Discrimination arising from disability: questions remain about "unfavourable treatment"

Author: Darren Newman

Darren Newman

Consultant editor Darren Newman suggests that a recent Supreme Court decision raises more questions than it answers about the tricky issue of what exactly constitutes "unfavourable treatment" because of something arising in consequence of a disability.

In Williams v Trustees of Swansea University Pension and Assurance Scheme and another [2019] IRLR 306 SC the Supreme Court held that an employee who took ill-health early retirement did not suffer discrimination when his pension benefits were based in part on the part-time salary he was on at the time of his retirement - even though the move to part-time work was itself a response to his disability. In doing so, the Court has raised - but not answered - important questions about what is meant by "unfavourable treatment".

Mr Williams claimed that basing part of his pension benefits on his part-time salary amounted to discrimination under s.15 of the Equality Act 2010. This required him to show that he had been treated "unfavourably because of something arising in consequence of" his disability. Had he done so, the question would then have been whether or not the employer could show that the unfavourable treatment was a "proportionate means of achieving a legitimate aim". As it was, the Supreme Court agreed with the Employment Appeal Tribunal and the Court of Appeal that basing his pension benefits on the part-time salary he was on at the time of his retirement did not amount to unfavourable treatment at all.

To understand the implications of the case we need to delve into the history of disability discrimination. Section 15 replaced the concept of "disability-related discrimination" in the Disability Discrimination Act 1995, which covered less favourable treatment for a reason related to the person's disability. A change was needed after the House of Lords held in London Borough of Lewisham v Malcolm [2008] IRLR 700 HL that the treatment of the disabled person had to be compared with the treatment of a non-disabled person whose circumstances were the same in all respects apart from the disability.

Malcolm concerned a tenant subletting his property - but the reasoning of the House of Lords is best illustrated by the classic example of a restaurant refusing to admit a customer with a guide dog. Prior to Malcolm, the standard analysis was that this would be disability-related discrimination because the customer was being treated less favourably than a customer who was not blind and who therefore did not have the need for a guide dog. What the House of Lords decided, however, was that the proper comparison was with a customer who was not blind, but who was also accompanied by a dog. In other words, provided that the restaurant banned all dogs, it was not disability-related discrimination to refuse to accept guide dogs.

There was an overwhelming consensus that the Malcolm approach was too narrow, so what became s.15 of the Equality Act 2010 was designed to fix the problem. One of the ways in which it did so was to remove the concept of "less favourable" treatment and replace it with "unfavourable" treatment. The thinking was that this removed the need for a comparator in the same relevant circumstances - indeed the word was already being used for that purpose in the context of pregnancy discrimination.

The assumption behind the use of the word "unfavourable" was that it made establishing discrimination easier. To return to our restaurant example, refusing to seat a customer is clearly unfavourable treatment and the reason for it - the presence of the guide dog - is something that arises in consequence of the disability. In the employment context, employees are increasingly relying on s.15 when they object to the way in which their employer has dealt with disability-related absence.

But Williams shows that the concept of "unfavourable treatment" is not straightforward. In dismissing Mr Williams' appeal, the Supreme Court agreed with the Court of Appeal that there was nothing "intrinsically unfavourable" about the pension Mr Williams received. Indeed, giving someone an enhanced pension when he was no longer capable of working could not reasonably be regarded as unfavourable treatment at all.

In finding that there was no unfavourable treatment, the Court seems to be saying that less favourable treatment will not come within s.15 unless it is intrinsically disadvantageous. Unfortunately, the reasoning of Lord Carnwath (who gave the only reasoned judgment in the case and with whom the other members of the Supreme Court agreed) is very brief and does not really grapple with the potential implications that arise.

Suppose an employer gives all of its employees but one a 5% pay increase, and awards that individual just 2%. Does that amount to treating that employee unfavourably? There is nothing intrinsically disadvantageous about being given a 2% pay increase - it is better than nothing - but when we look at it in context we can see that the employer is withholding a pay increase that it is giving to other employees. In doing so it must surely be treating the singled-out employee unfavourably, even though, judged in isolation, the employee is being given something positive. If the reason for the lower pay increase is the employee's absence, caused by a disability, it would follow that it is for the employer to show that this unfavourable treatment is a proportionate means of achieving a legitimate aim.

There is, I think, room in the approach of the Supreme Court to look at the context of the treatment complained about. Certainly the Court attached importance to the fact that, in Mr Williams' case, anyone who qualified for ill-health early retirement would, by definition, be disabled within the meaning of the Equality Act 2010. If one compared his treatment with that of non-disabled employees, he was actually being treated more favourably, because none of them would have qualified for ill-health early retirement at all. This fact was clearly a major influence on the outcome of the case. There is also no doubt that the pension that Mr Williams received involved the employer making a significant additional contribution to the pension fund. One can easily see why the idea that he should have received an even more generous pension - with an even larger contribution from the employer - would strike the Court as an unattractive proposition.

Had the Court been considering the case of an employee given a lower pay increase than others because of their disability-related absence, the unfavourable nature of the treatment would, I think, have been more apparent. It is a pity that the reasoning of the Court is so brief that a definitive ruling on this point must wait for another day.