the claim. It found that Lloyds had a practice of not giving undertakings, only words of comfort in such situations and that this practice placed Mrs Hill at a substantial disadvantage because it meant her working in fear. In the Tribunal’s view, the undertaking proposed would have been reasonable to give and therefore Lloyds had failed in its duty to make reasonable adjustments. Lloyds appealed the decision to the Employment Appeal Tribunal.

The decision on appeal

The Employment Appeal Tribunal dismissed the appeal. It rejected Lloyds’ argument that its refusal to give the undertaking was a one-off decision rather than a practice capable of falling within section 20 of the Equality Act 2010. The Employment Tribunal had made a clear finding of fact that it made a practice of not giving such undertakings. It also rejected Lloyds’ arguments that it was unreasonable for them to be required to commit to making a severance payment at some point in the future when Mrs Hill may not in fact be redundant, and that the purpose of a reasonable adjustment is to keep an employee in work, not to make provision for them to leave. The Employment Appeal Tribunal felt that it was reasonable to give the undertaking in the circumstances, as its purpose relating to the severance payment was to give a ‘backstop’ that would keep Mrs Hill at work without fearing that she would be required to work with M or B.

Conclusion

This case illustrates how widely the duty to make reasonable adjustments can be interpreted. Based on this case, employers may be concerned as to the adjustments that they might have to make to provide assurances to disabled employees who do not wish to work with certain colleagues. Whilst it is important that employers give proper consideration to genuine concerns expressed by disabled employees in this type of situation, the Employment Appeal Tribunal in this case felt that an undertaking in the form given will be relatively rare. The size and resources of Lloyds will no doubt have been a relevant factor for the Tribunal and the EAT when considering reasonableness, and it may not be reasonable for a smaller employer to give such an undertaking. What amounts to a reasonable adjustment will inevitably vary from case to case, depending on the circumstances. Where possible, taking steps to deal with an employee’s concerns at an early stage might prevent things from escalating, and we can advise you on strategies in relation to this.