Wednesday, 19 September 2018 12:30

With the festive season nearly upon us, employers and employees can be caught up in events that may not appear work-related on the surface, but which turn out to have major implications for employment relationships.

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An employer may be confronted with ‘bad behaviour’ by an employee, such as an act of misconduct, criminal activity or inappropriate behaviour that has occurred outside working hours and not on company premises. The Fair Work Commission (FWC) will apply certain principles when considering the extent to which an employer can discipline, or dismiss, an employee in relation to out of hours conduct.

In the case of a staff Christmas party, it is often a good idea to remind employees of their obligations while at the same time encouraging them to have a good time. Remind them that it is still a ‘work function’, and this requires responsible alcohol consumption, no use of illegal drugs, no harassment, no fighting/violence, and no inappropriate language. In addition, the employer should state that any breaches of those rules or breaches of policies and procedures may result in disciplinary action, leading to termination of employment.

Staff Organised Functions

While a staff Christmas party would be regarded as a work-related function, parties arranged by staff members outside management direction or knowledge can still create issues for employers. Employees may think that behaviour at such functions is none of the employer’s business. Ordinarily, it is only in exceptional circumstances that an employer has a right to extend any supervision over the private activities of an employee.

However, conduct that gives rise to a material risk of damage to an employer’s interests, even if there is no actual damage in the particular case, may nevertheless be conduct that attracts the legitimate concern of the employer and, depending on the circumstances, conduct that justifies the employee’s dismissal.

In considering the employee’s out-of-hours conduct in relation to the employment contract, the Fair Work Commission (FWC) considers certain factors in determining the fairness, or otherwise, of an employee’s dismissal.

The factors relating to fairness that are normally considered include:

  1. Whether there is a company policy that deals with out-of-hours conduct and whether the policy is lawful and reasonable;
  1. Whether the reason for dismissal was valid;
  1. Whether the dismissal was harsh, unjust or unreasonable.

An employee’s actions may, for example, involve inappropriate behaviour or activity while the employee was wearing a company uniform or behaviour that may potentially damage the company’s image or brand.

Ultimately, behaviour that gives rise to a material risk of damage to an employer’s interests, even if there is no actual damage in the particular case, may nevertheless be conduct that attracts the legitimate concern of the employer and may thus, depending on the circumstances, constitute conduct that provides a ‘valid or sound reason’ for termination of employment.

Relevant Circumstances

 The circumstances in which conduct may be considered as such are limited to instances where:

  1. The conduct, when viewed objectively, is likely to cause serious damage to the relationship between the employer and employee. For example, behaviour that tarnishes the relationship of trust and confidence on which the employment relationship is based (‘a breach of trust and confidence’); or
  1. The conduct damages the employer’s interests. For example, behaviour that significantly undermines management, creates fear in the workplace, or gives rise to negative publicity (‘a breach of the employer’s interests’); or
  1. The conduct is incompatible with the employee’s duty as an employee.For example, a police officer engaging in criminal activity, or a teacher engaging in sexual activity with a student would be incompatible with the employment duties of a police officer and teacher respectively (‘a breach of duties’).

Some Real Life Cases

Circumstances in which the employer successfully argued before the FWC’s predecessors — Fair Work Australia and the Australian Industrial Relations Commission — that the reason for the employee’s dismissal was valid, and also not unfair, include:

  1. The dismissal of an employee because of offensive behaviour in a hotel room after a combined Christmas party and farewell party. Refer to Streeter Vs. Telstra Corporation 2007.
  1. The dismissal of an employee who punched a fellow employee in the face at a private New Year’s Eve party attended by other employees. Refer to Farquarson Vs. Qantas Airways Limited.
  1. The dismissal of an employee who used offensive, abusive and threatening language towards a female colleague at a motel being used by staff in connection with a company training course. Refer to Fox Vs. Allianz Australia Services Pty Limited 2006.
  1. The dismissal of a brewing company employee after his conviction for drunk driving, while driving out of hours in a non-work vehicle. Refer to Kolodjashni Vs. Lion Nathan t/a James Boag & Son Brewing Pty Ltd 2010.


Employers’ Legal Responsibility

Under Occupational Safety & Health and legislation, employers have an obligation to ensure the health, safety and welfare of all employees whilst they are at work. Conversely, employees also have a duty of care to ensure their own health and safety and those of their colleagues.

The Christmas party is considered a "work activity". Such duty of care is not confined strictly to the workplace – it can be an offsite party and includes the trip home.

In order for employers to satisfy the requirements as outlined in the Occupational Safety and Health Act 1984 and the Equal Opportunity Act 1984 we suggest the following considerations be taken into account;

       Policies and Procedures

  1. Ensure policies and procedures are current and establish clear guidelines covering sexual harassment, bullying, discrimination, drugs and alcohol;
  2. Refresh all staff on these policies and procedures and as to their responsibilities and duty of care to others;
  3. Make staff aware of what behaviour is acceptable and what behaviour is unacceptable in the workplace including when attending functions, dress code etc;
  4. Advise staff that displays of unacceptable behaviour may result in disciplinary action and/or termination of their employment;
  5. Inspect the venue for possible hazards like slips and trips and make potential risk areas out of bounds.


  1. Encourage the responsible consumption of alcohol by providing food, low alcoholic and non-alcoholic beverages and water;
  2. Ensure employees below the legal drinking age do not consume alcoholic beverages;
  3. Set a reasonable limit on the supply of alcohol and ensure staff are well briefed on limiting or not serving alcohol to people who are displaying signs of intoxication;
  4. Organise an activity to divert the focus directly off alcohol;
  5. Take the appropriate measures should staff consume alcohol excessively or partake in inappropriate behaviours.

      Supervision & Appropriate Behaviour

  1. Provide appropriate monitoring and supervision of the Christmas party by managers;
  2. Ensure managers model appropriate behaviour themselves;

     Function etiquette, transportation and gifts

  1. Clearly define a start and finish time for functions;
  2. Make travel arrangements for the safe transportation of staff i.e. designated drivers, taxis (cab vouchers) etc;
  3. Remind staff that such functions are a work event;
  4. If staff participate in “Secret Santa” ensure staff are aware that gifts of an offensive or inappropriate nature are not acceptable.

By taking the above simple measures, such precautions may prevent an incident from occurring and therefore possible litigation arising out of this year’s festivities.

Skeleton Staff

We also suggest being mindful of possible safety risks/hazards over the Christmas/New Year period when businesses are operating on skeleton staff.

A risk management plan might include hazard identification, assessment and control of hazards employees are exposed to; the provision of adequate information, instruction & training; and the means of communication in an emergency and a procedure for regular contact.


In order to avoid any liability arising from potential claims as a result of festive season celebrations, it is essential employers seriously and effectively deal with all complaints including harassment, failing which employers may face claims for breach of contract or stress-related illness or expose themselves to liability for sex or race discrimination or constructive dismissal claims.

Employers should implement and practice fair, effective and meticulous disciplinary and grievance procedures. Whilst the intervention of the Christmas break may complicate matters, it will not justify any failure to follow normal procedures. We suggest should you receive such a claim, contact the MTA as soon as possible for advice.


In summary, plan a function that reflects well on the business. Organise an appropriate location, limit the intake of alcohol and consider the interests of all staff.

If you have any queries, please contact Ron Ballucci at 9233 9800 or This email address is being protected from spambots. You need JavaScript enabled to view it.

Please Note:

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice may be necessary in particular transactions or on matters of interest arising from this article. Motor Trades Association of WA is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission in this article.

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