Pay protection may be a reasonable adjustment

29.09.2016

The EAT has confirmed in G4S Cash Solutions (UK) Limited -v- Powell 2016 that continuing to pay an employee their old salary, notwithstanding a change in role, may be a reasonable adjustment in appropriate circumstances.
Mr Powell was employed by G4S as an engineer. He subsequently developed back problems and was no longer able to carry out work that involved lifting and working in confined spaces. It was accepted by the parties that this amounted to a disability. He was offered a new position as a ‘key runner’ instead, and worked in this position at his old salary for nearly a year. In May 2013, G4S informed Mr Powell that they were considering discontinuing the role for organisational reasons; G4S later agreed to make the role permanent, but on the basis of a salary reduction of 10%. Mr Powell refused to accept this and was dismissed.
At Tribunal, Mr Powell sought to argue that the contract had been varied when he commenced the key runner position, such that he was employed on a permanent basis at his old salary. The Tribunal disagreed – there had been no such variation. However, the Tribunal held that it would have amounted to a reasonable adjustment to continue to pay Mr Powell at his old (slightly higher) salary. G4S appealed, and Mr Powell cross-appealed.
The EAT upheld Mr Powell’s cross-appeal. There had indeed been a contractual variation although the Tribunal had not enquired fully into precisely what had been agreed, and had made other errors of law. However, it was not necessary to remit the case because the EAT upheld the Tribunal’s decision on the reasonable adjustment point. Although it would not be an everyday occurrence, there was no reason in principle why protecting an employee’s pay could not be a reasonable adjustment. The question to be determined in each case was whether or not the adjustment was reasonable in the circumstances.
In this case, Mr Powell had carried out the new job at his old salary for nearly a year, and had been led to believe that it was a long-term change. The cost to the employer was not significant, and G4S is a company with substantial resources. The main reason for lowering the salary was said to be the possibility of discontent from other employees but, in the words of the EAT, this was an “unattractive” reason. On the facts of this case therefore, the Tribunal had been entitled to hold that the adjustment was reasonable.