Appeal No. UKEAT/0263/07/CEA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 28 June 2007
Judgment handed down on 18 September 2007

Before
HIS HONOUR JUDGE PETER CLARK
MR D WELCH
MR S YEBOAH

E A GIBSON SHIPBROKERS LTD	APPELLANT

MR J STAPLES	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR JOHN BOWERS QC
(Of Counsel)
and
MS LUCY BONE
(Of Counsel)
Instructed by:
CMS Cameron McKenna
Solicitors
Mitre House
160 Aldersgate Street
London
EC1A 4DD

For the Respondent	MR GARRETH WONG
(Of Counsel)
Instructed by:
Messrs Bates Wells & Braithwaite
Solicitors
Scandanavian House 
2-6 Cannon St
London
EC4M 6YH	

SUMMARY

DISABILITY DISCRIMINATION

Reasonable adjustments

Less favourable treatment

Adequacy of reasons

Sick pay as a reasonable adjustment.  Other adjustments which could prevent substantial disadvantage to the Claimant (dismissal).  The ‘Tarbuck’ point.  Adequacy of reasons.  

Appeal allowed and issue remitted to same Employment Tribunal for reconsideration.

HIS HONOUR JUDGE PETER CLARK

1.	This is an appeal by E A Gibson Shipbrokers Ltd, the Respondent before an Employment Tribunal sitting at London Central, chaired by Mr C P Baron, sitting on, we are told (contrary to the information given at the head of the Employment Tribunal’s Judgment)  22-25 January 2007, followed by a further day’s deliberations in private, against part of that Employment Tribunal’s Reserved Judgment, registered with reasons on 3 April 2007.  The principal issues before the Employment Tribunal were (1) was the Claimant, Mr John Staples, disabled for the purposes of the Disability Discrimination Act 1995 (DDA); (2) if so, did the Respondent unlawfully discriminate against him contrary to the DDA (3) was the Claimant unfairly dismissed by the Respondent and (4) was the Respondent in breach of contract in failing to pay the Claimant’s notice pay at the full contractual rate?  The Employment Tribunal answered all 4 questions in the affirmative.  This appeal is limited to a challenge to the second of those issues.  We shall describe the parties as they appeared below.

Factual background
2.	The facts material to the question of disability discrimination were these.  The Respondent carries on the business of ship brokers.  The Claimant, born on 15 December 1948, commenced employment with the Respondent in October 1991.  He began as a broker, was appointed a director of the Company on 1 July 1996 and acted as executive director responsible for business development from 19 August 1998 until 7 February 2003, when he reverted to the role of ordinary director.

3.	In 1999 the Claimant went through a divorce.  On 22 February that year he wrote to Mr Lilley, Managing Director, saying that due to his personal problems he felt unable to perform to the expected standards and tendered his resignation.  Mr Lilley did not accept that offer but instead reduced the number of accounts handled by the Claimant, initially for a 6 month period, later extended to the end April 2000, when the Claimant returned to full-time working.

4.	On 16 August 2004 the Claimant was admitted to hospital as an emergency case.  He had a heart problem.  He remained off work up until his eventual dismissal on 1 March 2006 and subsequent unsuccessful appeal in April 2006.  The Employment Tribunal found that the Claimant’s relevant medical condition was recurrent atrial arrhythmia, that is episodes of increased heart rate causing him to require rest and occasionally leading to him becoming dizzy and experiencing blackouts.  He was disabled within the meaning of Section 1 DDA throughout the period from 16 August 2004.

5.	Prior to the episode on 16 August 2004 the Claimant’s work involved a degree of long haul travel and entertaining clients.  He was paid by way of salary and bonus annual remuneration of the order of £280,000 gross.  His contract of employment provided for sick pay; 26 weeks at full basic salary and a further 26 weeks at half pay.  He also participated in a PHI Scheme through an external insurer, UNUM.

6.	Following 6 months full sick pay the insurer began payments under the PHI Scheme on 15 February 2005.  Those payments represented the equivalent of half basic salary plus 50 per cent of the average of fluctuating emoluments paid over the previous 3 years.  In the Claimant’s case the benefit amounted to 75 per cent of his insured earnings.

