Misconduct Outside of the Workplace – When does it become an Employer’s Problem?

Social events are a great way for business to build their workplace culture, whether they be new year celebrations, end of financial year parties, or celebrating workplace milestones. Unfortunately, however misconduct at events organised by employers, or events attended by employees outside of work hours, too often occurs, causing tension in the workplace or leading to disciplinary action being taken against an employee.

But when does an employee’s conduct outside of work hours become an employer’s problem?

Like most circumstances, it depends…

As the short title reads, it depends. It will depend on what the out hours of misconduct was and whether the employer had specific policies in force to deal with the conduct in question. In most circumstances where an employee engages in out of hours misconduct the employer will not be able to take disciplinary action against the employee of dismiss that employee on the basis of misconduct. However, as with most things, there is an exception to that general rule.

Connection between the employment relationship and out of hours conduct

Where out of hours misconduct occurs, the employer may be able to take disciplinary action against the employee where the employer is able to demonstrate there is a significant connection between the employment relationship and the conduct in question. The Court in Rose v Telstra [1998] AIRC 1592, set out the test for this:

  1. The conduct must be such that, when viewed objectively, it is likely to cause serious damage to the relationship between the employee and employer; or
  2. The conduct damages the employer’s interests; or
  3. The conduct is incompatible with the employee’s duty as an employee.

When can disciplinary action be taken?

Misconduct which occurs outside of the workplace, irrespective of whether it occurs at events organised by the employer or employee organised events, can be a breach of the employer’s policies and the employee’s contract notwithstanding that the conduct may have occurred outside of work. Where a sufficient nexus to the workplace can be established, such misconduct can  constitute a valid reason for termination of an employee’s contract.

In Stephen Keenan v Leighton Boral Army Joint Venture (2015) 250 IR 27 it was held that “the social interaction which occurred was not in any sense organised, authorised, proposed or induced” by the employer. However, in this particular case the matter was dismissed as there was nothing in the employer’s code of conduct or policies relating to out of hours conduct.

On the other hand, in Applicant v Employer (U2014/1450) [2015] FWC 506), it was held that termination of an employee for conduct that occurred after hours at a hotel, where there were allegations of sexual harassment, was valid. The dismissal was held to be valid for the following reasons:

  • it was determined that the employee groped a waitress at a hotel organised and paid for by the employer;
  • the employee was only in the bar due to his employment relationship with the employer;
  • the employee had previously been given a warning for misconduct;
  • the misconduct did give rise to a potential to damage the employer’s reputation; and
  • although the employee wasn’t in his normal work location, this did not discharge him from the responsibility to behave in a way consistent with the conditions of his employment.

Recent Case – Keron v Westpac Banking Corporation (2022) FWC 221

Recently, in Keron v Westpac Banking Corporation, the Commission examined the question of whether an employer’s actions in terminating a longstanding employee on account of out of hours misconduct was valid.

In this case, Mr Keron was a Westpac employee for a period of 35 years. Following a workplace function, Mr Keron and other employees attended a secondary location where Mr Keron was involved in two incidents of misconduct, for which his employment with Westpac was terminated. As a result, Mr Keron tried to bring an unfair dismissal application against Westpac challenging that there was not a sufficient connection with his employment as the incident occurred outside of work and not at the work function. The Commission held that it was not necessary for the relevant behaviour to occur at the same physical location as the workplace or work function in order for there to be a sufficient connection the employment.

Ultimately, the Commission concluded that the employees were only at the secondary location where the incidents occurred due to the fact they had attended a work event prior. Accordingly, it was held that the incident was sufficiently proximate to the workplace and Mr Keron’s employment, which formed a valid reason for the workplace investigation to be carried out and for his subsequent dismissal to have occurred.

In Summary

  • It is important for employees to act and behave in a way that is consistent with their employer’s values and policies.
  • Each circumstance in which misconduct occurs out of hours and what actions can lawfully be taken by an employer will differ.
  • Employers should ensure they have detailed policies which set out their expectations of employee’s conduct outside of work hours.

*This article was prepared with the assistance of Ebony Billett*


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