'Things can turn ugly': legal tips about relationships at work

“Unfortunately, we have seen situations where things can turn ugly.”

So says Philippa Noakes, partner at Seyfarth Shaw Australia, in discussing the challenging area for HR of undisclosed relationships at work.

A recent case before the Federal Court of Australia is a prime example, where the allegation of a relationship between a CEO and former CHRO was included in a long list of claims brought by former executives.

The dispute included allegations of bullying and victimisation, misconduct, confidentiality breaches and a contentious settlement agreement.

An undisclosed relationship between a corporate leader and HR chief is enough to turn a complex legal challenge into a costly nightmare.

Defining workplace relationships

There is little gain in pretending romance doesn’t happen at the mill, said Noakes.

“You’ve got to be realistic,” she said. “People spend a lot of time with people at work, and they find themselves in relationships. It’s appropriate to put some measures in place to help organisations manage risks around that.”

When it comes to romance at work a broad spectrum of actions is available to employers, she said, from “love contracts” to banning work relationships entirely to doing nothing.

“Best practice is to have some type of disclosure requirement so that HR managers can manage those relationships and any conflicts of interest or risks that arise.”

The first step for HR is to define what is the threshold for a personal relationship. It’s a quandary, Noakes said.

“Are we talking about a casual relationship? What about a housemate who is in a reporting line? Or someone who has the ability to offer more shifts or change someone’s earning capacity?”

Minimising conflicts of interest

Noakes said personal relationships within organisations should be declared to minimise accusations of conflicts of interest.

“Disclosure of a personal or intimate relationship enables companies to manage risks presented by those types of relationships in the workplace,” she said, such as skewed decisions about remuneration or promotion.

Noakes has noticed more obligations around requiring disclosure at senior executive and senior management levels. Some organisations require disclosure for all workers, she said, “so that they can take steps, if necessary, to manage the risks and any perceived conflict of interest that could arise,” rather than apply a banket ban on relationships.

Policies around disclosure of workplace relationships

Rules around disclosure can be part of the employee handbook or employment policies, so that there is a positive obligation on workers to disclose a relationship, Noakes said. Relationships can be managed in line with a conflicts-of-interest policy or positive disclosure obligations.

“If you don’t have those policies and someone discloses a relationship to you, you should take that information away and consider, ‘Is there a conflict of interest there that needs to be managed? What steps would be appropriate to manage that? Do we need to transfer someone to a different manager? Do we need to ensure there’s another check in a remuneration decision?’” she said.

HR managers must initiate frank conversations with individuals and then be prepared to redesign reporting lines, she said. The “love contracts” that exist in the US, however, might be a step too far, Noakes said, where parties sign on the dotted line that their relationship is consensual and they’ll announce when it ends.

Allegations of sexual harassment or discrimination

When a relationship goes sour, allegations of sexual harassment or discrimination can follow. It’s not unknown for HR managers to have to manage the terms of an apprehended violence order (AVO) in a workplace environment, she said.

“These are not theoretical things; they do happen,” Noakes said. “They are really tricky issues to manage.”

An AVO requires an individual to comply with mandatory orders. If an employer is aware there is a risk to an employee’s health and safety in the workplace because of an AVO or harassment, it must meet its obligations to provide a safe and healthy workplace.

“When you’re dealing with AVOs and allegations of sexual harassment, [employers are] very concerned about ensuring employee safety and managing through that process,” she said.

As to possibilities of fallout from a bitter break-up, positive duty under the Sex Discrimination Act puts an obligation on employers to take all reasonable and proportionate measures to prevent sexual harassment and sex discrimination – and managing those risks, Noakes said.

“[Disclosure] will help companies and employers to manage risks when, or if, those relationships turn sour.”