7.	In August 2005 UNUM decided to cease payments under the PHI Scheme.  Against that decision the Respondent appealed.  For the purposes of that appeal medical evidence was obtained from the Claimant’s treating Consultant Cardiologist, Dr Milne.  Letters and reports from Dr Milne dated 6 July, 7 and 14 September 2005 and 11 January 2006 were submitted to the insurers and copied to the Respondent.  At no time during the employment did the Respondent seek its own medical evidence, from an Occupational Health expert or otherwise.

8.	On 30 September 2005 UNUM ceased payments under the PHI Scheme.  However the Respondent then made a like payment to the Claimant until February 2006.

9.	On 23 February 2006 a meeting took place between the Claimant and Mr Brook, Company Secretary and Finance Director.  Following that meeting Mr Brook dismissed the Claimant on ill-health capability grounds by letter dated 1 March.  An appeal by the Claimant to Mr Lilley against that decision was heard on 6 April and dismissed by letter dated 20 April 2006.

DDA
10.	Section 3A of the Act, as amended, creates 3 forms of discrimination, categorised by Sedley LJ in O’Hanlon v Commissioners for HM Revenue & Customs [2007] IRLR 404 (CA), paragraph 93 as follows:

(1)	direct discrimination ‘on the grounds of a person’s disability, which is not open to justification; Section 3A(5) and (4);

(2)	disability-related discrimination, which is open to justification; Sections 3A(1) and (3), and we would add, 3(6);

(3)	failure to make reasonable adjustments; Sections 3A(2), 4A and 18B.

11.	In the present case we are concerned with the second and third forms of discrimination, but not the first (direct discrimination).

12.	By Section 4 discrimination is unlawful if the employer discriminates against the disabled employee by dismissing him or subjecting him to a detriment (Section 4(2)(b)). 

13.	The duty to make reasonable adjustments is set out in Section 4A, which provides:

“(1)     Where –
(a)     a provision, criterion or practice applied by or on behalf of an employer, or
(b)     any physical feature of premises occupied by the employer, 
places the disabled person concerned at a substantial disadvantage in comparison with persons who are not disabled, it is the duty of the employer to take such steps as it is reasonable, in all the circumstances of the case, for him to have to take in order to prevent the provision, criterion or practice, or feature, having that effect.”

14.	Mr Bowers QC submits that 3 questions arise under Section 4A in the present case (which does not concern ‘physical features’):

(1)	Is the Claimant at a substantial disadvantage in comparison with the non-disabled comparator?

(2)	Is it reasonable for the Respondent to make adjustments?

(3)	Would those adjustments prevent the relevant provision, criterion or practice (PCP) having that effect?

We shall return to that formulation later in this judgment.

15.	During argument we draw attention to the analysis of the former Section 6 DDA (now Section 4A) by His Honour Judge Serota QC in Smith’s Detection Watford v Berriman (UKEAT/712/04 and 144/05. 9 August 2005), paragraph 85: An Employment Tribunal must identify:

(a)	the relevant arrangements (now PCP) made by the employer

(b)	the relevant physical features (immaterial here)

(c)	the identity of non-disabled comparators (if appropriate)

(d)	the nature and extent of the substantial disadvantage suffered by the Claimant.

16.	That analysis was adopted and applied by His Honour Judge McMullen QC in London Borough of Barnet v Ferguson (UKEAT/0220/06/DA.  18 September 2006), paragraphs 21-25.  Failure to follow that approach was said, by the Employment Appeal Tribunal in both those cases, to amount to an error of law.  We understand that those 2 unreported cases were not cited to Mr Baron’s Tribunal below.

17.	In determining whether it is reasonable for the employer to take a particular step in order to comply with a duty (once found) to make reasonable adjustments, the Employment Tribunal must consider the matters set out at Section 18B(1).  In particular, we note (Section 18B(1)(a): the extent to which taking the step would prevent the effect in relation to which the duty is imposed.

The Employment Tribunal decision
18.	Reasonable adjustments
The Employment Tribunal’s conclusion that the Respondent had failed in its duty to make reasonable adjustments falls into 2 categories:

(a)	a phased return to work for the Claimant; reduced responsibilities and possible alternative employment (Reasons, paragraphs 76-89)
(b)	sick pay during February 2006.

19.	Disability-related discrimination
At paragraph 89 of their Reasons, having found a failure on the part of the Respondent to make the adjustments under category (a) above, the Employment Tribunal went on to find that had the adjustments been made the Claimant would not have been dismissed; consequently he was subjected to disability-related discrimination under Section 3A(1) which could not be justified.  They reached a similar conclusion in relation to the sick pay adjustment (paragraph 93).

