Disability is an area far more contentious and complex than race, age and gender when dealing with diversity. Paul Avis, corporate development manager at Ceridian’s LifeWork’s division, explores why disability is often the hardest area of equal opportunities and can be overlooked by employers.

While it is easy to imagine the uproar if an employer tries to manage someone out of an organisation just because they are a woman or someone of ethnic descent, it is less easy when it comes to many disabled employees.

However, employers who still have final salary schemes, specifically in the public sector, use ill health early retirement pensions to manage out disabled employees and incentivise them with a tax-free cash sum and a potential income for life. While local government employers, under the best value approach, are limited to a fixed percentage of the workforce going via this route, some bypass this and use efficiency pensions on the grounds of ill health. This, in turn, flies in the face of further best value targets to have a disability diverse workforce.

A potential pitfall to this approach is the fact that the NHS Pensions Agency has reduced the numbers of ill health early retirement pensions by tightening the criteria. One of the concerns therefore is that if the employee is not granted an ill health early retirement pension they will only have the paucity of state incapacity benefits to live on.

If an organisation successfully manages an employee out of the organisation, using an ill health early retirement pension, what can happen next? Many pension scheme rules allow the trustees to review the state of health of the employee. If an employee’s condition improves, and they no longer fulfil the incapacity definition of the pension, it can then be withdrawn.

The problem is that the employee can then sue the employer for failing to make reasonable adaptations under the Disability Discrimination Act (1995). Therefore, a clear audit trail of DDA compliance is required.

Encourage diversity adaptation

It should also be noted that, in some cases, the organisation may have pressured trustees to grant a pension before the clinical outcome is known. Once occupational sick pay has been utilised, the employee simply sits in limbo between the organisation and the pension.

With many line managers reluctant to retain employees with a disability (for a variety of reasons, including fear of the effect of the disability, concerns over the work load, and so on), one of the best ways to encourage diversity adaptation is to show them the capitalised cost of the ill health pension if granted. This can easily be up to 10 times the employee’s salary and a lot more than any diversity adaptation costs.

A good approach is it to consider matters from a disabled employee’s point of view. Imagine the effect of becoming disabled, unsure about the clinical prognosis, the effect that it will have on your life, your family, your colleagues and so forth. Then overlay this with the financial concerns, the possibility of being encouraged to take the pension when you actually want to work, unsure of how much the pension will be if granted, and scared that if it is not granted state benefits are the only option.

Therein lies the challenge: if you were to become disabled tomorrow, what would happen to you and how would you feel in this new world? Is your organisation one that embraces a diverse workforce? Would it look to retain you rather than manage you out using a pension or income protection scheme?

Take time to think your approach through and, if you are comfortable that your company is clear in its disability process and policy, then you may end up with the diverse workforce you have been seeking.

For more information, please visit: Ceridian UK.