Two recent cases have highlighted the risks associated with providing unlimited alcohol at work social functions.

Intoxicated Employee Found to Have Been Unfairly Dismissed

In late June 2015 the Fair Work Commission (FWC) ruled that a team leader who told his boss to “f**k off” and sexually harassed a number of female colleagues at a work Christmas party had been unfairly dismissed. Relevant to the decision was the fact that the employee was “never refused a drink” as part of the employer’s “unlimited service of free alcohol” at the function.

To say the team leader behaved badly at the function is a serious understatement. His indiscretions included:

  • telling two of his superiors to “f**k off”;
  • asking a colleague “Who the f**k are you? What do you even do here?”;
  • calling a female colleague a “stuck-up bitch”;
  • kissing another female colleague on the mouth and telling her he was going to “go home and dream about her”; and
  • announcing that it was his “mission” to find out what colour underwear another female colleague was wearing.

When the employee returned from Christmas holidays, he was terminated for two counts of sexual harassment.

The FWC’s decision was somewhat surprising in light of the employee’s extreme behaviour on the night of the function. Despite accepting that all of the incidents had occurred, the FWC held that only those which took place at the venue booked by the employer between 6 – 10 p.m. could be considered in determining whether the employee’s conduct warranted dismissal. The FWC also held that:

  • the employer had erred in failing to ensure all staff understood that the company’s policies and standards of conduct would apply beyond the physical boundaries of the function;
  • the employer could not reasonably expect regular standards of behaviour to be upheld when unlimited free alcohol was provided because, in such circumstances, it was “entirely predictable” that some individuals would drink to excess and behave inappropriately; and
  • while kissing the female colleague breached the Sex Discrimination Act 1984 (Cth), the incident did not occur “in connection” with the team leader’s employment.

The FWC found that the employee’s conduct was “isolated and aberrant” and that his degree of intoxication was a “mitigating factor”. This led to a finding that, on balance, the dismissal was harsh.

Keenan v Leighton Boral Amey Joint Venture [2015] FWC 3156 (26 June 2015)

Employer Liable for Employee’s Injury at Work Party

In another decision, an apprentice who suffered serious burns after drinking heavily at a work party successfully sued his employer for damages. The employer was also refused indemnity from its insurer on the basis that the managing director allowed the employees to consume alcohol for a sustained period of time before engaging in a dangerous activity.

The employer held a party at the company premises and provided 11 kegs of beer. After drinking for several hours, a number of employees tried to start an old engine by placing different flammable substances into it. The apprentice was pouring petrol next to the engine when it sparked causing him to catch alight and suffer burns to 60% of his body.

In refusing indemnity, the insurer argued that the employer had shown a “reckless disregard” for the employee’s safety and breached the Occupational Safety and Health Act 1984 (WA) by failing to provide a safe workplace. Central to the insurer’s decision was the fact that the employer provided “copious amounts of free alcohol” at the function “over a significant period of time”. The employees were then permitted to engage in a dangerous activity without adequate supervision.

Canny v Primepower Engineering Pty Ltd [2015] WADC 81 (3 July 2015)

Lessons for Employers

Employers need to strike a balance between providing enjoyable social functions and ensuring a safe workplace. Whenever alcohol is served at a work function, employers should:

  • ensure plenty of food is also provided especially at afterwork functions where employees may not have eaten an evening meal;
  • supervise employees closely by designating certain managers/supervisors to keep an eye out for any inappropriate behaviour; and
  • ensure all employees are aware of relevant policies and standards of conduct prior to the function as well as the extent to which those policies and standards extend beyond the physical boundaries of the venue and designated finishing time.

Employer Reminder 

A reminder that annual leave can only be cashed out when an award, enterprise agreement or other registered agreement allows it. However, as part of its four yearly review of modern awards, the Fair Work Commission has decided that all modern awards should include a cashing out provision subject to the following requirements:

  • each cashing out of a particular amount of accrued paid annual leave must be a separate agreement between the employer and employee;
  • the agreement must be in writing and retained as an employee record;
  • the agreement must state the amount of accrued leave to be cashed out and the payment to be made to the employee, including the date payment is to be made;
  • the agreement must be signed by the employer and employee and, if the employee is under 18 years of age, the employee’s parent or guardian;
  • a maximum of two weeks’ accrued annual leave may be cashed out in any 12 month period; and
  • the employee must retain a minimum of four weeks accrued leave after cashing out.

All modern awards will be changed to reflect the new provision, which will provide greater flexibility to both employers and employees in dealing with accrued annual leave.

Remember that, although an employer does not have to agree to an employee’s request to enter into a cashing out agreement, it is unlawful to force (or try to force) an employee to make (or not make) an agreement to cash out annual leave.

Did You Know?

Did you know that employees may be entitled to accrue annual leave and long service leave when they are absent on workers’ compensation?

Until recently, it was generally thought that employees could not accrue any leave while receiving workers’ compensation. The general view was that the Workers’ Compensation and Injury Management Act 1981 (WA)(WA Act) was silent on whether an employee was entitled to accrue any leave while absent on workers’ compensation and, therefore, the Fair Work Act 2009 (Cth) (FW Act) applied. Under the FW Act, an employee is not entitled to take or accrue any leave while they are absent from work due to an illness or injury in respect of which they are receiving workers’ compensation. This is the position unless the employee is permitted to take or accrue leave under a specific workers’ compensation law.

However, in the recent decision of Anglican Care v NSW Nurses and Midwives Association [2015] FCAFC 81 (Anglican Care), the Full Federal Court in NSW held that an employee receiving workers’ compensation in NSW is entitled, at the same time, to accrue any leave or absence (whether paid or unpaid) under section 49 of the Workers Compensation Act 1987 (NSW) (NSW Act) which provides:

Compensation is payable under this Division to a worker in respect of any period of incapacity for work even though the worker has received or is entitled to receive in respect of the period any payment, allowance or benefit for holidays, annual holidays or long service leave under any Act (Commonwealth or State), award or industrial agreement under any such Act or contract of employment.

The court interpreted the NSW Act with a “beneficial” construction and held that the NSW Act did not prohibit an employee from receiving workers’ compensation and also accruing leave. Of particular note is that the Court stated that the wording used in section 49 of the NSW Act is “identical” to the WA Act. Section 80(1) of the WA Act provides that a worker can still receive payment of workers’ compensation notwithstanding that they have received or are entitled to a benefit (which would now seem to include the right to accrue) for annual or long service leave. As section 80(1) of the WA Act does not prohibit a worker from accruing annual or long service leave when in receipt of workers’ compensation, the same analysis applied to section 80 of the NSW Act in Anglican Care is likely to apply to section 80(1) of the WA Act. Because this issue is yet to be fully tested in WA, we recommend that you seek legal advice in relation to the facts of each particular case.

Legislation Update

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