Case Study: Hidden Disabilities and ‘Up or Out’ Performance Models – lessons from Pal v Accenture UK

The decision of the Employment Appeal Tribunal (EAT) in Pal v Accenture (UK) Ltd offers important guidance on the limits of “up or out” performance models in UK employment law. These models – which require employees to achieve promotion within a set timeframe or exit the organisation – can present particular risks where disability issues arise.

The case also clarifies the proper use of Polkey reductions and highlights the careful approach tribunals must take when assessing medical evidence and procedural fairness in performance dismissals. Of particular significance is the treatment of hidden disabilities – conditions such as ADHD, autism, chronic illness or mental health disorders that may not be immediately visible but can materially affect workplace performance.

Employers should take careful note of the implications for managing performance and ensure that disabled employees are appropriately supported, as well as their obligations to maintain fair and legally compliant decision-making processes.

Pal v Accenture UK in the Employment Tribunal

This case involved Ms Pal, who had been a manager at Accenture for 10 years, and who was ultimately dismissed for underperformance. Accenture’s performance criteria focussed on staff consistently being promotion ready, referred to as an “up or out” model. Essentially, if an employee is not deemed to be ready for promotion during a certain period of time, they could potentially be at risk of dismissal under a capability process. During this period of alleged underperformance, Ms Pal was also suffering significantly with symptoms related to endometriosis, a chronic health condition which can, in some cases, meet the statutory definition of disability under the Equality Act 2010 (Equality Act).

In May 2022, the Employment Tribunal (ET) had made a finding of unfair dismissal, on the basis that:

• Ms Pal had been dismissed for underperformance under a process for misconduct rather than capability.
• The investigation into her performance was fundamentally flawed.
• The decision makers for the dismissal were Ms Pal’s managers which Accenture’s own policy did not permit.

Whilst the ET did make a finding of unfair dismissal, they also applied an 100% Polkey reduction which meant that Ms Pal would not receive any compensatory award. The rationale in applying this reduction was that even if a fair process had been appropriately followed, the outcome would have been the same.

Additionally, the ET did not make a finding that Ms Pal was disabled within the definition under the Equality Act.

Ms Pal appealed on these grounds.

100% Polkey Reduction to the Compensatory Award

The Employment Appeal Tribunal (EAT) found that the ET was incorrect in their application of Polkey – namely that a Polkey reduction to compensation must be based on what the employer would likely have done if it had corrected the procedural defects, rather than what the ET itself would have done if they were the decision makers.

Accenture had not provided any evidence to explain how it would have corrected the defects in the procedure and as a result, the 100% reduction to the compensatory award was without a clear rationale and this ground was remitted[1] to the ET to consider what would have likely happened if Accenture had followed their own policy, conducted a fair investigation and used impartial decision makers in the context of the performance dismissal process.

“Up or Out” performance model

Ms Pal argued that Accenture’s performance model is unfair on the basis that the Employment Rights Act 1996 (ERA 1996) only provides that a potentially fair reason for dismissal, for the purposes of an unfair dismissal claim, is underperformance relating to the position that the employee currently holds, not on the basis that the employee is not ready to be promoted. The EAT agreed with Ms Pal’s interpretation and confirmed that an employee may only be fairly dismissed for “the work of the kind which he was employed to do” – meaning that, for the purposes of establishing a fair capability dismissal, an employee should only be assessed on the work they were contracted to carry out. As a result – dismissal for failing to meet the next level of promotion criteria may not be a fair reason under the heading of ‘capability’ within section 98 of the Employment Rights Act 1996.

This ground of appeal succeeded as the EAT determined that, whilst an employment contract may stipulate that employees may be required to demonstrate ability for promotion, it would still fall to the employer to demonstrate that dismissing the employee for failing to demonstrate readiness for promotion, was fair.

