The Royal Bank of Canada (“RBC”) made headlines last year when they fired two executives, over allegations of an undisclosed relationship between them that led to preferential treatment. One executive was junior to the other and had received significant promotions and pay increases, allegedly with the other’s influence. Both parties claimed their relationship was platonic and denied anything sexual or romantic. That said, RBC’s internal workplace investigation revealed endearing text messages between the two, complete with nicknames and “I love yous.”

But regardless of whether their relationship was in fact romantic, RBC’s Code of Conduct required staff to disclose any “close” relationship to prevent any preferential treatment — which begs the question, how close is close? Further complicating the issue, the parties claim that RBC’s stance is influenced by gender stereotypes and assumes that men and women cannot be friends. It was reported that the male who was in the alleged relationship claimed that RBC was an “old boys’ club,” and that a different set of rules apply to women when it comes to their work relationships.¹

Most companies have Codes of Conduct to address conflicts of interest, requiring employees to disclose relationships so that the employer can modify reporting structures and decision making. However, the RBC case demonstrates the complexities involved in distinguishing between permissible relationships and ones that may give rise to a conflict of interest. As we see here, a Code of Conduct may not suffice. Employers may need more robust workplace policies to account for “grey areas” and to be more explicit in communicating what relationships and behaviours are appropriate.

In the wake of the heightened scrutiny around the power dynamics that are inherent in workplaces and academic settings, we’ve seen a rise in policies governing personal relationships in workplaces and in post-secondary institutions.

Fraternization policies in workplaces

The line between acceptable personal relationships in the workplace and those that could be perceived as conflicts of interest is often blurred, partly because there is a subjective element to personal relationships, which leaves the potential for misinterpretation. Fraternization policies provide an opportunity to clearly define what the company considers “fraternization” under the policy, to provide guidelines to ensure professionalism, and to address potential concerns where an employee in a relationship can influence the other’s employment (such as promotions, compensation, and performance evaluations).

Fraternization policies are particularly useful in hierarchical organizations where power dynamics can often lead to perceptions of favouritism or conflicts of interest. The policy can be used in conjunction with a company’s Code of Conduct and Sexual Harassment policies.

Some elements that could be included in a fraternization policy include:

• • Explain the purpose of a fraternization policy
  • Define the scope of prohibited conduct
  • Provide examples of some types of close relationships that may impact judgment, particularly in reporting relationships, for example, romantic relationships, roommates, family and extended family, close friendships from outside of work
  • Provide examples of some types of behaviours that may lead to impacting judgment (for example, regularly going for drinks one-on-one, texting outside of work hours about personal issues, etc.)
  • Outline any duty to disclose, and share that, if in doubt, disclose anyway to err on the side of caution
  • Describe consequences for failing to disclose

Evolving policies in post-secondary institutions

The conversation about the need to institute new policies has extended beyond corporate workplaces and into post-secondary institutions, specifically as it relates to consensual relationships between students and their professors, residence advisors, and mentors. This has been prompted by a growing recognition of the need to address power imbalances in academic settings and to protect students from exploitation.

In the past, many post-secondary institutions have addressed these types of relationships simply as a conflict of interest. However, we are seeing an emergence of stricter policies being introduced at post-secondary institutions, which specifically bans faculty from engaging in any sexual or romantic interactions with students. Some post-secondary institution’s policies stipulate that these relationships will be deemed to be non-consensual and result in findings of sexual misconduct against the faculty member. As such, it appears that there has been a movement by post-secondary institutions towards instituting more rigorous policies to address situations involving students.

Navigating the future

The RBC case highlights the complexities surrounding workplace relationships and the evolving nature of workplace policies. It also serves as a catalyst for organizations to review its policies on personal relationships in the workplace.

Power dynamics are inherently present in workplaces, and it is increasingly important for organizations to consider whether to institute policies governing personal relationships and what those policies may look like. If an employer chooses to institute a policy, there are a wide array of approaches it may take. A more rigid approach may involve strictly prohibiting close personal relationships between employees, while a more flexible approach may involve prohibiting relationships between supervisors and their direct or indirect reports. Regardless of the approach, it is crucial that organizations strike an appropriate balance between maintaining professional integrity and respecting personal relationships that may form.

¹ Sarah Treleaven, “The Scandal, the Firing and the Fallout: Anatomy of a Bay Street fiasco at RBC” (March 19, 2025), online: Toronto Life < https://torontolife.com/deep-dives/anatomy-of-a-bay-street-fiasco-at-rbc/>

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