The cost of reasonable adjustments
The duty to make reasonable adjustments for disabled staff is arguably the foundation stone of the disability provisions under the Equality Act 2010.
The duty to make reasonable adjustments for disabled staff is arguably the foundation stone of the disability provisions under the Equality Act 2010. One of the most frequent questions we are asked is: 'Is there a financial limit on what amounts to a "reasonable" adjustment?' In the case of Cordell v The Foreign & Commonwealth Office, the Employment Appeal Tribunal has provided some much-needed guidance.
Under the Disability Discrimination Act 1995 (DDA), an employer had a duty to make reasonable adjustments for a job applicant, employee or former employee who, because of their disability, was placed at a substantial disadvantage by a "policy, criterion or practice" applied by the employer. The DDA also contained provisions on direct discrimination and disability-related discrimination. The Equality Act 2010 (EqA 2010), which replaced the DDA 1995 in Great Britain on 1 October 2010, contains similar rules on reasonable adjustments and direct discrimination. However, disability-related discrimination has been replaced by indirect discrimination and discrimination arising from disability.
Whether there is a breach of the duty to make adjustments will depend on whether a particular adjustment was "reasonable". In Smith v Churchill's Stairlifts plc  IRLR 41, the Court of Appeal held that the test of reasonableness is objective and to be determined by the Employment Tribunal. The DDA set out a list of factors that had to be taken into account when determining whether an adjustment was reasonable, factors that are now set out in the EHRC Employment Statutory Code of Practice as those that might be taken into account when deciding what are reasonable steps for an employer to take. Cost is one such factor.
This case (to which the DDA applied) concerned whether adjustments required to support a deaf senior diplomat in a new overseas posting were reasonable. Ms Cordell, who is profoundly deaf, was employed by the Foreign & Commonwealth Office (FCO). In January 2006, Ms Cordell was posted abroad as the First Secretary to the embassy in Poland. As the role required Ms Cordell to react quickly to political events, the FCO provided her with full time lipspeaker support. This comprised three lipspeakers who each did a two-week shift in Warsaw where they were provided with a flat by the embassy. The average annual cost of this support was approximately £146,000.
In March 2009 (after Ms Cordell's appointment in Poland), the FCO introduced a Reasonable Adjustment (RA) policy. According to the RA policy, adjustments costing over £10,000 were subject to a specific procedure for addressing reasonableness.
In September 2009, Ms Cordell accepted a promotion to the post of Deputy Head of Mission at the British embassy in Kazakhstan. As the support costs for the role would exceed £10,000, the FCO applied the RA policy. In consultation with Ms Cordell, it was agreed that the new post would require more costly adjustments than the Poland post, due to factors such as lipspeaker support for language training, higher airfares and the cost of accommodating the lipspeakers. The overall annual costs of the proposed adjustments would be in the region of £249,500. The FCO withdrew the offer of the Kazakhstan job on the basis that the costs were unreasonable.
Ms Cordell brought tribunal claims for direct discrimination, disability-related discrimination and failure to make reasonable adjustments. On the issue of reasonable adjustments, Ms Cordell argued that, judged objectively, the costs of supporting her in Kazakhstan were reasonable. She relied on a comparison with the FCO's Continuity of Education Allowance (CEA) policy, under which the FCO would pay up to £25,000 annually per child towards the cost of private education for diplomats' children, plus the cost of up to three return trips to the UK. She contended that it was possible that the costs under the CEA policy for staff with large families could equal or exceed the costs of her proposed adjustments.
The Employment Tribunal's decision
The tribunal found that, although refusing the adjustments would have the effect of limiting Ms Cordell's career, the decision was reasonable because "on any objective test the cost of the agreed adjustments was simply unreasonable". In so holding, it took into account the fact that the cost:
- Was more than five times Ms Cordell’s salary;
- Was more than the entire annual cost of employing local staff at the Kazakhstan embassy; and
- Exceeded the cost of the adjustment in Poland by over £100,000 per year.
