While managers may be aware that misbehaviour by employees at the Christmas party could result in a claim against the employer, we are often asked, where does the employer's liability end?

The annual email from HR, reminding employees not to enjoy themselves too much at the firm's seasonal celebrations may have become something of a Christmas cliché but, it is no laughing matter for an employer if they are held to be vicariously liable for the actions of their staff; compensation can be considerable.

What is vicarious liability?

Vicarious liability is a legal principle which imposes strict, no-fault liability for wrongs committed by another person. In the employment relationship, an employer can become vicariously liable for the wrongdoing of its staff. Common areas where an employer may be vicariously liable are discrimination and personal injury claims.

Although there are limits to the extent of the employer's liability, the boundaries of vicarious liability are difficult to identify. For liability to arise, the wrong doing must be carried out in the course of employment, an employer will not be liable where the employee was on a 'frolic of their own'. In other words, the connection between the employment and the wrongful act or omission is so close that it would be just and reasonable to impose liability?

'Tis the season to be jolly..

Social events, particularly at Christmas are grey areas when it comes to vicarious liability. Usually Christmas parties are held off site, out of working hours but are paid for by the employer. This can cause confusion around where the boundaries lie. With alcohol in the mix, issues can arise. In reality every case turns on its own facts but employers need to be aware of the potential for liability for wrongful acts which take place at social events. However, a recent decision from the High Court demonstrates there are some limits.

Latest decision: claim arising from Christmas party fracas

In Bellman v Northampton Recruitment Ltd the High Court decided that a company was not vicariously liable for the personal injury of an employee following an assault by the Managing Director after the company's Christmas party. The event took place after a heavy post party drinking session when the Managing Director lost his temper and punched the employee, twice knocking him unconscious.

The employee claim for damages against the company was on the basis that it was vicariously liable for the MD's conduct. This was rejected by the High Court who drew a clear distinction between liability for events at the formal party and informal drinks. Although the fight resulted from a work related issue, it took place at an informal 'after party' in a hotel bar at a different venue to the actual Christmas party. The company had paid for the taxis to the hotel, contributed to the bar bill and those present were other employees of the company.

While it was the MD who had arranged and funded both events, the court decided that he could not always be seen as being 'on duty' in all and any circumstances. It was held that the victim had voluntarily taken part in the after party heavy drinking session (the Christmas party which ended earlier had passed without incident) increasing their risk that the additional alcohol would lead to an incident occurring.

It is interesting to consider how unpalatable this argument would be to an employment tribunal considering a harassment claim. The Court in this case gave weight to the need to draw a line on liability to avoid the Company's potential liability being so wide as to be potentially uninsurable, a consideration which would not be likely to impress a tribunal.

Comment

So, is an employer risk free if an organised event tips over into a less formal drink at which an incident such as sexual harassment occurs? Probably not. While this case suggests some grounds for arguing that events were not in the course of employment, an employment tribunal is unlikely to be moved by some of the factors which clearly influenced the Court in this decision.