20.	We shall return to the Employment Tribunal’s reasoning in relation to each of these findings when considering the relevant grounds of appeal.

The Appeal
21.	In broad terms, Mr Bowers identifies the live grounds of appeal under 3 headings:

(1)	Inadequate reasons given by the Employment Tribunal for their finding of a breach of duty in relation to what we have described as the category (a) adjustments (Reasons)
(2)	The ‘Tarbuck point’
(3)	Sick pay.

It is convenient to take those issues in a slightly different order.  We begin with:

The Tarbuck point
22.	That shorthand expression was coined and explained by His Honour Judge McMullen QC in NCH Scotland v McHugh (UKEATS/0010/06/MT.  15 December 2006), paragraph 34.  In short, is the failure by an employer to consider the making of reasonable adjustments of itself a breach of the Section 4A duty?  The Employment Appeal Tribunal in Mid-Staffs General Hospital Trust v Cambridge [2003] IRLR 566 (Keith J presiding) thought that it was; a different division (Elias P and members) disagreed in Tarbuck v Sainsbury’s Supermarket Ltd [2006] IRLR 664; a view repeated by the President in Spence v Intype Libra Ltd (UKEAT/0617/06/JOJ.  27 April 2007.)  The point also arose in Hay v Surrey County Council [2007] EWCA Civ 93.  16 February 2007.  However, it was accepted on behalf of the Claimant in that case that Tarbuck was correctly decided and should be followed in preference to Mid-Staffs.  The Court of Appeal declined to affirm that Tarbuck was correct, in the absence of argument (per Buxton LJ, paragraph 10).

23.	In these circumstances Mr Wong accepts, for the purposes of this Employment Appeal Tribunal hearing, that Tarbuck should be followed whilst reserving his position to argue the point in the Court of Appeal.  We note that the point was in issue in Spence and that the President gave permission to appeal in that case.

24.	Mr Baron’s Tribunal specifically brought Tarbuck to the attention of the advocates appearing below (reasons, paragraph 5), having been referred to Mid-Staffs.  They do not there indicate which line of authority they chose to follow.  For our part, we shall follow Tarbuck.

Reasons
25.	The Employment Tribunal’s self-direction as to the Section 4A duty to make reasonable adjustments is to be found at paragraph 75 of their Reasons, where they said:

“75     The provisions of section 4A of the Act are set out above.   As Mr Wong pointed out, the “provision criterion or practice” in question can include the requirements of the job.  The “substantial disadvantage” in question in these proceedings is the dismissal of a Claimant.  If there are adjustments which the employer could have made to prevent the dismissal taking place, then it is the duty of the employer under section 4A to take such steps if they are reasonable in all circumstances of the case.  The steps must be such as to prevent the provision, criterion or practice putting the employee at the substantial disadvantage.  In other words, they must be steps which would have prevented the dismissal being effected.  The examples of the steps which it may be reasonable to take are now set out in section 18B(2) of the Act.  The factors to which particular regard must be paid in considering the issue are set out in section 18B(1).”

At paragraph 76 the Employment Tribunal set out the following adjustments suggested by Mr Wong on behalf of the Claimant:

“76.1    a phased return to work;
76.2     additional support to enable the Claimant to get up to speed on market conditions;
76.3     a reduction in his working hours or duties;
76.4     homeworking;
76.5     reduced travel.”

26.	Having set out the submissions of Miss Bone, then appearing on behalf of the Respondent, at paragraph 77 the Employment Tribunal set out their further findings of fact material to the Section 4A issue at paragraphs 79-88 and concluded at paragraph 89:

“89     We therefore find that the Respondent failed in its duty under section 4A of the 1996 Act to make reasonable adjustments such as would have prevented the Claimant from being dismissed.  That results in a finding of discrimination under section 3A(2).  We also find that the Claimant was discriminated against under Section 3A(1) because the dismissal could not have been justified under section 3A(1)(b) on the assumption that the Respondent had made such reasonable adjustments which would have prevented the dismissal taking place.”

