Personal relationships in the workplace

Hazards for employers when employees ‘fish off the company pier’

The recent media attention given to the Seven West and Amber Harrison legal and social media battle, as well as to the recent claims of senior AFL executives being asked to resign due to extramarital affairs with junior female employees, has highlighted the potential consequences for employers when personal relationships in the workplace end in tears. An estimated 40% to 50% of workers have engaged in a romantic relationship with a co-worker, and with working hours increasing, it is hard to see these statistics dropping. But what can an employer do about employees that elect to fish off the company pier?

Can workplace relationships be banned?

Generally, employers cannot ban personal relationships in the workplace due to laws banning discrimination on the basis of relationship/marital status and lawful sexual activity. (FOOTNOTE: although grounds of discrimination vary between States, territories and federally).  So what are the rules when cupid shoots his arrow across the photocopier?

Employee duties

All employees have implied into their employment contracts an obligation of good faith and fidelity. This obligation imposes many obligations, but includes an obligation:

• not to place themselves into a position of conflict with their employer’s interests;
• not to bring their employer into disrepute; and
• not to conduct themselves in a way that is inconsistent with the employment relationship continuing.

Some employees who are ‘officers’ for the purposes of the Corporations Act 2001 (Cth), or who hold positions of particular trust and confidence and who may be fiduciaries, may have additional obligations to navigate.

Most commonly causing concern for employers is where one employee is subordinate to and perhaps supervised by the other party, giving rise to an actual or potential conflict of interests. For example, where the more senior employee had input into whether the employee they are in a relationship with receives a pay rise or promotion, whether the employee is disciplined, whether their expenses are approved and other matters that an employer would otherwise expect the senior employee to bring an independent mind to bear upon. Recently the CEO of QBE Insurance had his bonus slashed by $550,000 following his delay in disclosing to the Board a relationship with an employee.

A failure to make such a disclosure might in some circumstances entitle the employer to dismiss the more senior employee for failing to disclose an actual or potential conflict, particularly where the employer has a written policy on disclosing conflicts or the employment contract contains a clause with similar effect.

What are the potential claims employers can face?

The risks associated with the circumstances that can surround workplace relationships include:

• sexual harassment claims for which the employer may be vicariously liable – such as where one party continues to pursue the relationship at work after the other party has brought it to an end or by co-workers if they are disclosed to consensual sexual conduct involving the employees in the relationship
• general protections and discrimination claims – such as where it is necessary for the employer to dismiss or take some other form of action against one employee in the relationship, and that employee alleges it has been taken for an unlawful reason (perhaps a complaint of sexual harassment or bullying)
• unfair dismissal claims – where one employee is dismissed as a result of conduct relating to the relationship, such as failing to disclose a conflict, or harassing one party after the relationship ends, and
• workers’ compensation claims, allegations of breaches of workplace health and safety obligations, and personal injury claims, where for example one employee suffers a psychological injury, or where there is an assault (such as a sexual assault)

There are also considerable commercial risks, such as lost productivity (perhaps as a consequences of flirtation by the watercooler, or tea room gossip), brand damage and adverse media attention, as well as negative consequences for workplace culture (particularly if other employees fear a co-worker will gain preferential treatment due to their relationship with the boss).

What should employers do to manage these risks?

To ensure that employers manage the risks involved in personal relationships at work, employers should:

• ensure that they have written employment contracts with all employees containing obligations to disclose relationships that give rise to conflicts
• ensure that they have appropriate policies in place dealing with:
  • sexual harassment
  • discrimination
  • bullying
  • workplace health and safety
• ensure that employees have been trained in the policies and the policies are enforced from time to time
• ensure that employers (and managers) seek legal advice when these issues arise.

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.  It should not be relied upon and specific legal advice always be sought before taking any action.