Conduct and PerformanceGeneral

Romance in the Workplace

People spend a significant amount of time with each other at work, it is therefore perhaps unsurprising that workplace relationships are common with which many employers need to deal. Most employers are often mortified at the prospect of having to discuss intimate or personal details with their employees and usually adopt the “don’t ask, don’t tell” approach. However, not only can a workplace romance impact on other employees, if such relationships sour, they can develop into bullying and sexual harassment claims, leaving the business and human resource professionals left to pick up the pieces. It is thus important for employers to know how to effectively manage these situations and ensure reasonable measures are in place so the business is not adversely affected.

For the avoidance of doubt, nothing at law prevents two employees from engaging in a genuine and consensual relationship, provided such relationship does not otherwise infringe upon either employee’s ability to discharge their duties to the employer. Treating employees unfavourably because of a genuine workplace romance can amount to unlawful discrimination. However, although this is the starting point, there are a series of important considerations both employees and an employer ought to keep in mind. In order to assess these matters, it is fundamental to examine how the Courts deal with this issue.

For example, in a Fair Work Commission (“FWC”) decision handed down last year, the very issue of a workplace relationship was considered to be a potential conflict of interest. In Mihalopoulos v Westpac Banking Corporation t/a Westpac Retail and Business Banking [2015] FWC 2087, the FWC rejected an unfair dismissal application by a Westpac manager who failed to disclose an office affair with his subordinate employee. The Applicant in this case, Mr Mihalopoulos, was employed at Westpac as a Bank Manager of its Wollongong Branch and had been employed for over 16 years. In February 2014, he commenced a romantic relationship with a colleague, “Ms A” who directly reported to him. Mr Mihalopoulos’ superior heard rumours about the pair being in a relationship and asked Mr Mihalopoulos on two separate occasions whether he was in fact in a relationship with Ms A. On both occasions, Mr Mihalopoulos denied the relationship. Ms A was a high performing employee. However, during the relationship Mr Mihalopoulos took steps to aid Ms A’s career development by positively advocating a promotion for Ms A outside Westpac’s usual recruitment process. He also visited a Westpac branch for the first time in which Ms A had been seconded, to speak to a specific employee and then spent most of his day performing small tasks for Ms A such as photocopying.

After approximately six months, the relationship soured and Mr Mihalopoulos and Ms A became the subject of an interim apprehended violence order (“AVO”). Mr Mihalopoulos then informed his supervisor of the romantic relationship and the consequential AVO to which he was subject. Furthermore, Mr Mihalopoulos then took it upon himself to inform some of the staff at Westpac of the relationship with Ms A and the subsequent Police involvement. On 1 September 2014, Mr Mihalopoulos again contacted his supervisor to disclose that he had now breached the AVO and was subject to related charges. Westpac then suspended Mr Mihalopoulos on full pay and proceeded to investigate the matter.

The allegations put to Mr Mihalopoulos by Westpac included:

  • being dishonest about his relationship with Ms A when asked as he did not disclose that there might be a real or perceived conflict of interest;
  • breaching the AVO and in doing so exposing Westpac to reputational damage; and
  • inappropriately disclosing details of the relationship to his subordinates.

Ultimately, his supervisor having considered Mr Mihalopoulos’ responses to the allegations, formed the view that they had irretrievably lost trust and confidence in Mr Mihalopoulos and terminated his employment with four weeks’ pay in lieu of notice. In the proceedings, Senior Deputy President Hamberger held that even though Westpac relied on several reasons for dismissal, Mr Mihalopoulos’ failure to disclose his relationship with Ms A in combination with repeated dishonesty when asked about the relationship by his supervisor amounted to a valid reason for his dismissal. Senior Deputy President Hamberger explained that even though employers cannot stop their employees forming romantic relationships, the potential for conflict of interest was significant. As such, employers have a reasonable expectation that employees will disclose any potential conflict of interest so it may be appropriately managed. In addition, His Honour found that Mr Mihalopoulos should have disclosed the relationship and that his employer was entitled to expect that he would do so pursuant to the obligations contained in his employment contract and the bank’s conflict of interest policy. Finally, Senior Deputy President Hamberger acknowledged that Mr Mihalopoulos held a senior position which required a high degree of honesty and personal integrity. Against that background, his dishonesty fundamentally undermined the trust and confidence which is at the heart of the employer-employee relationship.

This decision reaffirms that employers are entitled to know about romantic relationships between employees where this creates a real or perceived conflict of interest. Employers should ensure employees are clear about the obligation to disclose and to protect the interests of the business. If employers or management suspect a romantic relationship exists in the workplace, then it should be addressed and employers should have proper policies and procedures dealing with this issue. In light of this particular decision, it is recommended that employers should also include conflict of interest clauses in their employees’ employment contracts imposing positive disclosure obligations on their employees in such circumstances.

The other significant issue for employers, insofar as workplace relationships are concerned, is how to respond (and to what extent) in circumstances where the relationship breaks down. When romantic relationships are formed in the workplace and then unfortunately deteriorate they may evolve into a more serious concern triggering a raft of obligations under applicable employment and human rights legislation, the work health and safety regime and potentially aspects of criminal law. In this regard, it is not beyond the realm of possibility that employers may need to respond (including by investigation), and sometimes with Police involvement, to the side-effects of a workplace relationship gone bad. For example, there have been instances where once the relationships sours, one party then continues to pursue the other developing into both criminal and civil claims, such as bullying, sexual harassment and even criminal charges.

In order to deflect the risk of being vicariously liable to an employee the subject of a soured workplace romance, it is vital that employers “take all steps reasonably practicable” to prevent such acts occurring in the workplace. In order to satisfy this legal requirement, employers should ensure they:

  • have clear guidelines regarding appropriate behaviour at work including dealing with behaviour between employees who may be in a romantic relationship;
  • have a requirement that employees in senior or managerial roles who have relationships with subordinates disclose this to the employer;
  • provide regular training to managers and staff regarding acceptable workplace behaviours;
  • implement policies around appropriate workplace behaviours (specifically with respect to sexual harassment, bullying and discrimination) and set formal procedures to deal with such grievances; and
  • take appropriate remedial and disciplinary action if warranted including by responding to employee concerns in a timely fashion by way of a neutral investigation process.

If employers fail to take reasonable steps, they can be held legally responsible for unwelcome acts committed by an employee, and often this can present a very challenging issue for an employer where one participant to a workplace romance acts inappropriately at work once the relationship has ended. Employers can also be liable when computers, phones or other electronic devices are used to harass a person, for example by sending unwelcome sexualised text messages, emails or posting offensive material on social media sites.In addition, employers need to be cognisant that the workplace extends beyond the realms of the physical surroundings in which work is performed. For example, in the case of Leslie v Graham [2002] FCA, an employer was found to be vicariously liable for sexual harassment in a context where the harassment occurred between two employees in the early hours of the morning in a serviced apartment they were sharing, while attending a work related conference.

Although everyone deserves to find love, doing so in the workplace can create a number of complex issues for employers. If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to this topic, please do not hesitate to contact us.

This alert is not intended to constitute, and should not be treated as, legal advice.

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