A Fasano v Reckitt Benckiser Group PLC & Anor

For indirect discrimination under section 19 of the Equality Act 2010, it is the particular PCP that must be justified. A tribunal cannot justify a discriminatory cut-off merely because wider changes of which it forms part pursue a legitimate retention aim. The cut-off must itself contribute to that aim.

For employer liability under section 109, common-law agency requires that the alleged principal authorised the relevant act and that the alleged agent acted on its behalf. Benefit to the principal, control, or an effect on its contractual relationship with an employee does not alone establish agency. A purposive construction cannot extend the statute where there are not two plausible constructions.

The claimant retired from the second respondent, a subsidiary of the first respondent, as a good leaver under the group long-term incentive plan. A later amendment allowed part of the 2017 award to vest despite unmet performance conditions, but only for participants employed when the amendment took effect. The claimant, who had already retired, received no award.

The Employment Tribunal dismissed his indirect age discrimination claim. It held that the cut-off PCP was justified by staff retention and that the parent company acted as the employer subsidiary’s agent. The claimant appealed the justification decision. The respondents also challenged the agency determination, although they raised that challenge in their Answer rather than by a formal cross-appeal.

1. Appeal formally dismissed; cross-appeal allowed. The EAT substituted findings that the PCP was not justified, but that the parent company was not the employer subsidiary’s agent. Neither respondent was therefore liable, and the Tribunal’s dismissal of the claim was upheld.

2. The Tribunal had erred in treating the LTIP changes as a whole as the measure to be justified. The relevant PCP was the requirement that a participant be employed on 18 September 2019. That requirement could not retain employees who had already left. It was therefore not a means of achieving the accepted retention aim, still less a proportionate means. Avoiding payments to former employees might explain the cut-off, but the respondents had not advanced cost-saving as its legitimate aim. The EAT made the only possible substituted decision under section 35(1)(a) of the Employment Tribunals Act 1996.

3. The agency finding was perverse. Under section 109(2) of the Equality Act 2010, agency required authorisation by the alleged principal and action on its behalf. There was no factual basis for either requirement. The subsidiary did not control the parent’s LTIP decisions; the LTIP’s benefit to employees, and its effect on their employment relationship, were insufficient. The Tribunal had also wrongly allowed perceived remedial unfairness to drive an impermissibly expansive purposive construction.

4. The agency determination was capable of finally disposing of the claim and should technically have been challenged by cross-appeal. However, no party suffered prejudice. In the interests of justice, the EAT dispensed under rule 39(2) of the Employment Appeal Tribunal Rules 1993 with the formal cross-appeal steps.

• Employment Appeal Tribunal: The claimant’s appeal against the justification finding succeeded in substance, but the respondents’ cross-appeal on agency also succeeded. The formal order dismissed the appeal and upheld dismissal of the claim: [2024] EAT 7.

• Employment Tribunal: The Reading Employment Tribunal dismissed the claimant’s indirect age discrimination claim in a judgment promulgated on 6 January 2022. It found the PCP justified and held that the parent company acted as agent for the employer subsidiary.