With festive party season in full flow, employers will be on high alert for any inappropriate employee behavior. Workplace relationships between colleagues can pose a particular risk for employers in the financial services sector, given the regulators’ repeated emphasis on the importance of addressing non-financial misconduct effectively. With the FCA/PRA consultation on a new diversity and inclusion framework closing on December 18, this remains a topical issue.

The Sunday Times ran a readers’ poll earlier this year asking: “Do employers have a right to know of sexual relationships between staff?”. 89% of the 15,800 respondents voted “no”. The poll was in response to ITV introducing a broad “Personal relationships at work” policy after Philip Schofield resigned from the channel due to a relationship with a junior colleague, something he had repeatedly denied.  

Employees may believe that their right to privacy should take priority. However, workplace relationships pose complex issues for employers, particularly where senior executives are involved, causing their integrity to be called into question. BP’s chief executive, Bernard Looney, was forced to resign earlier this year after misleading BP’s Board about the number of colleagues he had relationships with. Similarly, Steve Easterbrook, the Chief Executive of McDonalds, was dismissed in 2019 for breaching the company’s policy forbidding managers from personal relationships with employees.

So how can employers balance employees’ personal connections with a professional and harmonious working environment?

4 steps to a more harmonious workplace

1. Introduce a clear policy

It is important that employees understand their employer’s expectations when it comes to workplace relationships. A clear written policy is an effective way to ensure this happens and to ensure that the parameters of personal relationships among colleagues are established. That said, employers may want to steer clear of ITV’s attempt to include the broad and uncertain category of office “friendships” under their relationship policy.

US employers often favor bans on romantic relationships at work, but this is less common in the UK due to the significant impact on UK employees’ protected rights to a private and family life. However, some employers may opt for a more restrictive approach for senior executives, where there is a higher risk of a power imbalance, inappropriate conduct, and potential damage to the company’s reputation.

One more practical alternative to an outright ban is to expressly require employees to disclose any such relationships at an early stage, emphasizing the need to address any day-to-day implications such as a conflict of interest. For example, if one staff member is involved in supervising the other and makes performance review and remuneration decisions, this could clearly cause problems.

As well as any disclosure obligation, the written policy should ideally offer guidance on when conflicts of interest arise and the potential disciplinary consequences of behaviour which breaches the policy.

The policy should be regularly reviewed and updated to reflect any emerging challenges or changes in accepted behaviour. That way, employers can show their commitment to maintaining a healthy and inclusive work environment.

2. Communicate with the workforce

Any new policy or change in approach should be fully explained to employees through open and comprehensive communication. It is much more likely that employees will feel comfortable enough to disclose romantic relationships with either their manager or HR team if employees know that speaking up will be supported and conversations will be treated sensitively and, where possible, kept confidential.

Historically, relationships between colleagues have often been conducted under the radar, so HR may have its work cut out trying to convince employees that transparency is a better approach.

However, it is likely to be worth the effort because it creates the opportunity for employers to deal with potential conflicts early on and minimise adverse impact. It may be as simple as changing an employee’s line manager within a team, or for larger employers, offering the chance to change the team or department.

3. Offer employee training

A policy may have limited impact without staff training. Employees need to understand the ethical issues of workplace relationships and the need for professionalism and appropriate conduct. It is an opportunity to remind staff that their behavior, whether in a romantic relationship or otherwise, should not disrupt their work or affect their job performance.

Staff training on the equal opportunity and anti-harassment policy can also be taken. One of the key risks when a workplace relationship fails is that one person (generally the more junior employee) feels that their career will be damaged or there is ongoing pressure to continue the unwanted relationship. This can quickly escalate into a grievance and/or legal claims for discrimination, harassment, or victimisation pursuant to the UK Equality Act 2010. Employers will be keen, rightly, to demonstrate that incidents of sexual harassment or retaliatory behaviour are treated seriously and dealt with swiftly.

Regular and effective training is a chance to reinforce that zero-tolerance approach. It can also be an important aspect of the reasonable steps of legal defense available to employers facing such claims.

4. Avoid the common pitfalls

• Address issues proactively: Do not just hope the awkward problem will disappear. Take steps to manage the situation however difficult and embarrassing the conversations may be regardless of the seniority of the people involved. This may involve reassigning responsibilities, altering business structures, or providing guidance on how to navigate professional decisions without compromising integrity.
• Act consistently: If there is a power imbalance in the relationship, it is important that the junior employee is treated consistently by their senior colleague. The same principle applies regardless of the sex of the parties involved. Otherwise, the employer opens themselves up to legal claims, particularly discrimination based on the protected characteristics of sex and age.
• Avoid favoritism: Staff can quickly become resentful towards colleagues in an ongoing relationship if there is a suggestion of favoritism at play, whether that is in the allocation of workload, client opportunities, or promotion. Reassurances from those involved are unlikely to be enough to change the wider perception, which can damage morale. The situation can also change over time, so it is best to keep an eye on workplace dynamics, even if the relationship is widely accepted.

Strike the right balance

By following our top tips, employers will be well-positioned to navigate workplace relationships between colleagues. There is a delicate balance to be struck between respecting employees’ personal lives and avoiding any negative impact on the rest of the workforce or damage to culture.

The potential for legal claims when things turn sour will also be at the forefront of many employers’ minds. This is a key reason why it is best to tackle this issue head-on rather than wait until problems arise.