If misconduct occurs outside of ordinary work hours, it may constitute a 'valid reason' for dismissal. A long line of cases can help guide employers about how to respond to out-of-hours conduct which may have crossed the line of what is acceptable in the workplace. 

After a long three years of Covid, workplaces across Australia are planning holiday celebrations at the close of 2022 to recognise the hard work of employees.

These events are often held offsite, outside of work hours. Employees may think that the Code of Conduct and other workplace expectations don't apply at such events. 

When a fight broke out after hours between two Telstra employees in a hotel room in 1998, causing the instigator's subsequent dismissal, the Australian Industrial Relations Commission was tasked to consider whether out-of-hours misconduct could constitute a valid reason for dismissal. 

Vice President Ross (as he then was) deliberated over several key factors, including the fact that the incident was outside of ordinary hours, at the relevant time neither employee was wearing brand-identifiable clothing, they were not on-call, and the incident did not occur in a place that could be considered public. 

Importantly, Ross asserted that "an employee's behaviour outside working hours will only have an impact on their employment to the extent that it can be said to breach an express or implied term of his or her contract of employment". 

Ultimately, the relevant conduct in this case lacked the requisite connection to the applicant's employment and it was found that the termination was harsh. 

From this case, we can draw three key circumstances where out-of-hours misconduct may be a valid reason for termination. The conduct:

1. must be such that, viewed objectively, it is likely to cause serious damage to the relationship between the employer and employee; or

2. damages the employer's interests; or

3. is incompatible with the employee's duty as an employee.

(See Rose v Telstra Corporation Limited 1444/98N Print Q9292 [1998] AIRC 1592' (4 December 1998))

Absent these factors, the judiciary will exercise caution before extending an employer's supervisory powers over the private activities of their employees. (See McManus v Scott-Charlton (1996) 140 ALR 625 at 636 per Justice Finn)

Let's consider some case examples: 

A familiar activity for work mates to organise is a work trivia team. One employer organised a trivia night for its workers away from the company premises. During the event, an employee behaved aggressively and insultingly toward another employee, telling her "everyone … hates you Kathy" before uttering obscenities. The instigator's employment was terminated and he brought an application that there was no valid reason for dismissal because the conduct lacked a sufficient nexus to the employment relationship. 

The Court invoked Ross VP's reasoning in Rose, finding that there was a valid reason for dismissal where the conduct was "incompatible with the employee's duty as an employee". 

(See Fox v Allianz Australia Services Pty Ltd AIRC PR971014 (Roberts C), 5/4/06)

Two Qantas employee engaged in a verbal altercation over whether Australia or New Zealand had better talent whilst watching Australian Idol in the staff room during a break. The Applicant, Mr Dobson, was of New Zealand descent, and claimed that Mr Ofria made some racist remarks. 

The facts were heavily disputed, but the Commission ultimately preferred the evidence of the Respondent, which relied heavily on an investigation that included Mr Ofria's oral statement. The incident culminated with Mr Dobson swinging a clenched fist at Mr Ofria in the parking lot after their shifts had ended, landing on Mr Ofria's shoulder.

Mr Dobson submitted that the incident occurred outside of work hours and in a car park not owned or operated by Qantas, and therefore was not within their jurisdiction to investigate. 

Notably, Mr Dobson had two prior warnings for anger-fuelled incidents, had stated during the investigation that he would hit Mr Ofria again to "shut him up", and was wearing the Qantas uniform when the assault took place. There were no extenuating factors.

The Commission was satisfied that there was a sufficient nexus between the incident and the employment relationship, and found there was a valid reason for dismissal. 

(See Dobson v Qantas Airways Ltd [2010] FWA 6431)

A female employee was sexually harassed three times in the office by a male co-worker. Following that conduct, the employee alleged she was sexually assaulted offsite by the same employee following a workplace event.

A complaint was brought by the woman under the Sex Discrimination Act 1984, and key findings were made on whether the conduct occurred at the 'workplace'. The Act sets out a two-limb test for 'workplace' as: '(1) a place at which a workplace participant works or (2) otherwise carries out functions in connection with being a workplace participant.'

In the first instance, the Judge was satisfied that contraventions that occurred at the hotel across the road from the office and at a place on the street on the way to the train station happened at work, where they were 'in the same course of sexual harassment' that originated in the office. Turning on the nuance of the case, this finding was overturned on appeal. 

The Federal Court elaborated on how the two-limb approach may be applied in practice. Not only must a 'workplace' be a place at which a workplace participant happens to be, it must also be a place in which the worker 'carries out functions' in connection with being a workplace participant. This necessarily implies 'the performance of some acts required, expected or authorised by the person’s employment, agency, contract or partnership'. In other words, the place must be one in which the person 'carries out some aspect of the bundle of responsibilities, duties and activities' connected with their employment. 

This is a question of fact that involves identifying a function performed in connection with work. For example, an authorised function such as an awards night held offsite would be a workplace. However, if employees 'kick on' after a function, post-function conduct may not be related to the workplace. Ultimately, whether conduct is considered to be work related will come down to an assessment of the facts and circumstances. 

To make an employer's expectations clear, you should consider making specific statements about post-event conduct as not being work related.  

(See Vergara v Ewin [2014] FCAFC 100 (12 August 2014)) 

In the wake of the pandemic, the traditional work Christmas party was left behind. But as things begin to return to normal and with the festive season fast approaching, your business should consider how you party, where you party and the rules of engagement.  

Where the cases tell us that work sanctioned and endorsed parties will likely be 'in connection with work'—whether they occur outside the workplace, outside of work hours, even if partners or family members are also invited—your Code of Conduct, statutory safety provisions and protections against bullying and harassment will apply. 

Where employers and employees fail to ensure those protections, the legal hangover from such events may be long lasting and costly.