Published 28 September 2022
Employees being able to socialise with each other can be an integral part of a successful and happy workplace. Further to this, officially endorsed ‘social events’ at work can be a great way to reward employees for their hard work and to help build team cohesion. Unfortunately, however, social events associated with work can create a number of legal risks, including:
- physical injuries resulting in workers’ compensation claims;
- injuries to third parties and potential vicarious liability at common law; and
- allegations of sexual harassment and bullying.
Many employees see a social event as an opportunity to socialise and let their hair down. However, when these social events are either arranged or endorsed by the employer, or even merely arising out of work, employers need to remain vigilant about enforcing workplace policies and procedures as well as ensuring that there are effective limits in place, and that there is responsible management of the event by the employer.
When legal issues arise, the first issue will be whether or not the conduct has the requisite connection to work to create legal responsibility on the employer.
This can become contentious for a number of reasons, but typically:
- where an employee is injured, and wishes to seek compensation, they will generally seek to argue that the injury ‘arose in the course of employment’, which will involve establishing a connection between the event and the workplace;
- by contrast, where an employee misbehaves while out socialising, the employer will need to establish the required connection to work before dismissing the employee for this conduct, in order to demonstrate to the Fair Work Commission (FWC) that the dismissal was not unfair.
The seminal case on this issue, from the Australian Industrial Relations Commission from 1998, is Rose v Telstra Corporation Limited  AIRC 1592 (Rose). In this case, the Commission held that there were limits to what a tribunal would consider to be workplace conduct in an unfair dismissal case. In Rose, two Telstra employees were working away from their normal place of employment, and sharing a room at a hotel. After going out socially and consuming alcohol, the employees had a physical altercation in their accommodation. Mr Rose was viewed as the instigator of the altercation, which resulted in a broken window and a laceration to Mr Rose’s hand. Telstra viewed this as serious misconduct and dismissed Mr Rose. However, the Commission found that there was not a sufficient connection to the workplace, holding that the incident was outside working hours, neither party were in their Telstra uniform nor were ‘on-call’. However, it should be noted that this decision goes both ways. Telstra had, somewhat ironically, earlier resisted Mr Rose’s application for workers compensation for the injury on similar grounds.
However, just as Rose demonstrated that there were reasonable limits to an employee’s conduct obligations to their employer outside of work, the recent case of Hattenfels v Richards Panel Pty Ltd  NSWPIC 213 (Hattenfels) showed that the extent of an employer’s liability can be far-reaching, as long as the nexus between work and the social event is maintained. In Hattenfels , the owners of Richards Panel Pty Ltd, who were also husband and wife, held a Christmas function for their employees at a local tavern. When the tavern was closing, one of the owners organised a taxi-bus to transport some of the attendees to her home, where more alcohol was provided. While at the employer’s residence, at approximately 3:00AM, one of the employees was seriously injured when he fell from a golf cart being driven by another employee. The NSW Personal Injury Commission (PIC) determined that the gathering at the employers’ home was a ‘seamless continuation of [the] work Christmas function’. As PIC Senior Member Elizabeth Beilby observed: ‘To my mind there appears to be no interruption or deviation from the intended beneficial purpose to the employer of allowing a Christmas celebration to facilitate a harmonious working group.’ As such the employees’ injury was determined to be a workplace incident for which the employer was liable.
Where employees socialise informally, there is a chance (depending on the overall context and the extent to which a connection with work can be established) that this may be considered part of the ‘workplace’.
Where an employer actively organises (and funds) an event such as Christmas lunch or drinks, this will inevitably be considered to be part of an employee’s employment. As a result, if there are physical injuries, or if unlawful behaviour occurs that impacts another employee, there would likely be consequences of liability for the employer. This is a risk in relation to unlawful conduct between employees, such as sexual harassment or bullying.
It is therefore essential that strong policies are adopted to positively influence employee conduct, but also to provide mechanisms for the employer to respond appropriately to this misconduct.
One case demonstrates the fact that the level of planning and sensible management of a workplace social event will certainly be scrutinised by a tribunal or court in determining the respective liabilities of the employee and employer. In Keenan v Leighton Boral Amey Joint Venture  FWC 3156 (Keenan v Leighton) an employee was accused of having committed various acts of poor behaviour at the workplace Christmas function. This included allegations of sexual harassment, swearing at colleagues, criticising the company and bullying attendees. The employee’s job was terminated for these acts, which occurred after he had consumed lots of free alcohol. Vice President Hatcher noted in this case that it was: ‘contradictory and self-defeating for an employer to require compliance with usual standards of behaviour at a function but at the same time allow unlimited service of free alcohol at the function.’ The Vice President observed that no one was in charge at the function to observe and address employee behaviour. In fact, despite the employee’s noticeably poor behaviour and clear intoxication, he was not stopped from further consuming alcohol or forced to leave. The decision that the employee was unfairly dismissed, despite his deplorable behaviour, highlights the folly of not being properly prepared for a workplace party.
