by Sheila Spokes, Employment Lawyer at A&L Goodbody LLP
When the kiss-cam zoomed-in on a couple at a Coldplay concert, a private “office romance” between the CEO and Chief of People of a US start-up became a matter of public and online debate. Almost immediately the spotlight turned to the board. What would the professional implications be for the two members of senior management (if any)? How would the board deal with the impact on its reputation? What actions could they take to maintain confidence from the public, shareholders and staff?
While workplace relationships are not against the law, they do pose reputational and legal risks for employers. This article will provide an overview of these risks and best practices for employers developing a crisis response strategy.
Legal and reputational risks
Workplace relationships can give rise to a range of legal issues, including allegations of harassment, discrimination, and conflicts of interest:
- Increased risk of harassment and discrimination: One of the key risks is the potential for harassment or discrimination claims in the workplace, bearing in mind the very broad definition of harassment under the Employment Equality Acts 1998 to 2021 (the Acts), which can occur during or after workplace hours and irrespective of intent. Examples include unwanted conduct in the form of workplace “banter” when referring to the relationship in question, or either party engaging in harassment following any breakdown of the workplace relationship, which could also lead to an increased risk of victimisation, or inappropriate and unprofessional conduct in the workplace leading to allegations the conduct has the effect of creating an offensive or intimidating environment.
Recent amendments to the Acts, which introduced a general prohibition on the use of non-disclosure agreements in respect of allegations of harassment and discrimination, further highlight the potential impact on the employer’s reputation. While an employer is clearly responsible for taking steps to prevent workplace harassment, this must also be balanced against an employee’s right to privacy. Employers need to navigate these issues cautiously, particularly when the lines have been blurred by the parties involved. - Conflicts of interest: Such relationships can also lead to conflicts of interests particularly where one of the parties holds a management position. Even if there is no actual proof the relationship has created a conflict, the perception can do just as much damage to staff morale and the public’s perception of the company. For example, it can lead to questions about career progression, transparency in relation to governance processes and decision-making, perceptions of bias in existing workplace disputes, the fair exercise of discretion by management and the factors which might influence this. Other risks include inappropriate access to and the misuse of private or confidential client or other internal information and breaching covenants such as non-solicitation provisions.
- Workplace investigations and processes: Uncovering a once private relationship can undermine the impartiality and integrity of a workplace process particularly. For example, where a manager who has engaged in a personal relationship with another employee, makes a decision in relation to that employee or is a witness to an investigation in respect of the employee without disclosing the relationship. This raises serious questions in respect of trust and confidence, as well as the manager’s ability to lead staff and enforce policies going forward. These issues can cost an organisation dearly both in terms of the financial repercussions of re-running said processes, managing ongoing or potential legal claims as well as the reputational impact.
- Increased risk of reputational damage: Any public controversy or “viral moments” escalate quickly and can have a significant and long-lasting impact on a company’s reputation. A high-profile crisis can also lead to significant pressure on the board and senior management to comment publicly. Doing so could serve to bring further light to the matter or have significant legal implications if the wording of any response is not carefully thought out and reviewed by trusted legal advisors. Making statements before the facts have been ascertained and an investigation has taken place could potentially lead to claims in defamation. The risk is two-fold as a company may also need to be prepared to bring an action to protect its own reputation in the wake of a crisis if untrue and defamatory statements regarding the company have been published.
- Misuse of company resources and breaches of internal policies: If company resources are used in the context of such a relationship (e.g. to fund trips or expenses which do not correlate to a specific business need) this could also have significant ramifications including for example a breach of the company’s Code of Conduct or Ethics policies, or depending on the context, a breach of fiduciary duty may arise.
How to manage the risks?
- The importance of investigations and paid suspension: If the workplace relationship potentially breaches a workplace policy, an internal investigation should commence as soon as possible in accordance with the appropriate policy and fair procedures. The board should consider the composition of that investigation team and ensure that a credible independent process is followed. A myriad of legal issues can arise in conducting internal investigations such as privilege, due process, GDPR and employment law considerations. During an investigation the board should endeavour to collect and preserve any relevant documents / information which would assist in the investigation. It may need to consider potential grounds to suspend an employee with pay pending the outcome of the investigation. This could arise in this context to prevent the interference with evidence and/or to protect the employer’s business reputation. This is a particularly contentious area of law given the impact on the individual and their career. A case-by-case assessment should be undertaken and if suspension is justified, it will require that fair procedures are applied in advance of making any final decision.
- Communication is key: A crisis communications strategy is integral. This means having a plan in place for engaging with key stakeholders including the board, shareholders, executive management, employees, clients and customers. This plan should consider legal issues such as confidentiality, defamation, privilege and employment law considerations. This should include a statement acknowledging the issue, the employer’s response and the steps being taken to address this. These communications should be carefully prepared to avoid undermining the outcome of any investigation and the confidentiality of any processes while clearly articulating the Company’s values. Careful consideration should also be given as to whether any public statements should be made. This entails activating a crisis management team which could include legal advisors, executive leadership and PR advisors and assigning a single point of contact to deal with media enquiries to ensure a consistent approach in any statements issued on behalf of the company.
- Fail to prepare, prepare to fail: Employers should ensure their policies and procedures adequately capture the potential risks associated with workplace relationships. This will require management to review the definition of misconduct and gross misconduct to include a breach of trust and confidence, abuse or misuse of authority, breaching confidentiality, conflicts of interests or a failure to immediately disclose such conflicts when they arise. Such policies should appropriately refer to other policies including the dignity at work policy, code of conduct, compliance and ethics policies and disclosures policy. The board should encourage awareness of the policies and procedures at all levels and ensure that the tone is set from the top by the board and company leadership. Employers should ensure all staff are given regular training in relation to their company policies, that this is communicated and accessible to all staff, and that management understand the importance of their role in reflecting and proactively communicating policies. Regular monitoring of policies and procedures is essential to ensure their continuing effectiveness.
This viral moment serves as a timely reminder for boards to consider ways their organisation is prepared to address a “Coldplay Crisis”. Those who take proactive steps now will be well-positioned to manage similar challenges when they arise in the future.
