An ongoing, high profile sexual harassment case in which it is alleged an energy company’s Managing Director had to be shadowed by a Human Resources team member to avoid any inappropriate behaviour raises many questions.

As is common in sexual harassment cases, one of the questions raised is that of whether the behaviour was unwelcome. Surprisingly, a number of sexual harassment cases actually arise from previously consensual relationships and romance in the workplace is widespread.

According to Psychologist Geoff Carter, of Queensland’s Griffith University, who interviewed 300 employees aged between 18 and 40, eight out of 10 have shared more than the stapler at work. But while many work romances blossom into serious relationships – even marriages – more often than not they end in tears. It is estimated that about a quarter of workplace romances end in a sexual harassment claim.

One recent example, where a Sydney woman and three co-workers were sacked by a major telecommunications provider following a liaison after a work party, raised the question of where does the job end and your private life begin?

The woman later took the telco giant to the Australian Industrial Relations Commission for wrongful dismissal following a workplace investigation. Interestingly, it was not the male colleagues involved who had complained but three female co-workers who said being in the same hotel room at the time of the incident was enough to claim sexual harassment.

Sordid details aside, the case questioned what constituted a ”work-related” function. The company argued that the co-workers would not have been there if they had not attended the earlier work-funded party. The woman countered that the room was booked privately and had nothing to do with work.

The commission awarded her compensation and the right to be reinstated but she later lost on appeal. The company had won the right to sack her.

While Australian bosses are still clinging to the “don’t ask, don’t tell” approach, one of Australia’s leading employment lawyers, Kate Jenkins, says managing the legal fallout from office relationships is a growing issue for businesses in the US.

There, more than one in three workers have to tell their boss if they become intimately involved with a colleague. Some US companies adopt policies that ban or limit workplace dating–all in the name of lowering liability.

Employees have fallen foul of this at the highest levels. A number of leading US CEOs have lost their jobs as a result of office flings – although some have later married their lovers. The careers of world leaders, notably the former US President Bill Clinton, suffered negative effects from extra-marital office flings.

Increasing time demands being placed on staff – particularly since the global financial crisis – may have inadvertently turned the workplace into a social hub. A time-use study by the Australian Bureau of Statistics reveals that in 1992, people socialised outside of work for 77 minutes every day, but by 2008, that socialising time was down to just 10 minutes. Several US studies also have shown that between 33% and 40% of romantic relationships these days begin in the office. But for bosses, Ms Jenkins says navigating the office affair can also be an HR nightmare.

“In Australia recently we’ve had a lot of high-profile bullying and sexual harassment cases and a lot of them have arisen out of office romances gone wrong, so it’s a very tricky area for employers,” she said. “There’s a lot of examples my clients have of very startling sexual harassment incidents in the car park, at the Christmas party, which was really an aggrieved lover trying to rekindle the flame.”

In the United States it is now standard practice for workers to disclose intimate relationships with colleagues. This may involve written agreements, which bind couples to clear rules of engagement at work – helping to protect the company from legal risks. In stark contrast to the United States, bosses in Australia seem to shy away from the prospect of having to discuss intimate details of their workers’ personal lives, it is an issue still largely ignored by companies and one which could be a significant risk.

“Managers say they don’t want to be having this conversation,” Ms Jenkins explains. “There’s a really strong sense that this is people’s personal lives and it’s got nothing to do with work. And that is simply not how things are playing out now. “I think some of the cases that have involved senior people have caused boards to realise that they need to be a bit more actively interested if they’ve got a senior person who has a reputation for playing around,” she said.

US companies, depending on their size have adopted a range of policies, from doing nothing to seeking written disclosure to banning “fraternisation” altogether. Another option is banning relationships within the chain of authority. Sometimes, policies cover not only employees, but also contractors, vendors, suppliers, manufacturers, and the like. Essentially, any relationship between two people that could have a negative effect on the company if things sour, or if one party is able to improperly influence the other would fall under the policy.

iHR Australia recommends putting in place clear sexual harassment and discrimination polices that are clearly communicated to all staff. iHR Australia also conducts independent workplace investigations for organisations that are dealing with allegations of inappropriate workplace behaviour, including sexual harassment.