27.	Mr Bowers submits that the Employment Tribunal’s reasoning in reaching their conclusion at paragraph 89 is not ‘Meek-compliant’.  He asks rhetorically:

(1)	How has the Employment Tribunal applied the burden of proof, as explained by Elias J in Project Management Institute v Latif (UKEAT/0028/07/CEA.  10 May 2007), paragraphs 54-55?

(2)	How would the steps suggested by the Claimant have prevented his dismissal?

(3)	To what extent did the Employment Tribunal take into account their findings (see particularly Reasons paragraphs 80-81) that the Respondent failed to consider the possibility of a phased return to work; reduction in the requirement on the Claimant to travel and entertain clients; working from home or assisting with the problems caused by the resignation of 9 brokers and to discuss these matters with the Claimant as the basis for their conclusion that the Respondent had failed to make reasonable adjustments?  If they did so, that approach would conflict with the Tarbuck approach.

28.	In response Mr Wong accepts that the Employment Tribunal did not mention the burden of proof; however, he submits that this omission is immaterial; the Claimant identified potentially reasonable adjustments (see paragraph 76 of the Reasons); the onus then shifted to the Respondent to show that such adjustments were not reasonable.  On this aspect the Employment Tribunal expressly rejected the evidence of Messrs Brook and Lilley (Reasons paragraph 83) that it was not possible to vary the Claimant’s role.

29.	He further submits that under Section 4A it is unnecessary to find that the proposed adjustments would certainly succeed in preventing the Claimant’s dismissal.  The question is what steps was it reasonable for the Respondent to take in order to prevent dismissal.  Having found a breach of the duty it is then for the Employment Tribunal to assess, for the purposes of remedy, the chance that dismissal would have been prevented or delayed.

30.	Finally, he argues that the Employment Tribunal was entitled to take into account the Respondent’s failure to consider or consult with the Claimant over possible adjustments in answering the overall question of whether such adjustments were reasonable.  It is easier for the Employment Tribunal to conclude that an adjustment is reasonable if not considered by the employer; harder if it was considered and rejected prior to dismissal.

31.	We see the force of Mr Wong’s submissions but ultimately we are persuaded by Mr Bowers that the Employment Tribunal has not sufficiently explained its reasoning leading to the terse conclusion in the first sentence of paragraph 89 of their Reasons.  We shall return to the question of how this appeal should be disposed of after considering the final ground of appeal.

Sick pay
32.	The Employment Tribunal was referred to the judgment of Elias P in O’Hanlon v Commissioners for HM Revenue & Customs [2006] IRLR 840, subsequently affirmed by the Court of Appeal.

33.	The findings of the Employment Tribunal (paragraphs 92-93) are based on their earlier findings of failure to make reasonable adjustments.  They relied on the approach of the Court of Appeal in Nottinghamshire County Council v Meikle [2004] IRLR 703.  Meikle was considered by both the Employment Appeal Tribunal and the Court of Appeal in O’Hanlon.  In short, it will be an exceptional case in which the payment of full pay when contractual sick pay is exhausted is a reasonable adjustment.  It is only where the making of other specific adjustments would have resulted in the disabled employee being back at work that such an adjustment will be reasonable.

34.	As Mr Bowers points out, the Employment Tribunal has not explained how the adjustments found to be reasonable (paragraph 89) would have resulted in the Claimant being back at work in February 2006, assuming that that finding is sustainable.  That, it seems to us, is the only basis on which the Employment Tribunal’s findings at paragraphs 92-93, could properly be made.

Disposal
35.	Mr Bowers invites us to allow the appeal and (a) remit the general question of reasonable adjustments to a fresh Employment Tribunal for rehearing and (b) reverse this Employment Tribunal’s finding as to sick pay for February 2006.

36.	Mr Wong submits that if we find that in either or both respects the Employment Tribunal’s reasoning is inadequate then we should, in allowing the appeal, remit the matter to the same Employment Tribunal chaired by Mr Baron for reconsideration in the light of our judgment.

37.	We prefer the submissions of Mr Wong.  It seems to us to be proportionate and in line with the principles to be found in Sinclair Roche & Temperley v Heard [2004] IRLR 763, that both questions be remitted to the same Employment Tribunal for reconsideration.

38.	Accordingly, we shall allow this appeal and remit the issue of reasonable adjustments to the same Employment Tribunal for reconsideration and clarification.  No further evidence, it seems to us, will be required.  The matter can be dealt with by written/oral submissions, subject to any further directions by the Employment Tribunal.