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Age Discrimination

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Is it unlawful age discrimination to change the rules of a Long Term Incentive Plan to only benefit employees who remained employed at the date that the change was made?

No, held the EAT in Fasano v Reckitt Benckiser Group (1) and Reckitt Benckiser Health (2), but its decision turned on very specific facts.

The Claimant worked for Reckitt Benckiser Health (RBH), a wholly-owned subsidiary of Reckitt Benckiser Group. He took part in a Long Term Incentive Plan ('LTIP') operated by the Group which ran from 2017-2019. Vesting was dependent on the Group’s performance between 2017 and 2019. He retired from RBH in June 2019 as a ‘good leaver’. This meant that he could get a pro rata amount of the 2017 LTIP award should it vest.

In 2019, it became clear to the Group that the 2017 LTIP would not vest. The Group made changes to the scheme to allow partial vesting for those who remained employed in September 2019 when the changes were made. The aim was to encourage staff retention. The Claimant received nothing and claimed indirect age discrimination.

The tribunal held that the Group was RBH’s agents in terms of its actions in relation to the 2017 LTIP scheme. It held that the PCP, that employees had to remain employed in September 2019 to benefit from the rule changes, placed those over the age of 57 (and the Claimant) at a particular disadvantage, but that the PCP was justified as a proportionate means of achieving the aim of retaining staff. The Claimant appealed.

The EAT disagreed with the tribunal’s position in relation to the PCP. The PCP wasn’t the LTIP changes themselves (which were done to retain staff); the PCP was the use of an arbitrary cut-off date after which departed employees could not benefit from the rule changes. This was not justified.

However, the EAT went on to hold that the Claimant’s claim failed for the alternative reason that the tribunal had been wrong to conclude that the Group was acting as an agent for RBH when it made the changes to the LTIP rules in the first place.