Office relationships: managing the hidden dangers with workplace love

Office relationships and breakups provide much gossip around the water-cooler.  As we have seen in recent years, it also provides fodder for the media.  Office relationships and the fall out, have the capacity to detrimentally affect decision-making, morale and reputations.

Earlier this year, the Australian Parliament was embroiled with a scandal involving the Deputy Prime Minister, a staffer and their relationship.  How to respond?  A 'bonk-ban'.  Such a "grey area", as someone intimately involved once said.

The fact is, many relationships are formed at work. Relationships Australia reports that up to 40% of people aged 35-50 years will develop a long term relationship with a co-worker.  Many workplace relationships end up in marriage and committed unions. Can an employer really prevent workplace relationships?

But one can't ignore the negatives that can come with office relationships.  A 2012 Australian Human Rights Commission survey revealed 25% of women had reported being sexually harassed at work.  The risk of a power imbalance is real particularly between managers and subordinates.  Then there is the impact office relationships have on morale and decision-making.  And when it doesn’t work, the fall out can cause many headaches.

So, should employers follow the Australian Parliament and simply ban office relationships all together?  Where is the balance?  In this bulletin, we tackle some of the controversy.

Favouritism and nepotism  

In Mihalopoulos v Westpac Banking Corporation [2015] FWC 2087, the Fair Work Commission said "employers cannot stop their employees forming romantic relationships".  Perhaps that is true.

Mr Mihalopoulos was a manager in an extramarital relationship with a subordinate.  Mr Mihalopoulos was dismissed because he was dishonest about his relationship with this co-worker (when asked),  he breached an apprehended violence order imposed by the worker (after the relationship ended) and inappropriately discussed details of their relationship with others at work. 

The Bank had a policy on office relationships.  "[S]uch relationships have the potential to create conflicts of interest", the Commission noted.  "It is virtually impossible in such circumstances to avoid - at the very least - the perception that the manager will favour the subordinate with whom they are in a romantic relationship when it comes to issues such as performance appraisals, the allocation of work, and promotional opportunities".  Such relationships required disclosure.

Mr Mihalopoulos sought to argue it was a private matter.  It was not.  Mr Mihalopoulos should have disclosed his relationship – “To be blunt it should be obvious to any reasonably intelligent person that for a manager … to form a romantic relationship with a direct subordinate creates the potential for a conflict of interest”, the Commission said.  Only with disclosure could any conflict be appropriately managed.

There is no doubt the risk of favouritism in some workplace relationships and its perception negatively impacts on morale and the quality of decision-making.  This in turn could effect productivity, staff retention and workplace culture.  But there is more at play.

The litigation problem 

It is not uncommon in the ‘fall out’ of an office relationship for allegations of sexual harassment to be made.  The debate becomes whether the conduct of a sexual nature during the relationship was welcomed.  Has any power imbalance influenced and tainted a so called “consensual” relationship?  

The fact is that any power imbalance creates a risk and susceptibility in many office relationships.  In our experience, the risk for employers of such a sexual harassment claim is real and cannot be ignored.  The claim and fall out can be costly.  It is a matter that needs careful management.


A further issue that an employer needs to think about is the potential reputational damage that can occur when these relationships become public discourse.  An office relationship ventilated through social media and the mainstream media has the potential to significantly tarnish brand and reputations.  

A need to act

Invariably, office relations are not truly a private affair.  As an employer, you cannot allow a relationship to form or continue where it could result in a confilict or have a negative impact on the workplace.  Good governance and HR requires careful management of the situation.   

Undoubtedly, a robust policy requiring office relationships to be promptly disclosed is a must. Training is also vital.  But should employers go further?  What about imposing an entire ban on office relationships?  Such an approach may have some attraction, but practically it is probably futile to ban all relationships.  

It might be worth banning relationships between senior staff and subordinates.  After all, senior staff are paid big dollars to make business prosper and not incur risk and liability. 

But such a ban is not a complete answer for all senior staff.  Indeed, it should not be assume that all relations between senior staff and a subordinate is necessarily inappropriate.

Arise, the love contract

If you accept office relations will happen, but you want to actively manage risks, a ‘love contract’ may be an option.  Yes, straight out of the litigious USA, a ‘love contract’ is a document signed by the employees in the relationship that:

  • attests to the relationship commencing and being consensual in nature (and releases the employer from any sexual harassment claims);

  • documents the employer’s expectation as to how both employees will behave during the relationship, setting ground rules as to matters like displaying affection at work etc;

  • records any agreement about decision-making, changes to reporting structure and other governance matters;  and

  • outlines an agreed strategy to deal with any breakup so that there is no disruption and disputation in the workplace, and warns of the consequences of any subsequent inappropriate behaviour.

The last step is vital in ensuring there is no harassing or potentially abusive behaviour from either party when the relationship ends.  Such behaviour will have negative impacts at work.


Office relations will happen.  An environment for disclosure and a mature discussion needs to occur about office relationships.  Employers and employees need to work together to avoid conflicts, poor morale and fall out.  A robust policy, and open discussion when a relationship forms, sets and reminds "lovebirds" of company expectations.

Give us a call if your business needs advice on managing workplace relationships.

Authors: James Mattson & Claire Limbach