Refusing to pay disabled employees bonus was discriminatory

The Employment Appeal Tribunal (EAT) has upheld a decision of the Employment Tribunal (ET) in Land Registry v Houghton and Others that withholding bonuses to disabled employees who have been warned in relation to sickness absence amounted to discrimination.

The Law

Under the Equality Act 2010 employers must not treat disabled employees unfavourably because of something arising out of their disability. An employee’s disability itself does not need to be the reason for the unfavourable treatment. The unfavourable treatment must be caused by something that is a consequence of disability, in this case sickness related absence.

There will be no discrimination if the employer can show that it did not know or could not reasonably be expected to have known that the employee was disabled. Employers will also have a defence if they can show that the treatment is objectively justifiable (i.e. a proportionate means of achieving a legitimate aim); in other words that there was no less discriminatory treatment they could have applied instead.

The Facts

The Land Registry operated a bonus scheme for its employees. Bonuses were not paid to those disabled employees who had received a formal warning for sickness related absence. The Land Registry made reasonable adjustments to avoid the employees being absent and therefore falling outside the bonus scheme. Nonetheless, during the year in question the
organisation’s disabled staff were all absent for reasons related to their disabilities and were consequently denied bonuses.

ET Decision

The employees claimed that by failing to pay them a bonus, the Land Registry had discriminated against them because of something arising from their disabilities; that is their sickness related absence. The ET agreed, ruling that the reason for the non-payment of the bonuses was the employees’ absence, which was a result of their disabilities.

The ET accepted that the Land Registry had a legitimate aim to encourage good performance and attendance but that the bonus scheme was not a proportionate means of achieving that aim because it did not allow for the possibility that the
employees could improve their attendance record during the course of the year, as three of the employees in question in fact did. Furthermore, conduct related warnings could be ignored for the purposes of the bonus scheme but sickness related absence warnings could not.

The EAT Decision

The Land Registry appealed to the EAT claiming that the connection between the employees’ disabilities and the nonpayment of bonuses was too remote. The Land Registry asserted that the decision to deny the employees a bonus was discretionary and was related to their absences, not their disabilities. The EAT, however, held that were it not for the employees’ disabilities they would not have had the same level of sickness absence and such absence was the reason for the non-payment of bonuses.

The EAT also made it clear that what was important was not the motive of the Land Registry in withholding the bonus but what had caused that treatment. The employees’ disabilities caused their absences and in turn those absences were the reason that they had not received their bonuses. The Land Registry could not justify denying these employees a bonus on those grounds and the employees were therefore entitled to compensation.


This case provides a cautionary tale for employers imposing policies which have the effect of treating disabled employees unfavourably because of something caused by their disability. Policies which are inflexible and do not allow employers to exercise discretion or flexibility will ultimately make the employer more vulnerable to discrimination claims, especially where there are potentially less discriminatory routes to achieve the same ends available.

Whilst employers may justify indirectly discriminatory treatment if it is a proportionate means of achieving a legitimate aim, it is difficult for an employer to try to rely on grounds for justification not previously considered or articulated after the event.

Furthermore where, as in this case, there is inconsistency between how employers treat conduct warnings and warnings for sickness absence, an ET is more likely to find that an act of discrimination has occurred. Employers would therefore be wise to seek advice on the implementation/ applications of policies they consider might have a discriminatory impact.

Click here to read our other newsbrief articles on time spent on trade union activities is “working time”,  “Dirty Leeds” email justifies summary dismissal, in cases where an employee is unfit for work – when does the duty to make reasonable adjustments arise? Suspending a disciplinary hearing where a grievance is raised, changing terms and conditions of employment – update and in a nutshell.

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