J McAllister v Commissioners for HMRC

The Employment Appeal Tribunal considered whether dismissal of a disabled employee for absence arising in consequence of his disability was objectively justified for the purposes of section 15 of the Equality Act 2010 and whether a reduction in a Civil Service Compensation Scheme payment amounted to unfavourable treatment. The Employment Tribunal had found that dismissal was a proportionate means of achieving legitimate aims (maintaining satisfactory attendance, a fair and transparent sickness-management regime and efficient use of resources) and that dismissal was fair under the Employment Rights Act 1996. The ET also found that the original 50% award under the Civil Service Compensation Scheme had been reduced in part because of disability-related reasons and that a 50% reduction was disproportionate, but that an 80% award would be proportionate. On appeal the EAT held that the ET had permissibly identified and balanced the legitimate aims and the discriminatory impact and that the dismissal decision was open to the ET on the evidence. The EAT further held that the ET was entitled to consider, at liability, whether a less discriminatory method of distributing the CSCS fund was available, but that the ET had erred in treating the subsequent independent CSAB decision as a matter for the ET. The EAT allowed the respondent's cross-appeal, applying Trustees of Swansea University Pension and Assurance Scheme v Williams and holding that the CSCS payment, being an entitlement arising because of the disability, was not unfavourable treatment in itself and the ET had erred in separating the method of calculation from the award.

This appeal concerned a claimant dismissed by HM Revenue & Customs after prolonged and intermittent absence, some of which arose as a consequence of certified anxiety and depression. The claimant relied on section 15 Equality Act 2010, contending that the dismissal and a reduced Civil Service Compensation Scheme (CSCS) payment were unfavourable treatment arising from something consequential to his disability. The case came to the Employment Appeal Tribunal from a reserved judgment of the Manchester Employment Tribunal dated 11 May 2020.

Procedural posture:

• First instance: Manchester Employment Tribunal (Employment Judge Hoey with lay members) reserved judgment 11 May 2020.
• Appeal and cross-appeal: Full hearing at the EAT on 7–8 December 2021; judgment approved 8 December 2021, neutral citation [2022] EAT 87.

Nature of the claims and relief sought:

• The claimant sought declarations and remedies for disability discrimination under section 15 EqA and for unfair dismissal.
• Issues included whether the dismissal and the reduction in CSCS payment amounted to unfavourable treatment because of something arising in consequence of the disability and, if so, whether such treatment was objectively justified; the respondent cross-appealed the ET's finding that the CSCS calculation was unfavourable treatment.

Issues framed by the EAT:

1. Was the claimant's dismissal a proportionate means of achieving a legitimate aim under section 15 EqA? (identification of legitimate aims; proportionality and balancing of discriminatory impact against employer needs)
2. Was the reduction of the CSCS payment "unfavourable treatment" for section 15 purposes or was the relevant treatment the award itself (and therefore not unfavourable because entitlement arose by reason of disability)?
3. Whether the ET, at the liability stage, had erred by considering the later independent CSAB decision and whether a finding as to a proportionate alternative at liability unlawfully determined remedy.

Court's reasoning (concise):

• The EAT applied the established objective-justification principles (Bilka, Hardys & Hansons, MacCulloch) and required a holistic, critical evaluation of the evidence. The ET had permissibly identified legitimate aims (ensuring satisfactory attendance, maintaining a fair sickness-management regime and efficient use of resources) and had properly balanced the discriminatory impact against the respondent's needs, noting management time, morale and productivity effects. The dismissal decision was within the range of decisions available to a reasonable employer and the ET's evaluation was open to it on the evidence.
• On the CSCS issue, the ET was entitled at liability to consider whether a less discriminatory approach existed and to conclude that the 50% award was disproportionate and that an 80% award would have been a less discriminatory means of achieving the legitimate aim of distributing public funds fairly. However, the ET was wrong to treat the independent CSAB decision as if it were before it. Separately, the EAT allowed the respondent's cross-appeal: the relevant treatment was the CSCS award itself, which arose because of the disability, and that award was not unfavourable within the meaning of section 15; to separate the calculation from the entitlement was artificial and contrary to Trustees of Swansea University Pension and Assurance Scheme v Williams.

Subsidiary findings and implications: The ET's liability-stage consideration of a less discriminatory distribution method (an 80% award) was permissible, but actual remedies remained for a later stage. The EAT emphasised the distinction in law between the identification of treatment and its method of calculation when that entitlement arises by reason of disability.

Appeal dismissed in respect of the finding that the claimant's dismissal was objectively justified and fair, because the Employment Tribunal had permissibly identified legitimate aims and carried out the required balancing exercise and critical evaluation; respondent's cross-appeal allowed in respect of the CSCS payment, because the relevant treatment was the award itself (an entitlement arising by reason of the disability) and not unfavourable treatment, so the ET erred in separating out the method of calculation.

First instance: Manchester Employment Tribunal (reserved judgment sent to parties 11 May 2020). Appeal and cross-appeal heard by the Employment Appeal Tribunal (Case No EA-2020-000476-AS) on 7–8 December 2021; judgment given 8 December 2021 (Neutral Citation: [2022] EAT 87).