Australia's Fair Works Commission ("FWC")¹ recently handed down its decision in Keenan v. Leighton Boral Amey Joint Venture.² In this case, the FWC defined "place of work" with respect to an employee's off-duty conduct, and found the employee's dismissal was unlawful because the employer had failed to conduct a procedurally fair discipline process.  

Factual Background

Despite being a team leader for Leighton Boral Amey Joint Venture (the "Company"), the complainant reportedly consumed a large amount of alcohol before, during, and after the Company's Christmas party, which ran from 6:00-10:00 p.m. in a hotel ballroom.  Many employees continued to socialize after the function officially ended, moving their drinks and conversation upstairs to the hotel's public bar.  Over the course of the evening, both during and after the work function, the employee engaged in multiple instances of misconduct, including swearing at colleagues, asking personal and intimate questions of female colleagues and sexually harassing a female co-worker. 

Within days of the party, a number of employees approached management to complain about the team leader's behavior.  Management conducted two meetings with the team leader, but failed to inform him of the substance of the allegations.  Specifically, the Company did not tell him that one of the allegations – namely, his aggressive and intimidating behavior towards a younger and physically smaller female colleague – merited dismissal.  The allegations management did bring up with the employee were discussed in vague and broad terms.  Moreover, the Company did not inform the employee before the first meeting that he was allowed to have a support person during their "informal" discussion. 

Following the two meetings and an investigation, the Company determined the employee committed eight instances of alleged misconduct, including the bullying, harassment, and sexual harassment of multiple employees.  About a month later, the employer issued the employee a letter of dismissal, relying on two of the allegations.

The "Place of Work"

In considering whether the Company had sufficient grounds to dismiss the employee, the FWC focused heavily on defining the "place of work." The tribunal determined that anything that took place after the official 10:00 p.m. end time and/or outside of the reserved party space was merely incidental to work, and did not constitute workspace itself.  Importantly, although employees were warned to comply with Company conduct standards during the work party, the FWC found "there was no suggestion of any expectation that those standards would apply to behavior outside the temporal and physical boundaries of the function."  Thus, all of the employee's actions at the public hotel bar and in the streets were characterized as "private activity" beyond the scope of employment, and therefore could not be valid reasons for dismissal.

Company's Responsibility for Alcohol Served

Further, the FWC focused on the employee's seemingly unfettered and unlimited alcohol consumption, placing the blame on the Company for not controlling the distribution of alcohol at its holiday event.  Even though the Company had a contract with the hotel in which it was agreed that the hotel was responsible for serving alcohol, the FWC reasoned that the Company should have been on watch and suggested that the employee stop or control his drinking.  In particular, the FWC criticized the Company for requiring employees to adhere to its Code of Conduct while allowing free, unlimited alcohol at the function, stating that "[i]f alcohol is supplied in such a manner, it becomes entirely predictable that some individuals will consume an excessive amount and behave inappropriately."

Procedural Unfairness with Regard to the Investigation and Dismissal

The FWC also found that the discipline process was procedurally unfair, thereby rendering the dismissal procedurally defective and therefore "harsh, unjust and unreasonable."  The FWC found that despite the Company's receipt of complaints from multiple employees about the team leader's conduct, the employee was not given the opportunity to respond to all of the allegations in question.  Therefore, the FWC concluded, such failure rendered the discipline process and the dismissal procedurally defective and unfair under Section 394 of the Fair Work Act.  The FWC also expressed surprise and concern that a company with a human resources management specialist allowed such procedural defects in its disciplinary process. 

Lessons for Employers

Although each circumstance will be factually different, employers with operations in Australia can still take a few lessons away from this case. Steps that employers should consider taking include:

• Advising employees of their expectation regarding conduct at work functions, either expressly before the event and/or in their company policies.  Such a warning might include an explanation that even behavior beyond the work function or workplace can be subject to disciplinary action if it damages the employer's reputation or threatens the health and safety of others.
• Ensuring that management and employees responsible for organizing work functions and events properly manage risk, including alcohol service.  It is not sufficient to leave a vendor or venue responsible for alcohol service. It is advisable for employers to monitor employee alcohol consumption and behavior at work-related events.
• Ensuring that employees are notified in advance of the requirement to attend investigations or meetings to discuss alleged misconduct. Such notice should include notification of the employee's right to have a support person of their choice present at the meeting.
• Ensuring that any meetings addressing misconduct include all relevant allegations, not just some, and that they are supported with specific facts.  It is important that the employee in question be afforded the opportunity to respond to every allegation so that he or she can properly respond, and that the employer can perform a thorough and complete investigation.