Endometriosis under the Equality Act 2010

Ms Pal was advised in September 2018 that she required an urgent ovarian cystectomy to remove two ovarian cysts for which she had surgery in October 2018. It was noted during this operation that Ms Pal had endometriosis, a chronic condition which can constitute a disability under the Equality Act depending on its effects. Ms Pal returned to work a month or so after the surgery, against medical advice. Unfortunately, this premature return to work resulted in a further period of sickness absence for Ms Pal. Ms Pal returned to work in January 2019 and following an Occupational Health assessment, it was recommended that she should complete a phased return to work as part of managing her return after a long-term sickness absence.

Ms Pal had returned to full duties by March 2019 but on 6 June 2019 she was invited to a meeting in order to discuss her performance on 10 June 2019, as part of the employer’s capability process. In the invite letter, Ms Pal was warned that there was a possibility she may be dismissed.

Ms Pal requested that the meeting be postponed and it was rescheduled for 3 July 2019. During this meeting, in mitigation for the performance concerns being raised, Ms Pal did highlight her periods of sickness absence between September 2018 and January 2019 as well as her phased return. However, at the end of that meeting, she was told that she was to be dismissed for alleged underperformance, and this was followed up in writing later that day.

Whilst the ET held that Ms Pal had not demonstrated that her endometriosis had a substantial and long-term adverse effect on her day-to-day life and that Accenture lacked knowledge of Ms Pal’s alleged disability, the EAT found that the ET had not properly considered Ms Pal’s disability impact statement or her medical evidence when applying the statutory definition of disability.

Additionally, the ET had failed to consider the likelihood of recurrence of endometriosis following Ms Pal’s surgery, which had been evidenced in March 2019, and there was little thought given to what the position would have been if Ms Pal had not had the surgery when assessing whether the effects were long-term.

In fact, the EAT held that Ms Pal’s recovery from surgery could in itself amount to a substantial adverse effect under the statutory definition of disability. The EAT was also unconvinced that Accenture lacked knowledge of the disability considering that she notified them of her surgery, had a long period of sick leave and underwent a phased return back to work.

Given the various errors, it was determined that all grounds were to be remitted back to a different Employment Tribunal for reconsideration.

The EAT also warned that where an ET makes a general assessment on credibility, this can be unhelpful in respect of the fact-finding process of the ET and credibility ought to be assessed on each individual issue rather than a sweeping assumption.

Practical Lessons for Employers

The decision in Pal v Accenture UK Ltd offers several important lessons for employers managing performance, particularly when it comes to supporting employees with disabilities. The case highlights the need for careful alignment between capability assessments and contractual duties, strict adherence to fair procedures, and a properly evidenced approach to disability under the Equality Act. Employers operating structured progression or “up or out” models should take particular care to ensure that dismissals are legally robust, proportionate and well documented. Below are some practical lessons for employers to follow when managing performance:

• Capability should be assessed against the contractual duties the employee is currently employed to do and whilst a contract could include a requirement that employees should be “promotion ready” – it still may not constitute a lack of capability and therefore “some other substantial reason” may be more appropriate – although if an employer sought to rely on this as a reason for dismissal, the employer would still be required to follow a fair process.
• Follow the appropriate procedures– using a misconduct policy to manage alleged underperformance would generally be found to be unfair/unlawful and was a significant failing for Accenture.
• Record everything – this case demonstrates the requirement for employers to document health disclosures and performance issues to enable an employer to have a clear overview of the employee’s position.
• Proportionality should remain a key consideration when making decisions – even though Accenture had a legitimate aim (maintaining their progression model), dismissing a disabled employee is unlikely to be seen to be a proportionate means of achieving that aim.
• Hidden disabilities can constitute a disability under the Equality Act if they have a substantial, long term-adverse effect on day-to-day activities. The EAT in this case advised that even the recovery from surgery may amount to a substantial adverse effect.
• Do not overlook medical evidence and do not assume that surgery is a one-off event.

Author – Emma Andersen, Solicitor

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[1] When a matter is remitted back to the ET, it means the EAT has found a legal error in the original decision and sent it back to the ET for the error to be corrected or for the case to be reheard.