EAT rules on indirect age discrimination and agency in Fasano v Reckitt Benckiser: Analysis of PCP and agency relationship.

Citation: [2024] EAT 7
Judgment on

Introduction

The Employment Appeal Tribunal (EAT) case of A Fasano v Reckitt Benckiser Group PLC & Anor [2024] deals with complex issues of indirect age discrimination and agency within the context of employment law. The EAT’s judgment delves into the legal principles surrounding the proper means of achieving a legitimate aim and the common law principles that define agency, particularly within corporate structures.

Key Facts

Mr. A Fasano, a former senior employee of Reckitt Benckiser Health Ltd (R2), a subsidiary of Reckitt Benckiser Group PLC (R1), was awarded shares and options under a long-term incentive plan (LTIP) which were to vest based on R1’s share performance. Upon retirement, Mr. Fasano was to receive a pro-rated amount of this award; however, due to a change in vesting conditions by R1’s remuneration committee (Remco), he received no benefit. This led to Mr. Fasano commencing proceedings for indirect age discrimination against both R1 and R2.

Indirect Age Discrimination

The legal principles pertinent to indirect age discrimination under the Equality Act 2010, Section 19, were analyzed. A provision, criterion, or practice (PCP) is discriminatory if it disproportionally disadvantages a person with a protected characteristic (age) compared to those without. Here, a PCP requiring LTIP participants to be employed on a certain date, which disproportionately affected those over 57, was scrutinized. The key question was whether the PCP was a proportionate means of achieving a legitimate aim, which in this case was the retention of staff.

Agency

The other fundamental legal issue explored revolved around the common law concepts of agency, as applied to the relationship between R1 and R2. Agency, essential for imputing liability under Sections 109 and 110 of the Equality Act 2010, requires that the purported agent (R1) had authority from the principal (R2) and acted on behalf of the principal. The purposeful approach to agency was considered, which seeks to ensure that victims of discrimination have access to remedies, but the tribunal’s application of this principle was challenged in the EAT.

Purposive Approach

The tribunal originally took a purposive approach to the concept of agency, which was critiqued in the EAT judgment. Legal principles from cases such as Ministry of Defence v Kemeh and Blackwood v Birmingham and Solihull Mental Health NHS Foundation Trust, which stipulate the limitations of a purposive interpretation, were acknowledged. The EAT reemphasized that a purposive approach should not extend legislation beyond its plausible interpretation.

Outcomes

The EAT concluded that:

  • The PCP was not a proportionate means of achieving the legitimate aim, as those who had already left employment could not be retained.
  • The change to the LTIP terms was not proper justification for the indirect age discrimination claim.
  • R1 (RB Group) was not acting as an agent for R2 (RB Health) when deciding on the changes to the LTIP.

Conclusion

In summary, the EAT’s comprehensive judgment in Fasano v Reckitt Benckiser clarifies the application of legal principles pertaining to age discrimination and agency within the corporate context. It was determined that while the amending of LTIP terms may help retain staff, excluding former employees from the awards does not constitute a proportionate means of achieving such an aim. Additionally, the EAT’s analysis demonstrates a careful consideration of the legal thresholds for establishing an agency relationship, disapproving of an overly purposive approach that exceeds the normal criteria for agency under common law. Consequently, the EAT upholds the principle that corporate entities within the same group are not automatically agents for one another without clear authorization and representation. The decision highlights the judiciary’s role in applying established legal principles to maintain protection against discrimination within the employment sphere.

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