Too much Christmas cheer?

By Adam Foster

It is common practice in Australia for employers to hold Christmas parties for their employees as a token of gratitude above and beyond any financial remuneration. This is good practice as it builds employee loyalty. Unfortunately there may be occasions where employees take advantage of their employer’s generosity and over-indulge in alcohol, usually with problematic results.

As an employer, what can you do?

Take the recent case of Keenan -v- Leighton, where the Fair Work Commission determined that a drunken employee was unfairly dismissed by his employer, because the employer had not taken proper steps to ensure that the employee did not consume too much alcohol at a work function.

The Commission heard that an employee was observed at Leighton’s Christmas function using offensive, derogatory and sexist language and behaviour. Leighton conducted an investigation into Keenan’s behaviour at the Christmas function, and upon interview, Mr Keenan denied the allegations, although he later admitted to some of his behaviour. On the basis of the investigation, Mr Keenan was dismissed. However, in his letter of termination, the employer only specified two grounds for dismissal, namely:

1. the sexual harassment of a colleague at the function when he asked for her phone number; and
2. the sexual harassment of another colleague after the function when he kissed her on the lips and said he would be dreaming of her later.

The Commission considered the various witness accounts from the night of the function and found that he could not rely on Mr Keenan’s recollection of events given his substantial intoxication.

Despite this, the Commission held that Mr Keenan had, in fact, been unfairly dismissed for various reasons, including:

1. Leighton did not appear to have taken any steps to ensure the responsible service of alcohol during the Christmas function, other than entering into a venue hire agreement with the hotel in which the hotel agreed to take this responsibility upon itself;
2. no-one cautioned Mr Keenan over the amount of alcohol he was consuming and did not prevent him from serving himself a substantial number of beers;
3. Mr Keenan’s behaviour following the Christmas function was not relevant to his employer as it was not within the ‘place of work’ and did not sufficiently impact upon Leighton and its employees; and
4. Mr Keenan’s advances towards his female colleague at the function where he asked for her phone number, while unwelcome, did not constitute sexual harassment and were not a valid reason for dismissal.

Lessons for employers

While the Keenan decision was informed partly by the fact that the employer provided alcohol and failed to monitor consumption, employers need to proceed carefully when considering allegations against their employees, particularly where there are questions about whether the allegations occurred within the workplace.

Employers should do the following with a view to protecting themselves and, as far as possible, preventing incidents similar to this case occurring at their own functions, by ensuring that:

1. if an employer is expecting an employee to live up to a high standard of behaviour, then the employer will need to inform its employees of that standard, and reflect it in its own management of work functions and events;
2. company policies are reviewed to ensure that employees’ expected behaviour in and outside of the workplace is clearly set out and that there is an appropriate and thorough disciplinary procedure in place;
3. the employer identify in company policies that behaviour which may damage the employer’s reputation, even if this behaviour occurs outside the workplace, may still be subject to disciplinary action;
4. the employer train employees in the relevant policies (including the disciplinary policy and procedures) and also train responsible people who manage out of hours functions and events; and
5. the employer does not simply leave the responsible service of alcohol at work functions to the venue’s hosts; employers should ensure that there is some form of monitoring of employee alcohol consumption and behaviour.

All employers understand that there is a limit as to how far their reach can be and that there are areas of employees’ private behaviour that are beyond scrutiny. However, where the behaviour has a significant and negative impact on the workplace, an employer is entitled to be legitimately concerned and employers need to be prepared accordingly.

If you would like advice on whether your policies are appropriate or would like us to review them for you, please contact Chris Morey (Director, Business Practice Group) or Adam Foster (Associate, Business Practice Group) on 03 9629 9629.