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Can misconduct at the office Christmas party give rise to valid grounds for dismissal? Sometimes, it can. However, the Fair Work Commission (FWC) decided in Stephen Keenan v Leighton Boral Amey NSW Pty Ltd [2015] FWC 3156 that it may not be that straightforward. The FWC may still not consider conduct, including verbally aggressive behaviour and sexual harassment, adequate reason for dismissing an employee if it is not sufficiently relevant to their employment. Below, we examine the facts of the case, and the key lessons employers can take away.

What Happened?

In this case, employee Stephen Keenan was dismissed by his employer Leighton Boral Amey Joint Venture (LBAJV) due to his misconduct at his company’s Christmas function in December 2014.

LBAJV had organised the event and was stated specifically to last from 6 pm – 10 pm. The event had an unlimited service of alcohol and LBAJV had not put a manager in charge to supervise conduct. During the event, Keenan became quickly inebriated and was involved in a series of incidents, including:

  • Telling a company director and another senior employee to “f*** off”;
  • Asking a female colleague for her phone number; and
  • Telling another female colleague: “Who the f*** are you? What do you even do here?”

After the official function had ended at 10 pm, Keenan went with a group of fellow colleagues to an unofficial after party upstairs at the venue’s public bar. LBAJV had not hired the public bar for the event. During this time, Keenan called a female colleague a “bitch” and kissed another female employee on the mouth, further telling her that he was going to dream about her that night.

Due to his actions at the Christmas function, LBAJV dismissed Keenan.

What Does the Law Say?

In assessing whether or not the dismissal was unfair, the FWC took into account the eight criteria listed under section 387 of the Fair Work Act 2009 (Cth). Of the eight, the first criterion was the most applicable. It relates to whether there was a valid reason for the dismissal taking into account the safety and welfare of other employees.

What Did the Commission Decide?

This case turned on the fact that the primary conduct which gave rise to his dismissal took place outside the scope of Keenan’s employment. That was because it was outside the time and venue of the official work function, and therefore constituted a private activity.

The FWC further referenced the case of Rose v Telstra Corporation Limited [1998] AIRC 1592 (‘Rose v Telstra’) which LBAJV used as a defence. It highlighted certain circumstances where “out of hours” misconduct would also constitute a valid grounds for dismissal. On considering the two grounds below, the FWC ultimately held that they were not valid.

1. LBAJV was not vicariously liable

Vicarious liability often comes up in the context of employers and employees. It refers to the situation where the employer is held responsible for the actions of the employee. This liability arises provided the employee conducts acts in the course of their employment.

LBAJV stated that where an employer was vicariously liable for an employee’s sexual harassment, this would be a valid reason for dismissal. They argued that Keenan’s conduct fell into this category since it constituted sexual harassment.

However, the FWC held that as the conduct occurred outside of working hours and work-related functions, LBAJV would not be held vicariously liable. Since LBAJV would not be held vicariously liable, Keenan’s conduct was not an “out of hours” misconduct that constituted a valid reason for dismissal.

2. The conduct did not damage the harassed employee’s capacity to perform her duties

In Rose v Telstra, the court held that if the misconduct adversely affected the harassed employee’s work or capabilities, this would be enough to constitute valid dismissal.

However, in this case, there appeared to be no lasting damaging impact on any of the other employees involved. They had either left the company or were unconcerned and hence this was also not a valid reason.

Concerning Keenan’s conduct during the actual Christmas function, the FWC held that:

  • Keenan’s question of “who the f*** are you?” to a fellow employee was serious enough to be a valid reason. However, taking into consideration Keenan’s good record and his high state of intoxication, the dismissal was still unfair;
  • All other conduct was not serious enough to be a valid reason for dismissal.

Finally, in coming to its decision, the FWC emphasised that employers cannot hold their employees to the same standard of conduct at functions where they provide unlimited alcohol.

The FWC also criticised LBAJV’s actions with regards to the service of alcohol. In particular, LBAJV failed to place anyone with authority to supervise employee conduct which exacerbated the incidents that took place.

Key Takeaways

This decision is significant for employers as it highlights that unfair dismissal cases will ultimately turn on the facts. The case ultimately provides several key lessons for employers:

  1. Employers should ensure that if alcohol is served at a work event there is someone there to supervise staff and ensure that alcohol is served responsibly;
  2. Employers may need to lower the standard of conduct at which they hold their employees at office functions, particularly where alcohol is served; and
  3. In considering whether an employee’s conduct at a function constitutes valid grounds for dismissal, it is important to take into account whether or not the conduct took place during the official work event and therefore within the employment relationship.

If you have any questions about your office Christmas party and your obligations as an employer, get in touch with our employment lawyers on 1300 544 755.


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