By way of contrast, demonstrating the likely beneficial application by an employer of the lessons learnt in Keenan v Leighton, is the case of Sione Vai v ALDI Stores  FWC 4118. In this case, a Christmas function had been organised at a local hotel. During the event, an employee, who had consumed alcohol before the function, was eventually refused service because of his intoxication. He became agitated and threw a full glass of beer which smashed against a lamp after narrowly missing other employees seated nearby. His employment was terminated because of his conduct. The FWC did not find that an unfair dismissal had occurred and noted the distinction from Keenan v Leighton in respect of the employer’s liability because ALDI had ensured that the section leaders were there to supervise behaviour, and in fact the employee was spoken to several times about his conduct and advised that he would have to leave if he continued being disruptive. Further, the employer had placed a limit on the amount of alcohol that would be served and arranged with the hotel for a security person to be present.
FWC Commissioner Gregory stated: ‘any employer who decides to hold a Christmas party has an obligation to take reasonable steps to ensure appropriate standards of behaviour are maintained, and the safety of those attending is protected. However… any employee attending has a responsibility to act within reasonable bounds.’
Most of the poor behaviour or injury that arises out of office parties inevitably involves the consumption of alcohol. While we do not advocate banning alcohol at your social events, we do suggest that the following Ten Rules are put in place to reduce the risks surrounding its consumption:
- Have a Code of Conduct. If appropriate, specify that intoxication at work social events is a breach of the code of conduct. The Liquor Act 2007 (NSW), provides in section 5 that a person is “intoxicated” if the person’s speech, balance, co-ordination or behaviour is noticeably affected, and it is reasonable in the circumstances to believe this is the result of the consumption of liquor.
- Remind Employees of the Code of Conduct Before Each Event – Be clear and upfront with employees about what behaviour is expected at work functions, including the Christmas party, and the fact that all workplace policies apply to these situations. If appropriate, consider a Social Media Ban in relation to your function: for some people, interacting with social media is an essential feature of being out socially; but the mix of colleagues, alcohol, and social media can pose potential risks for employers. If appropriate, directing your employees, in advance of the party, that refraining from social media use is required as a condition of attendance is one way of mitigating this risk.
- Provide Alternative Drinks – Plenty of non-alcoholic drinks should be available and employers should consider whether there are limits placed on the types of alcohol that can be consumed (i.e., beer and wine instead of spirits).
- Limit Consumption – Consider setting a limit on how much alcohol can be consumed by employees by issuing drinks vouchers and centralising the point of alcohol distribution so that topping up of alcohol, without an employee’s awareness, can be avoided. Consider the principles of RSA.
- Monitor Employees – Particular members of management need to be given designated roles of being on the lookout for poor behaviour and excessive drinking. Management should step in to provide instructions to employees where appropriate.
- A Designated Sober Person in management to ensure that any decisions that are made in respect of employee conduct at the event are made by a person who has not consumed any alcohol. If inappropriate behaviour does arise at the event, it should be addressed quickly but not rashly. The offending employee should be sent home immediately, and the offending behaviour should be addressed later in a procedurally fair manner, taking into account the employee’s performance history, the context, and the various options available for discipline.
- Entertainment – Ensure there are other activities taking place throughout the function to provide alternatives to simply drinking alcohol.
- Food should be provided to ensure people are not drinking on an empty stomach, and if possible, food should be available for the duration of the event.
- Think Ahead about Transport – Employees should be clearly advised well before the event that they should plan suitable transport if they are going to consume alcohol. As an employer, consider providing suitable transport options or suggestions. Managers in charge of monitoring behaviour at the event must keep a close eye on intoxicated employees to ensure they do not drive. While workers’ compensation claims for journeys between work and home are largely a thing of the past, there is still potential for such liability where an employer provides alcohol and lets an employee drive home intoxicated. Where possible, be proactive, and bear the costs of arranging transport options for employees.
- Have a Designated Finishing Time – At the designated finish time, the serving of alcohol should cease, and the event closed down. If employees then continue celebrating elsewhere, any mishaps that occur will less likely be connected to their employment, and the employer will therefore be less likely to be liable. Management should clearly mark the end of the event by farewelling employees and not, under any circumstances, continue on with the employees. As demonstrated, this will risk the ‘after party’ as being seen as a continuation of the work event.
Whilst employers should always adjust their management style based on their experience and the nature of their employee group, sensible application of these Ten Rules should see many of the risks to employers that can arise from work related social functions either reduced or eliminated. No one wants to be seen as the ‘fun police’ and in modern Australian society, it should be possible for all employees to have a safe and enjoyable time at a work function; providing an environment for this, and managing it properly, could be better characterised as ‘fun facilitation’.
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This content is general in nature and provides a summary of the issues covered. It is not intended to be, nor should it be relied upon, as legal or professional advice for specific employment situations.
Olexo Workplace Law recommends that specialist legal advice should be sought about specific legal issues.