Bonus Schemes Linked to Attendance: Employers Beware!

In the case of Land Registry v Houghton and others UKEAT/0149/14, one of the rules under the terms of the Land Registry’s discretionary bonus scheme, was that any employee who received a formal warning in respect of sickness absence during the relevant financial year, was not eligible to receive a bonus. When five claimant, all disabled, were absent due to sickness during the 2012 financial year, they received warning which rendered them ineligible for bonus.

The Employment Appeal Tribunal (“EAT”) upheld the Employment Tribunal’s decision; the absences leading to the warning were disability-related and the warning automatically disentitled the claimants to the bonus. This was clearly sufficient to amount to unfavourable treatment in consequence of disability. Without the disability, each claimant would not have had the same level of sickness absence, and that is why the bonus was not paid.

The EAT found that, the fact that the Land Registry was unaware of the claimants’ disabilities was irrelevant as there was knowledge as to the claimants’ disability-related absences. The EAT also found that there was an absence of valid justification for the disability discrimination that had occurred.

Employers should take care to ensure that flexibility is maintained in bonus schemes that are linked to attendance. Rigid schemes are likely to lead to employers withholding payment in circumstances where it is likely to be discriminatory.

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