Romance may be personal, but when it enters the workplace, particularly in reporting hierarchies, it becomes a matter of governance.
On September 1, Nestle dismissed Laurent Freixe as CEO with immediate effect for concealing a romantic relationship with a direct subordinate.
'The departure of Laurent Freixe follows an investigation into an undisclosed romantic relationship with a direct subordinate, which breached Nestle's code of business conduct,' the Swiss food giant said in a statement.
Like Nestle, several multinationals have internal codes of conduct around direct reporting relationships that can result in potential conflict of interest.
Such policies require employees to disclose personal ties -- whether with family members, spouses, or romantic partners -- so that the company can step in and reassign reporting structures.
Several Indian companies have similar safeguards in place, though few were forthcoming about their policies when contacted.
Hindustan Unilever was among the handful to respond. A spokesperson of the fast-moving consumer goods company said: "At HUL, our Code of Business Principles guides how we manage situations that may create potential conflicts of interest... Any potential conflict must be clearly disclosed so it can be appropriately managed."
A senior executive at a leading automobile company, however, admitted that disclosure rules can be tricky to enforce.
"Code and romance -- does it not sound like an oxymoron?" he asked. The company informally ensures spouses are not placed in superior-subordinate roles but does not have a written human resources code for workplace romance, said the official who did not want to be named.
"It is practically impossible to implement. Why would an employee disclose who he or she is having coffee with?", he said.
"Many relationships are exploratory and may not lead to marriage. How can we compel employees to declare such encounters?"
Employees are usually mindful of the risks, he added, particularly since any complaint under the prevention of sexual harassment (POSH) Act could arise if a subordinate feels uncomfortable or perceives bias or discrimination because of such a relationship. "Employees, thus, usually avoid such relations," he said.
Issues such as these pose challenges globally. In July, New York-based tech firm Astronomer announced the resignation of its CEO Andy Byron after he was caught on camera embracing an employee at a Coldplay concert.
Following the scandal, the company issued a statement saying, 'Our leaders are expected to set the standard in both conduct and accountability.'
Speaking to Business Standard after that incident, Amarnath Saxena, chief technical officer-Commercial at Bajaj Allianz General Insurance, highlighted the legal minefield such situations create.
"Situations involving personal relationships in the workplace, particularly between a senior leader and a subordinate can potentially lead to legal challenges, especially if there's a perceived conflict of interest, allegations of favouritism, a hostile work environment, or breach of corporate governance norms," he said.
From an insurance perspective, Saxena pointed out that Directors & Officers (D&O) Liability Insurance becomes vital in such scenarios.
"D&O policies also provide cover for employment practice-related claims (EPLI)," he said.
If, for instance, an employee alleges that a relationship was not consensual, the EPLI cover could meet legal costs and settlements.
Wrongful termination suits arising from such cases may also be covered. "Alternatively, if shareholders allege that the incident constitutes mismanagement or breach of duty by the board in overseeing senior leadership conduct, the D&O policy could be triggered," Saxena explained.
With careers and reputations at stake, and emotions often running high, these cases can quickly spiral into costly lawsuits, he cautioned.
A senior official at a large IT services firm said spouses working in the same company was common in the IT industry, but they worked in different departments.
Nestle's Freixe, 63, is not the first corporate leader to lose his job over an undisclosed office romance.
In 2023, BP CEO Bernard Looney resigned after failing to fully disclose past relationships with colleagues.
Four years earlier, McDonald's fired CEO Steve Easterbrook for violating company policy by engaging in a consensual relationship with an employee.
The Chicago-based fast-food chain explicitly prohibits intimate relationships between employees in a direct or indirect reporting line.
These cases underscore a common corporate reality: Romance may be personal, but when it enters the workplace, particularly in reporting hierarchies, it becomes a matter of governance.
For leaders, the message is clear. What companies demand is not the absence of relationships, but the presence of disclosure.
Shivani Shinde, Ishita Ayan Dutt and Gulveen Aulakh contributed to this report.
Feature Presentation: Rajesh Alva/Rediff
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