As the holiday season approaches, employers must remain vigilant and uphold their duty of care during year-end gatherings and office Christmas parties. While employers might assume that misconduct at a company’s Christmas event could warrant dismissal, the situation is more nuanced, as illustrated by the Fair Work Commission’s (FWC) decision in the case of Stephen Keenan v Leighton Boral Amey NSW Pty Ltd (LBAJV).

In this instance, the FWC did not deem the misconduct, which included verbally aggressive behaviour and sexual harassment, as a valid reason for termination due to its insufficient connection to employment. 

The Facts

In the specific case, Leighton Boral Amey Joint Venture (LBAJV) terminated employee Stephen Keenan based on alleged misconduct during the company’s Christmas party in December 2014. The event, organized by LBAJV, featured unrestricted alcohol consumption, and lasted from 6 pm to 10 pm, with no designated manager overseeing conduct.

Throughout the evening, Keenan, influenced by alcohol, engaged in various incidents, such as:

  •       Using offensive language towards a company director and another senior employee.
  •       Soliciting a female colleague for her phone number.
  •       Disparaging another female colleague using offensive language.

After the official event concluded, Keenan joined colleagues for an unofficial afterparty in the public bar, where he continued his inappropriate behaviour, including offensive language, kissing a female colleague, and making inappropriate comments. LBAJV dismissed Keenan, leading to an Unfair Dismissal claim before the FWC. 

What did the commission say?

In evaluating the fairness of the dismissal, the Fair Work Commission considered the criteria outlined in section 387 of the Fair Work Act 2009. It pertains to determining if a valid reason for the dismissal exists, with due consideration given to the safety and welfare of other employees.

  1. Vicarious Liability

The FWC first assessed if the company could be held vicariously liable for the sexual harassment that occurred. The concept refers to situations where the law holds an employer responsible for the conduct of its employees. This liability arises provided the employee conducts acts in the course of their employment.

LBAJV stated that as an employer, they would be vicariously liable for Mr Keenan’s sexual harassment and thus they had a valid reason to dismiss him.  However, the FWC found that the conduct that occurred that was of sexual nature occurred after the end of the official function and in a setting that was not sufficiently connected to his employment. Therefore LBAJV would not be vicariously liable for Mr Keenan’s conduct under the law of sexual harassment. Since LBAJV would not be held vicariously liable for this, this could not constitute a valid reason for dismissal.

  1. Harassed employee’s capacity to perform her duties

The FWC then assessed if Mr Keenan’s conduct damaged the harassed employee’s capacity to perform her duties. In the case Rose v Telstra which was referenced in LBAJV’s response, the court held that if the misconduct adversely affected a harassed employee’s work or capabilities, this would be enough to constitute valid dismissal.

However, in this case, there appeared to be no lasting damaging impact on any of the other employees involved. They had either left the company or were unconcerned with Mr Keenan’s conduct and hence this was also not a valid reason for dismissal. The FWC emphasised that employers cannot hold their employees to the same standard of conduct at functions where the employer has provided unlimited alcohol. Subsequently, the FWC deemed the dismissal Unfair.

Key Takeaway

This ruling carries significance for employers, emphasizing that the outcome of unfair dismissal cases hinges on the specific circumstances.

The case imparts valuable lessons to employers including:

  •       It is best practice to ensure the presence of supervision when alcohol is served at work-related events to guarantee responsible service;
  •       Employers may need to adjust the expected standard of conduct for employees during office functions, particularly those involving alcohol;
  •       It is a good idea to make it 100% clear to employees when an official event is ending, so there will be a clear line between an event connected to employment and an unofficial “after-party” event which is not connected with the workplace.
  •       When evaluating whether an employee’s behaviour at an event justifies dismissal, it is crucial to consider whether the conduct occurred during the official work event and, consequently, within the bounds of the employment relationship. If the conduct occurred after the official event had finished, the situation will be much less clear.


The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact HR Connect for advice.

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