Legal Boundaries for Managing Spouses at Work
Discrimination in the workplace remains a key concern for HR professionals. The recent case of Cheuk Kit Man v FWD Life Insurance Company (Bermuda) Limited and others [2025] HKCFI 1369 sheds light on how Hong Kong courts assess claims of marital and family status discrimination under the Sex Discrimination Ordinance (SDO) and Family Status Discrimination Ordinance (FSDO) respectively, particular in the context of termination involving married employees.
Facts of the Case
Cheuk (the “Plaintiff”) was a Senior Agency Director at FWD Life Insurance Company (the “Company”). Her agency under the Individual Agent’s Agreement (the “IAA”) was terminated shortly after her husband, a prominent Regional Director at the Company, resigned. The Plaintiff alleged that her termination was discriminatory under the SDO and FSDO and in breach of the implied term of good faith.
The company denied any alleged unlawful termination, asserting that the termination of the Plaintiff’s employment was a business decision tied to her husband’s resignation, and counterclaimed over HK$4 million for repayment of bonuses and incentives under clawback provisions in the Plaintiff’s offer letter.
Key Legal Issues and Findings
Discrimination claims dismissed
The Plaintiff argued that her marital status or family status, i.e. as the wife of a former Regional Director, were reasons for her dismissal.
“Marital status” is defined under the SDO to mean the state or condition of being single, married, married but living separately and apart from one’s spouse, divorced or widowed. “Family status” is defined under the FSDO to mean the status of having responsibility for the care of an immediate family member, including a spouse.
In determining whether the Company’s termination decision amounts to unlawful marital status discrimination, the Court applied a comparator test: Would a person with a different marital status in a similar or not materially different circumstances, i.e. a hypothetical unmarried FWD agent in a romantic relationship with the husband of the Plaintiff, have been treated differently?
The Court considered that the relevant provision under the SDO on unlawful direct discrimination focuses on whether the differential treatment arose from the individual’s marital status itself, not the identity of their spouse. The Court found that the termination was based on the identity of the Plaintiff’s husband – someone who had openly expressed his desire to take his team with him – not on the Plaintiff’s marital status itself. Therefore, the marital status discrimination claim was dismissed.
The family status discrimination claim also failed. Although the Plaintiff and her husband are immediate family members, the Plaintiff acknowledged that her husband was healthy and did not need assistance with his daily living needs at the relevant time. As the Plaintiff did not bear caregiving responsibilities, she did not qualify as having family status under the FSDO.
No implied term of good faith in termination
The Plaintiff argued that the IAA contained the implied terms requiring the Company to exercise termination rights in good faith and for valid reasons (the “Implied Terms”). The Court rejected this, finding that the termination clause relied upon was unqualified and did not require justification. While acknowledging the relatively harsher financial consequences for agents as compared to the Company (due to the clawback provision, discussed below), the Court held that such Implied Terms were neither necessary nor obvious to give business efficacy to the IAA.
Clawback provisions enforced
As the Court found that there was no unlawful termination, the Company successfully counterclaimed for over HK$4 million in bonuses and incentives, relying on clawback clauses triggered by early termination. The Court also considered whether an implied term should exist to prevent arbitrary termination of the IAA in circumstances where such termination would trigger the agreed clawback, thus depriving the Plaintiff of the bonuses. It concluded that the Plaintiff had accepted the risk when signing the IAA hence an implied term was not required.
Takeaways
Although this case involved an agency relationship, the Court’s interpretations of the SDO and FSDO and a party’s contractual right to terminate are equally applicable in employment contexts. Notably, this case also addressed a question left unresolved in an earlier interlocutory judgement – namely, whether being married to a specific individual could amount to marital status discrimination. That uncertainty had previously led employers to act cautiously when managing situations involving employees who are married to one another.
Practical Tips for HR Professionals
- Establish clear policies: Develop and communicate policies addressing potential conflicts of interest and/or potential bias. Emphasise the importance of maintaining confidentiality in workplace matters, especially if one spouse has access to sensitive information;
- Avoid assumptions: Make employment decisions based on individual performance and conduct, not on marital or family connections. Avoid assuming an employee’s actions are influenced by their spouse.
- Document decisions: Maintain clear records of the business rationale behind employment decisions, especially where family relationships are involved.
- Train managers: Equip managers with training to help them identify and prevent discrimination or unconscious bias based on marital or family status. While the SDO and FSDO allow for limited exceptions, such as preventing double benefits to married employees (including housing, education, air-conditioning, passage, or baggage allowances), and restricting the employment of family members where there is a significant risk of collusion that could harm the business after enquiry, these exceptions must be applied with caution.
The judgement is available here.
