Management Liability – Beware of the Office Christmas Party

The end of the calendar year brings around annual holiday season celebrations for most offices. These celebrations can be a great way for colleagues to come together and reflect on the year that was and the holiday activities ahead. This is also the time of year where there can be heightened risks associated with employee behaviour reinforcing the importance of businesses undertaking a risk management assessment, including the scope of their Management Liability insurance cover.

Businesses celebrate the holiday season differently. This includes in-office gatherings, lunches or dinners at restaurants, small private parties at a venue, or extravagant corporate functions. These events have a common thread – that is – they are sanctioned work functions where the employer is responsible for providing a safe environment for staff and staff are expected to behave in the same way as a normal day in the office. After the event, some staff members may arrange to continue celebrations by attending an unofficial “After Party”. Depending on the circumstances, the “After Party” may also be considered an extension of the work environment even if it is not sanctioned by the employer. This means the employer may have a continuing obligation to ensure the safety of its staff at the “After Party”.

On occasion, individuals may use the annual office holiday party as a chance to let off some steam, vent their frustrations, or even confess romantic feelings for a colleague. Unwanted advances, offensive comments, or aggressive behaviour can have serious consequences for the perpetrator, victim, witnesses, management and the business. As part of a business’s risk management assessment it is a good idea to:

1. review relevant policies (e.g. drug / alcohol policy, social medial policy, and bullying and harassment policy) to ensure they are adequate and up to date

2. remind staff of the standards of behaviour expected from them when attending work events and recirculate relevant policies before these events

3. ensure that the selected function venue has a system for responsible service of alcohol and a demonstrated plan for removing compromised individuals

4. nominate one or more responsible person(s) to ensure the supervision and safety of staff while at the work event

5. have a plan for the steps to be taken if an employee becomes compromised and further steps to be taken if they refuse to comply with directions

6. ensure staff have safe transportation options to return home from the function

7. consider Management Liability insurance settings and how covers such as Workplace Health and Safety Costs, Employment Practice Liability Entity Coverage, Third Party Discrimination or Sexual Harassment Entity Coverage, and Employee Theft and Third Party Crime, can protect the business from loss and costs associated with employee complaints that may arise from work events

Despite best endeavours, a risk management assessment will never completely remove the risk of inappropriate employee conduct. Accordingly, if a staff member makes a complaint about conduct that occurred at a work function – which can include an “After Party” – it is important for the complaint to be investigated in a timely manner with procedural fairness in accordance with the policies and procedures of the business.

If you would like more information about Management Liability insurance for your clients, please contact your local underwriter.

Claim Example

An employee of a legal division for a large financial advisory group had a pattern of engaging in misconduct at work functions due to intoxication. The employer issued multiple verbal and formal warnings to the employee and placed them under performance management, which included a direction to not consume alcohol at work events.

While under performance management further information was obtained about various other misdemeanors the employee was alleged to have engaged in.

The employee lodged an unfair dismissal claim contending they were constructively dismissed. The employee alleged that their employer had a culture that encouraged the consumption of alcohol and illicit substances.This reinforces the importance for each business to have suitable policies and procedures establishing its values, code of conduct and the standard of behaviour expected from all staff, Further, it is critical that what is written ‘on paper’ is also applied ‘in practice’.

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