The legal fallout from dating at work is back in the headlines after the Royal Bank of Canada dismissed its chief financial officer for alleged misconduct. The Bank stated an internal investigation uncovered evidence showing that Nadine Ahn violated its code of conduct by engaging in an undisclosed personal relationship with a fellow employee that allegedly resulted in preferential treatment, including promotions and salary increases.
This incident reflects the potential conflict of interest that can arise when staff and their subordinates enter into personal relationships and, more broadly, whether companies have the right to enforce policies that forbid dating at work.
Despite the potential risks, office romances between consenting colleagues are not inherently illegal, and there are no statutes or laws against dating anyone at work. Why then do employers fear legal liability and when does a consensual workplace relationship become an employer’s business?
Employers have a legal duty to ensure that their workplaces are free from discrimination and harassment. Harassment is broadly defined as unwelcome conduct that negatively affects the work environment or leads to adverse job-related consequences. This conduct becomes sexual harassment where it is sexualized in nature. Even consensual workplace relationships can lead to human rights, retaliation or sexual harassment claims, especially when those relationships end.
Consensual workplace relationships can become problematic when one of the people involved is the other’s manager as there is an inherent power imbalance because the more senior employee is in a position to confer, or deny, workplace benefits. Other employees may complain of preferential treatment or a toxic environment where a superior has a relationship with one of their peers. Indeed, this is exactly what RBC has accused its former CFO of doing – favouring the employee she was in a relationship with.
For these reasons, many companies have made workplace romance their business by establishing policies, attempting to address the situation. At one end of the spectrum are policies that require the disclosure of any personal relationships so that steps can be taken to reduce the risk of liability on the employer. At the other end are policies that prohibit relationships between managers and subordinates or prohibit intimate relationships among co-workers altogether.
Employees can be terminated with severance in most circumstances, including for being in a personal relationship where the employer does not approve. But when can an employee be terminated for misconduct (for example, without any severance) for engaging in a consensual workplace relationship?
If an employee fails to adhere to a workplace code of conduct or policy, it can be cause for dismissal without severance. An employer has the right to establish its own rules. If its policies are clear and consistently enforced, it will have a much stronger case. However, courts will still consider context. Even if there is a violation of a policy, in some cases it may not be cause for dismissal when taking into consideration the employee’s tenure and seniority, whether there is a prior disciplinary history, how the relationship affected other employees in the workplace and the nature of the company’s business, among other factors.
Where the relationship is between a senior employee and a more junior one, an employer can more easily justify a termination without severance. The law requires company leadership to put the company’s interests before its own. Certain elements of engaging in a personal relationship, such as being in a position to favour the junior employee, can create a serious conflict of interest and undermine the trust placed in the senior employee.
Where there is no policy surrounding workplace dating, employees may still have a duty to disclose the relationship to the company. Whether this is necessary or simply a good idea will depend on the context (for example, what type of workplace it is and whether colleagues or clients may be placed in uncomfortable situations). The onus is then placed on the company to determine what steps should be taken, if any, to ensure there is no conflict of interest. If an employer is made aware of and fails to censure the relationship, it becomes more difficult, if not impossible, to later assert that employee acted improperly and to terminate without severance.
Employees should also consider that the modern definition of the workplace is broad. Conduct that occurs outside of the office, including on the internet or social media, can easily give rise to a workplace complaint or code of conduct violation.
RBC’s public announcement about the firing of its former CFO underscores one final important point about handling high-profile employee dismissals. It must be able to prove its case. Taking steps to damage the reputation of an executive will rebound poorly in court if a judge determines that the allegations were embellished or that RBC’s former CFO was wrongfully dismissed.
Daniel A. Lublin is a partner at Whitten & Lublin, representing clients in workplace legal disputes. He can be reached at Dan@canadaemploymentlawyer.com.
Daniel Lublin