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17.02.2020

In Shah v TIAA Limited, the Employment Appeal Tribunal (EAT) held that the dismissal of a disabled employee for capability was fair and justified, even though the employee was still at work and capable of carrying out some of her role.

The facts

Mrs Shah worked as a senior audit manager for TIAA. Her role was client-facing, requiring regular visits to clients’ premises to audit and report on their performance. The report writing aspect of the role could be undertaken from home, but the audit work required site visits.

To cover the cost of Mrs Shah’s salary, she was expected to work 150 chargeable days per year. Falling short of this target would make her employment loss-making (as her salary would cost more than the income she generated).

Mrs Shah had longstanding back problems which constituted a disability under the Equality Act 2010 and which made it increasingly difficult for her to travel to client sites. As her back condition worsened, she attended fewer client sites: in May 2015 her productivity had dropped to about 50% below her annual target.

TIAA held numerous discussions with Mrs Shah (and later with her union representative) about her health issues, possible adjustments they could make and the fact that she was falling “a long way short” of her chargeable hours target. TIAA also obtained an occupational health report and carried out workstation assessments. During discussions, Mrs Shah stated that due to her health she could not travel to any of the client sites where work was available. Instead, she asked TIAA to reduce her target chargeable hours and to allow her to work from home.

TIAA considered Mrs Shah’s proposals, but concluded they were not feasible as client visits were needed to undertake audit work, the post was funded by Mrs Shah’s charged hours and there would be a funding deficit if she was kept on. Mrs Shah had agreed that none of the vacancies were suitable and there was no likelihood that this position would change in the foreseeable future. Accordingly, Mrs Shah was dismissed on grounds of capability. On appeal, the dismissal was upheld.

ET claims

Mrs Shah brought Employment Tribunal (ET) claims for unfair dismissal, disability discrimination, harassment and age discrimination, which did not succeed. The ET concluded that Mrs Shah’s dismissal had been undertaken fairly and was a proportionate means of achieving TIAA’s legitimate aim: of having a senior audit manager able to provide the services for which its clients had contracted.

EAT decision

Mrs Shah appealed to the EAT, which also dismissed her claims, agreeing with the ET that, in the circumstances, her dismissal had been justified and fair.

The EAT concluded that by the time of Mrs Shah’s dismissal the point had been reached where the dismissal was proportionate. Given the various aspects of Mrs Shah’s claim, numerous factors were relevant to the judgment, including findings that:

  • the financial targets imposed by TIAA were not unreasonable nor unrealistic;
  • discussions about the issues with Mrs Shah had been fairly conducted (the EAT noted that “the negotiations and attempts to seek a solution were conducted in a sensible and courteous way and without rancour or personal animosity”);
  • Mrs Shah’s back condition had been consistently described as “progressive”. She had refused due to her health to travel to sites which had vacancies and there was no likelihood this would change in the foreseeable future. As such the ET had been entitled to conclude that there was nothing to be gained by TIAA waiting any longer or getting another medical report before moving to dismissal;
  • there was no legal authority which stated that it could not be proportionate to dismiss a disabled employee who is not off sick;
  • despite asking for her chargeable target hours to be reduced, Mrs Shah had not indicated any willingness to accept reduced pay and she proposed no other solution which would have avoided her work being carried out at a continuing loss to TIAA (other than redundancy, which was not applicable on the facts). Mrs Shah did not, for example, suggest part-time hours. In the EAT’s view, the ET had been entitled to find that the demands made by Mrs Shah and her union representative were unrealistic, as TIAA could not be expected to pay Mrs Shah a full salary for doing 20% or less of the work she was required to do.

Practical tips

This case provides useful reassurance for employers that it is possible to dismiss a disabled employee who is not off sick and who is capable of performing some of their duties. Both the ET and the EAT in this case were sympathetic to the employer’s argument that it should not be required to sustain an employment relationship where to do so would be loss-making. Notwithstanding Mrs Shah’s lengthy service (over 30 years), TIAA could not be expected to continue to pay over £50,000 per year to someone who did less than 20% of the work expected of her.

However, the importance of getting detailed medical input from occupational health, engaging in thorough and plentiful discussions with the employee about her health and what possible adjustments could be made to support her (including exploring on more than one occasion vacant working locations), and of acting reasonably in its decision-making cannot be overstated.

In circumstances like this, where so much turns on the specific facts, keeping accurate written records of any discussions and decisions will be key to showing that a genuine impasse in the discussions has been reached, that there was no evidence the situation would change and that the employer was therefore acting reasonably and proportionately in making the final move to dismiss.

How we can help

In any instance of employee ill-health, it can be difficult for managers to reach a point where they can feel satisfied they have done enough to justify a dismissal for capability.

Our upcoming seminars, Managing ill health, tackling absence, promoting wellbeing, running at various locations in April and May 2020, will provide in-depth, practical guidance on how to minimise your legal risk, while effectively managing employees with health conditions. Realistic case studies cover tricky issues, such as when an employer can decide that ‘enough is enough’ and move towards dismissing an employee who is off sick or has a health condition, how to assess the reasonableness of proposed adjustments for disabled employees, getting the most out of medical reports and the special considerations when managing employees with mental health conditions. For further details and to book your place, click here.

In addition, our free Employment Law Updates, in which we update you on recent legislative and case law developments, are running in March at various locations. For further details and to book your place, click here.

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