The two recent resignations by male AFL executives who had affairs with lower ranked female employees has highlighted a complex yet growing issue for businesses in Australia and around the world.

Whilst most employers and HR managers in Australia simply ignore the issue taking a ‘don’t ask, don’t tell’ approach, this is not advisable in light of statistical evidence that workplaces are where many relationships begin. According to Relationships Australia in the 35 to 50 age group 40% of people meet their partner at work.

In the United States it is more common for employers to require employees to disclose, often in writing, any intimate relationships with colleagues.

Employers in Australia need to acknowledge that workplace relationships will occur and take steps to manage these situations. Employers who are proactive in this area will be better equipped to protect their businesses from litigation and other adverse consequences of workplace relationships.

The legal position on Workplace Relationships

We have recently seen a number of high-profile bullying and sexual harassment cases arising out of workplace relationships that have soured. Employers need to remember that where conduct occurs in a work setting which includes amongst others, client functions and the office Christmas party, they are vicariously liable for employee behaviour that breaches sexual harassment policies.

In George Mihalopoulos v Westpac Banking Corporation T/A Westpac Retail and Business Banking [2015] FWC 2087, the Fair Work Commission in Sydney upheld a summary termination of a long-serving bank branch manager for dishonest conduct and a failure to disclose a conflict of interest. The bank had specific policies and practices in place requiring disclosure of workplace relationships and the bank provided special training for employees (including the terminated manager) about how to manage conflicts of interest.

The branch manger was in a romantic relationship with a woman who reported directly to him and failed to disclose the relationship. Further the bank manager denied the relationship when asked on two separate occasions by the regional general manager. Ultimately, the existence of the relationship was confirmed when the manager was charged with the breach of an Apprehended Violence Order that had been taken out against him by the female employee.

The bank said that the manager had breached the corporate code of conduct, undermining the necessary relationship of confidence and trust. The Fair Work Commission agreed and Senior Deputy President Hamberger dismissed the bank manager’s application alleging wrongful termination.  SDP Hamberger found the dishonest conduct and the conflict of interest to be valid reasons for the termination.

The case may have gone differently for the bank if the bank had not had certain policies and practices in place.

What can Businesses do to protect themselves?

  1. Have a clear and detailed Disclosure Policy

We would recommend that employees who commence workplace relationships be required to disclose this to HR so that the employer can take necessary steps to prevent the relationship creating problems for the business.  The outcome/potential outcome for an employee who fails to disclose their workplace relationship should be made clear in the policy. The policy should be in writing and applied consistently for all staff.

  1. Implement a Conflict of Interest Policy

Once the business is aware of a workplace relationship a well drafted Conflict of Interest Policy becomes vital to prevent either an actual or perceived appearance of a conflict. For example if two employees are in a relationship and one is performance appraising the other or deciding on salary or promotion then there is a clear case of perceived bias which will likely result in decreased morale in other staff. A Conflict of Interest Policy would detail these issues to avoid their occurrence and may even provide for the reassignment of one of the employees depending on the circumstances and size of the business.

  1. Ensure all Policies are communicated to employees and train staff

All policies should be documented and distributed to employees so they are aware of their obligations. Appropriate training should also be offered to all staff and particularly managers and supervisors so they are able to recognise and respond effectively to conflicts of interest.

Pointon Partners has extensive experience in drafting policies for businesses. If you have any queries or would like to discuss a Disclosure and/or Conflict of Interest Policy please contact Michael Bishop or Amelita Hensman of our office.