The dangers of hiring friends and family

Analysis

The dangers of hiring friends and family

A recent matter before the Family Court of Australia highlights problems that can arise when a spouse or relative is a work colleague.

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A recent matter before the Family Court of Australia S & S [2017] FamCA 192 (10 March 2017) illustrates problems that can arise when a spouse or relative is a work colleague.

The court refused a husband’s request to ban his estranged wife from entering the workplace: he'd claimed her presence was damaging the value of the business.

WorkplaceInfo often receives enquiries from subscribers on whether an employer can impose a blanket ban on the employment of an existing employee’s spouse or relative.

There have also been instances where a person appointed to a management position has provided employment opportunities to members of either their immediate family or their extended family group, or promoted a spouse or relative within the organisation. A manager who exercises such employment practices can be accused of nepotism by other members of staff, with a consequent impact on staff morale.

There is no statutory prohibition on an employer employing a spouse or relative, although the dismissal of a person because of their spousal or family relationship with another employee may breach discrimination legislation.

So what are the legal considerations for an employer in this circumstance?

Discrimination generally


The Fair Work Act (s351) provides that an employer must not take adverse action against an employee, or prospective employee (for example dismiss, or not hire), because of a person’s race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities,  pregnancy, religion, political opinion, national extraction or social origin (except where authorised under a state or territory discrimination law, where the employee is incapable of performing the inherent requirements of the job, or religious grounds).

A prospective employee is protected from a prospective employer refusing to employ them, or discriminating against them, in the terms and conditions on which employment is offered.

There would be concerns with a company policy which prohibits employment of a spouse or relative, for the sole reason that the grounds for such prohibition were based on that employee’s marital or family relationship with a current employee. The non-employment or non-promotion of a current employee’s spouse or relative is a common area of complaint with anti-discrimination authorities. Also, the dismissal of an employee because their spouse obtains employment with a business who is a competitor of the current employer is also a common area of dispute in unfair dismissal matters.

An employer would need to be careful with respect to the non-employment of or non-promotion of a spouse or relative, as it may be deemed discriminatory on the grounds of ‘marital status’, that is, married, de facto, or divorced. Discrimination may occur if a company policy is based on, for example, a stereotypical view of how persons of a particular status behave, for example, that married persons cannot work together or that the criminal activity of one partner will automatically affect the other.

While discrimination against an existing employee because of who their spouse is won’t be illegal in every situation, it would be more appropriate for an employer to deal with each individual case on its merits rather than having a specific company policy on this matter. An employee dismissed on the grounds of ‘marital status’ may claim unlawful termination under the general protections provisions of the Fair Work Act.

Conflict of interest


An employer must have an objective reason for implementing a company policy or procedure. For example, there would be legitimate reasons for ensuring a current employee cannot be directly involved with, or influence the selection of, a relative or spouse for work at the company, or the performance of work under the supervision of a relative.

The objective reason justifying such a policy is that a person is hired or promoted on their merits, which reinforces in the minds of the workforce that a person recruited or promoted is not based on reasons of a family connection.

The recruitment or promotion of a spouse of relative could also be perceived as being financially lucrative to the individuals involved. Many federal agreements containing such a provision do not usually restrict the type of relative covered by the policy. In this circumstance, a relative may include, but is not restricted to, a spouse or partner, child, sibling, or in-law.

Discrimination in favour of particular groups


There may be circumstances where an employer can discriminate in favour of some groups over others. For example, it would be appropriate to employ a male actor to play a male role in a film or play, or a woman to clean female toilets while women are likely to be using them (likewise for a male to clean male toilets under the same circumstances), or a person of a particular ethnic group to provide certain welfare services for that ethnic group. In these cases, an employer could proceed to employ a person of a particular race or sex.

An employer may be able to apply for exemption under the relevant state or federal anti-discrimination legislation under certain circumstances. Many of these exemptions are granted where the purpose of the targeted position or service is to give the particular group an opportunity that was previously unavailable to them, such as, to help redress past disadvantage or discrimination experienced by the particular group. Evidence of this disadvantage or discrimination would need to be provided by the employer when seeking such an exemption.

The bottom line: A company policy which bans the employment of an existing employee’s spouse or relative could breach relevant discrimination law as well as the general protections provisions under the Fair Work Act.
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