Performance conditions disability discrimination

Posted by RM2 at 11:05 on 17 Mar 2015


Companies using performance conditions in share schemes which aim to encourage good attendance should be aware of the risks of falling foul of the law on disability discrimination.

It’s not unusual to have an aim of reducing sickness absence and rewarding good attendance, and it’s possible to include such aims as part of a share option package. However, you should take care that, by including such targets, you do not inadvertently discriminate against people whose attendance record may be affected by a disability.

In a recent case (Land Registry v Houghton and others UKEAT/0149/14), the employer operated a bonus scheme, but this did not pay out if employees received a warning about sickness absence. This happened automatically, so there was no discretion allowed even if the absence was due to the employee’s disability (despite the fact that the employer had made other adjustments to take account of that). Furthermore, even if an employee’s attendance improved as a result of a warning, the bonus could not be reinstated. This was not the case for other aspects of the bonus plan, for example, regarding conduct.

The Tribunal recognised that the plan had a legitimate aim to encourage and reward good attendance. However, the non-payment of the bonus to the employees was not proportionate in achieving that aim.

No company wants to end up in the Tribunal – with the associated costs, time and unsought for publicity – over a clause in an incentive scheme. There’s a careful balance to be struck between putting in place performance targets that are clear and unambiguous – yet allow a degree of flexibility in a situation like this.

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