Kelly Sayers: Closer to the heart

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Many companies now have nepotism policies in place to avoid favouritism, undue influence or conflicts of interest in employment decisions. However, what bearing does the closeness of a relationship have on the question of discrimination on the grounds of marital status?

 

The Employment Appeal Tribunal (“EAT”) has recently grappled with this issue in the case of Hawkins v Atex Group Limited and others, a case involving arguments about discrimination on the grounds of being married to a particular person.

 

The case arose from issues relating to the employment by Atex of three members of the Hawkins family.

 

Mr Hawkins was appointed CEO of Atex in 2004 and in 2006 went on to appoint his wife (who was the Appellant in the proceedings)  to provide HR and marketing consultancy services to Atex through a company which was jointly owned by the couple. The Board of Atex were apparently aware of this.

 

In December 2009 the couple’s daughter was employed by Atex as Global Human Resources Manager and in January 2010 Mrs Hawkins went on to become an official employee of Atex, in the capacity of Corporate Marketing Director. However, it was Atex’s case that, during a meeting on 30 April 2009, the Chairman of Atex had instructed Mr Hawkins that ‘no member of [his] family would be further employed by [Atex] in an executive or other professional capacity beyond the end of 2009’.

 

On 1 June 2010, Mrs Hawkins was suspended pending investigation of various allegations, including that her appointment to the Corporate Marketing Director role was unauthorised and in breach of the Chairman’s instruction referred to above. The suspension letter confirmed concerns which had been expressed previously, that Mrs Hawkins ‘had been allowed to take increasing levels of prominence and influence in matters related to Atex’ and that this may be inappropriate given that she was the wife of the CEO.

 

Mr Hawkins was suspended alongside his wife and daughter.

 

Following disciplinary proceedings, Mrs Hawkins was dismissed – the dismissal letter making it clear that no misconduct on her part had been found, but that her employment was in breach of the instruction which it was said the Chairman had given to Mr Hawkins. Her husband and daughter were also dismissed.

 

In a letter rejecting Mrs Hawkins’ appeal against dismissal, the following explanation was given:

 

“—As you will appreciate, many companies now have in place nepotism policies to avoid favouritism, undue influence or conflicts of interest in employment decisions. Although ATEX has no such formal policy in place, the Board felt that there was a perception that the Company was being run as a “family business” and that this was inappropriate. It was also felt that having the wife of the CEO perform a senior executive role in the business created an unacceptable conflict of interest and damaged transparency and morale within the management of ATEX.”

 

Following her dismissal, Mrs Hawkins brought a claim of direct discrimination on the grounds of marital status, contrary to section 3 of the Sex Discrimination Act 1975.  The claim was struck out by the Employment Tribunal on the basis that her treatment was not because of her marriage but on the grounds of who she was married to. She then appealed to the EAT.

 

The President of the EAT (Mr Justice Underhill), sitting alone, heard Mrs Hawkins’ appeal and analysed the legal position as follows:

 

  1. what is proscribed is less favourable treatment on the ground that a person is married;

 

  1. the appropriate comparator “will usually be someone in a relationship akin to marriage but who is not actually married:[e.g. a “common law spouse”] ”

 

  1. “the question is not whether the complainant suffered the treatment in question because she was married to a particular man, but whether she suffered it because she was married to that man”;

 

  1. “in many, perhaps most, cases of this kind the ground for the employer’s action will not be the fact that the complainant and her husband are married but simply the closeness of their relationship and the problems to which that is perceived to give rise—. The employer may in giving his reasons for the conduct complained of have referred to the fact that the two of them are married, or have used the language of husband and wife, but if that merely reflects the fact that in their particular case the close relationship takes the form of marriage, and he would have treated her the same if they were common-law spouses, then section 3 will not apply;”

 

  1. if there is a stereotype that partners in an intimate relationship are incapable of maintaining confidentiality about business matters, Mrs Hawkins would have to show that any such stereotype applied only to married persons.

 

Following his analysis the President dismissed Mrs Hawkins’ appeal.  In so doing, he doubted certain aspects of the reasoning in the previous EAT decision in Dunn v Institute of Cemetery and Crematorium Management. In that case it was held that detriments arising from being married to a particular person, not only the fact of being married, could found the basis for a claim of marital discrimination.

 

So, frustratingly for employers and employees alike, it would appear there is conflicting authority at EAT level on this point. It will take a decision of the Court of Appeal or Supreme Court to resolve this conflict.

 

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About KellySayers

Kelly Sayers, Partner and Head of Employment Services at law firm Prettys

As Head of Employment Services at Prettys, Kelly leads a highly experienced team advising on a full range of HR and employment related issues and helping clients through difficult and often complicated disputes.

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