The Regulations

The development of personal relationships in the workplace is not entirely a personal matter. There are several aspects employers need to be aware of when managing personal relationships between employees.

There are no hard and fast legal rules regulating personal relationships between employees in the same company. The key reason for having guidance around this issue is so companies can identify any actual or perceived conflict of interests.

It is standard practice to have disclosure rules in place, set out in the staff handbook or compliance manual and communicated to employees. Rules that require employees to report personal relationships with colleagues can help identify conflicts of interest. The company can use the information to structure reporting lines, accountability and risk management functions.

When implementing a disclosure mechanism, employees should be asked to disclose any personal relationships with other employees in their new-hire forms and on an ongoing basis during employment. This may be more difficult for new relationships that develop at work, as employees may want to keep the relationship a secret at an early stage in case the relationship fails.

To deal with such cases, employers may introduce a system that encourages employees to report such relationships confidentially, so that at least someone is informed and can monitor the situation.

The Risks

These can include where an employee works in the compliance department and his or her partner works in a line of business they support. A conflict of interest can arise if the compliance officer fails to consider the potential failings in the business that requires reporting in an objective manner.

Another conflict of interest can arise when one of the employees is involved in making decisions regarding his or her partners’ compensation, which can lead to conscious or unconscious bias.

Also, when two staff in the same department are in a relationship, other employees may feel left out or excluded, which can cause tension. There is also a greater risk for personal issues to affect the employees’ duties.

Other potential issues may include a failure to provide appropriate supervision and control systems, which can be a potential risk, particularly as some regulators or supervisory authorities provide for requirements regarding risk management and appropriate oversight.

If such problems materialise, the company can determine if changes to working arrangements need to be made, such as employees being asked to move to a new role or leave the company.

The Harassment Issue

Issues often arise when relationships go wrong and employees bring their personal problems into the workplace. If one person is in a position of authority, it can often lead to claims of power harassment by the aggrieved party.

In countries like Japan, senior individuals could fall foul of claims such as power harassment, which refers to bullying of a subordinate by an individual occupying a position of authority.

There is no law in Hong Kong that regulates power harassment or bullying specifically. However, employers should still watch out for potential complaints of unfavourable treatment and ensure the company has a proper mechanism to handle such complaints.

The Duty of Trust

An employer is at all times under a duty to behave in a manner that does not – or is not calculated to – destroy the relationship of trust and confidence between employer and employee.

Failure to investigate a harassment complaint may amount to a breach of duty of trust and confidence.

If an employee resigns in response to such a breach, it can be regarded as constructive dismissal, which means the employee will no longer be bound by any post-termination obligations such as restrictive covenants, intellectual property and confidentiality provisions.

 Employers should also be aware that there is protection from discrimination on grounds of family or marital status.

To minimise risks of infringement of the anti-discrimination ordinances, the employer should avoid singling out employees in the same company who are engaged in personal relationships and subjecting them to less favourable treatment.