Although the FCO had a large overall budget, the proposed adjustments would account for a large amount of its disability budget (which was £562,934 in 2009/10) and exceeded the next largest expenditure on disability adjustments for an individual by about £200,000. The highest costs under the CEA policy (for a family of seven children) were only likely to be £175,000 plus travel costs.
The Tribunal also held that there was no direct discrimination because reason for withdrawing the job offer was not Ms Cordell's disability but the cost of providing the necessary support to allow her to do her job. A hypothetical comparator without a disability but who required similar support costs would not have been treated any differently. The disability-related claim failed for the same reasons.
Ms Cordell appealed against the decisions on direct discrimination and reasonable adjustments.
The Employment Appeal Tribunal's decision
The EAT dismissed the appeal and upheld the tribunal's reasoning on both points.
The EAT found that there had been no direct discrimination for two reasons: first, the reason for withdrawing the job offer from Ms Cordell was not her disability, but the cost of the support. Although this was a reason related to the disability, this was not the same as saying that disability itself was the reason; second, the comparison with the CEA policy ignored the fact that there were material differences, other than disability, between Ms Cordell and a person in receipt of a CEA: namely, the fact that Ms Cordell did not have children. If she had children, she would have been eligible for a CEA.
The EAT thought that Ms Cordell's real point as regards the CEA policy was that it was wrong for the FCO not to pay the sums in question to enable her to take up the job, if it was prepared to pay commensurate sums in the case of an employee with a large family. In the EAT's view, this was a legitimate argument in the context of reasonable adjustments but it did not give rise to a finding of direct discrimination.
The EAT was sympathetic to Ms Cordell's situation, but noted that the law did not require the FCO to compensate for her misfortune "at whatever cost". The EAT noted that cost is "one of the central considerations in the assessment of reasonableness", although it must of course be weighed with other factors including the degree of benefit to the employee. The EAT went on to give guidance on assessing reasonableness based on cost considerations:
i) There is no objective measure that can be used to balance what are in truth two completely different kinds of consideration: on the one hand, the disadvantage to the employee if the adjustments are not made and, on the other, the cost of making them. The Act requires tribunals to make a judgment, ultimately, on the basis of what they consider right and just in their capacity as an industrial jury. That is not to say that tribunals should simply stick a finger in the air.
ii) A tribunal's assessment of what an employer would reasonably be expected to spend can be influenced by a variety of factors (besides the points made in the Disability Rights Commission’s Code of Practice and the degree to which the employee would benefit from the adjustment), including:
- The size of any budget dedicated to reasonable adjustments (though this cannot be conclusive);
- What the employer has chosen to spend in what might be thought to be comparable situations;
- What other employers are prepared to spend; and
- Any collective agreement or other indication of what level of expenditure is regarded as appropriate by representative organisations.
iii) However, such considerations can only help up to a point. Ultimately "there remains no objective measure for calibrating the value of one kind of expenditure against another."
The EAT held that comparisons with other costs, such as Ms Cordell's salary or the cost of employing local staff, would not provide a complete answer to the question of whether it was reasonable to provide lipspeaker support to Ms Cordell, but were "entirely legitimate" as a means of putting the figures into context, as the tribunal had done here.
The EAT has recognised the difficulty which Employment Tribunals (and employers) face in making a judgement on the question of the extent to which cost alone can make a proposed adjustment unreasonable for the purposes of disability discrimination law. Even in a large organisation, balancing a disabled person's need for adjustments against other spending priorities will never be easy. The EAT has given tribunals a very broad discretion, saying that it is essentially a matter of judgement rather than an "objective" test, and tribunals should do what they consider "right and just" in their capacity as an industrial jury. This is likely to make decisions difficult to overturn on appeal.
For more information on the cost of reasonable adjustments and your obligations, contact our employment lawyers.