A workplace affair

Personal relationships in the workplace seem to be of increasing concern to employers. Many businesses have developed ‘relationship policies’ in an attempt to exercise some control over these relationships, ranging from informal discouragement to contractual prohibitions.

However, relationship policies are in potential conflict with the Human Rights Act (HRA) which protects an individual’s right to a private life, and it is questionable whether a policy requiring disclosure of a personal relationship with a work colleague could be enforced against an employee who failed to do so.

A relationship policy of this kind has recently come under the spotlight in a case in which IT design and project management company Coleman Bennett International is seeking damages from a former employee, Terence Hunter. The company says the damages arise from Hunter’s failure to inform his line manager about his relationship with another employee, which amounted to breach of his contractual obligation to do so. The employer claims that during the relationship Hunter spent excessive time out of the office, on personal phone calls, texts and emails which meant he neglected his duties. As a result, the employer claims it lost clients and contracts, giving rise to financial losses of almost £470,000.

Hunter’s right to a private life will be relevant to the Court’s decision on whether his contractual obligation to tell of the relationship is valid. When looking at this question, the employer’s policy and practice will be reviewed in the context of it being “necessary in a democratic society” to protect the rights or freedom of others. It is highly unlikely that the interests of the employer needing to know of a private relationship would satisfy this test.

If the court finds Hunter was contractually obliged to tell his boss about a personal relationship with a colleague, the link between his failure to do so and the losses suffered will be difficult for the employer to prove. It is unclear what Hunter’s line manager would have done differently had he known of the relationship or how this might have avoided the losses.

Closer analysis suggests the better argument for the employer is to attribute the losses to the amount of work time the relationship occupied and the distraction from proper duties this caused. If the employer can show that Hunter has caused loss through his negligence or breach of contract, it might succeed in the claim. The right to sue an employee on this basis is well established but rarely used. It is commonly available when an employee leaves without giving full contractual notice, but the employer will usually face difficulty showing material loss given they have no need to pay the employee’s salary from the date they left. Generally the level of loss will be limited to the cost of recruiting a replacement and the additional cost of hiring a temporary worker less the ‘saved’ salary.

It will be for the employer to prove the link between Hunter’s breach of duty and the losses claimed. Hunter may well be able to suggest there were other reasons why the contracts were not performed or the clients lost or not won. However his rights under the HRA will not be relevant because the employer’s claim would be based on negligence and breach of contract.

Victory by the employer on this basis would not make new law; however, it may increase employers’ awareness of the existing legal position. As a result, employers faced with employee claims may take more seriously the possibility of “biting back”, rather than simply defending or more likely settling the claim. Bringing a counter claim (limited to 25,000 in value in the employment tribunals but unlimited in the County or High Court) may be a tactical advantage, as employees who usually have little to lose by bringing a claim would face the possibility of paying much more than they could afford and not just in legal fees.

The other outcome of a win for the employer here is that employers might believe that relationship policies are enforceable against employees. This is unlikely to be correct, even where they are contractual.

We await the outcome of this case with interest, aware that victory for the employer could be achieved without the court upholding the relationship policy at all.

Roger Byard is a partner in the employment law department at Cripps Harries Hall

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