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Are Your Employees’ Personal Lives, Company Business?

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23 Feb 2018

In light of the recent exhaustive and intrusive media coverage about The Honourable Barnaby Joyce MP’s affair with his staffer, the question that should be asked is whether the personal life of an employee is something with which the employer should be concerned or have any say. In this regard, the Prime Minister clearly is of the view that the answer to this question is in the affirmative. In other words, he sees no issue with an employer, in this case the Prime Minister dictating to his ministers what they can and cannot do in their personal lives, and in the most intimate of circumstances. Does this particular stance, however, apply to the working community at large as well as other workplaces?

It would not surprise anyone that the majority of couples in Australia in fact met their partner at work, so the suggestion that an employee may be able to take some kind of disciplinary action against an employee for doing what is completely normal and consensual seems a little far reaching. However, there is a real issue here and one that employers should carefully consider. It is self-evident that in some circumstances, the personal lives and actions of employees may have a real and negative effect on their employer, and by and large employers are entitled to protect their business interests from harm, including harm created by their own employees.

What does the law say about all of this?  The employment relationship can be governed by a myriad of laws, including legislation, an employment contract, industrial instruments and the common law. The common law imposes a number of implied duties on both parties to an employment relationship. An employee owes the following implied duties to their employer:

  • Duty to obey lawful and reasonable directions;
  • Duty to use care and skill;
  • Duty of fidelity and good faith; and
  • Duty of confidentiality.

In some instances, depending on the seniority and level of trust and confidence expected of the employee to properly perform the role, the employee may also owe a fiduciary duty to their employer. As such, employees must not bring their own interests in conflict with that of their employer. This fiduciary relationship will exist for employees holding senior managerial positions, company directors or officers, or employees who have access to sensitive and critical confidential information of the employer. It is not uncommon for contracts of employment to stipulate that employees owe further contractual duties to their employer including: not to act in conflict with the employer’s interests, not to conduct themselves in a manner that may bring their employer into disrepute and to abide by company policies.

The real question here is not whether an employer can regulate aspects of an employee’s private life, but rather to what extend can it do so? It goes without saying that employers have the right to discipline employees whose conduct may be harmful to an employer’s interests, however this is usually limited to conduct that would objectively be seen as unlawful or at least inappropriate. Given the changing nature of the modern-day workplace, including the fact that many employees now work flexible hours, often from home and in casual attire, the strictures of what was once a formal environment have eroded, making the prevalence of conduct that would have previously been frowned upon now commonplace at work. The advent of social media and the internet have exacerbated these issues. It is now common practice for employers to actively regulate employee behaviors regarding the use of social media where the actions of employees may damage the business. Given the real conflict that may arise as a result of relationships occurring between colleagues and even more importantly between managers and subordinates, it is incumbent upon responsible employers to have appropriate policies in place to ensure employees are not placing themselves in positions of conflict or by their actions potentially causing real harm to the business (or the potential for this to occur). Does this type of regulation extend to a ban on employees having romantic relationships with one another - probably not, but it is certainly possible and advisable that employees have positive obligations to disclose a relationship with a colleague to their employer, so any potential conflicts of interest can be dealt with appropriately.

Against the background of the foregoing, and the clear divide across the Australia community as to whether workplace relationships are acceptable, we recommend that employers carefully think about this issue for themselves and examine to what extent their existing policies and contracts of employment ensure such issues can be properly managed.

If any further information in relation to any aspect of this alert is required, or should you wish us to review your existing workplace systems to assess what safeguards are currently in place to respond to this issue and protect legitimate business interests, please do not hesitate to contact us.

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