Company Christmas parties: 'tis the season to be

Insurance brokers OAMPS have issued guidance to businesses staging company Christmas functions, reminding them that the rules associated with regular business operations still apply during such functions.

The advice states: "employees like their hard work to be recognised, and managers see the value in celebrating with colleagues as it builds morale and has a positive effect on employee engagement. But there is a downside."

What can go wrong?
End of year celebrations and Christmas functions are a normal business practice. But employees need to be reminded that when they are attending a company function, the rules associated with regular business operations still apply.

Alcohol is often served at end of year celebrations and Christmas functions. Excessive drinking can impair judgment. At a company sponsored event, if an employee consumes too much alcohol and damages property or injures another person, the employer may be held liable.

Equally, if a manager verbally or physically abuses an employee, they may be liable as well as the company. This has led to an increasing amount of lawsuits arising from the actions of co-workers at company-sponsored functions.

Alcohol isn't the only contributor to this spate of lawsuits
OAMPS Practice Leader Natasha Barker explains "many things can go wrong at company sponsored events. Some clients participate in boating races or have parties on boats that have obvious risks and hazards to participants. It is wonderful to be creative and adventurous and spend money on unique options for end-of-year functions but the required insurance for mishaps and injuries needs to be in place."

Barker gives the example: "one company had a Hawaiian theme for their function. A grass skirt caught fire from a candle, starting a blaze that obliterated the building and caused minor burns to employees. Who would have thought something fun such as this, that was meant to be an employee benefit, could actually be an employer liability?"

Insuring a liability-free party
If you are wondering 'would my insurance cover me for this?' The answer is generally yes; most commercial liability policies include cover for your legal liability arising from Christmas functions. However, most insurers picture a standard Christmas party in the office or perhaps a restaurant. Companies these days are offering their staff more exciting events which could fall outside the intention/scope of your policy coverage, especially when they are mixed with serving, selling or distribution of alcohol. The question is whether your business needs special insurance against liability arising out of social entertaining or corporate sponsored events with higher risk activities involved.

There have been cases where employees had been drinking at office parties and become inebriated when laws exist that alcohol cannot be served to an intoxicated person. The employees helped themselves to drinks behind the bar, transferring the liability onto the employer responsible for supervising the event. The judge held the employer accountable for providing too much alcohol and too little guidance.

Furthermore, the employee attempted to drive home and incurred an injury after a car accident. This employee was able to win a finding of liability against their employer, of which there was no insurance cover in place. It cost the company over a million dollars in damages.

Employers have a duty of care to safeguard their employees from harm. Even hosting a party at a restaurant, hotel or other location managed by a third party will still not necessarily pass on any potential liability to this venue and its bartenders and wait staff. This is because the legal system may still invoke the duty of care of the employer, assessing how well managed the event is to protect employees.

Legal experts advise employers to take caution, cross check their insurance program with their insurance broker and take steps to mitigate the risk of personal and property injury and harassment cases particularly during the end of year period.

Inappropriate comments or poor behaviour can lead to legal action for harassment or discrimination, and because an office party is seen as an extension of the workplace the employer bears some responsibility for what takes place there.

Action Plan 
Although companies don't want to dampen the time to reward and celebrate employees, it companies to protect against offensive and dangerous behaviour, accidents and ultimately itself from liability. 

As a result, OAMPS offer some suggestions for employers when holding social events: 

• Check that your company's insurance policy covers mishaps at specific company events, including Christmas and end-of-year parties. 
• Check liability insurance – that includes your company and the event venue for their respective coverage. 
• Workers' Compensation is another area to consider. Don't assume it's automatically covered. Each state is different. OAMPS recommend checking with your broker to confirm cover for your specific social function arrangements Inform your employees that the same actions that are unacceptable at work are also unacceptable at a company party. A company can protect itself by clarifying the proper behaviour and policies for work and social functions, and support itself with appropriate documentation stating employees understand regulations and agree to comply. 
• Develop and publicise within your company an alcohol consumption policy, and then strictly enforce it. Employers need to understand and control their exposure to liability from making alcohol available to employees. Restricting employees' consumption of alcohol is key in the event there is a claim. 
• Create alternative celebrations such as luncheons or picnics in parkland during the day. 
• Make sure that employees who have acted improperly in the past are not invited to the function or are supervised to ensure that they don't repeat their behaviour. 
• Call a taxi or even the police if seriously concerned about an employee's ability to drive safely when they are leaving any company event.

Barker concludes "when deciding to have a next company function, ensure you understand the potential repercussions, look at alternatives, cross check the proceedings with your insurance broker and minimise the risks to your company. Also, ensure your management team is united on how they manage the event, act responsibly and lead by example. Then you can let the party begin."

For more information, contact OAMPS on 1800 240 432.

Image courtesy of Sustainability Victoria.