Unlike unfair dismissal, Courts have not tried to narrow the scope between acts that occur in the workplace and work related social functions in relation to sexual harassment. Sexual harassment as defined in the Sex Discrimination Act 1984 (Cth) and Fair Work Act 2009 (Cth) occurs if a person makes an unwelcome sexual advance, or an unwelcome request for sexual favours, or alternatively engages in other unwelcome conduct of a sexual nature where a reasonable person, having regard to all the circumstances, would have anticipated the possibility that the person harassed would be offended, humiliated or intimidated.
The wide scope for vicarious liability for employers was examined in Leslie v Graham  FCA 32, where the employer was found to be vicariously liable for sexual harassment which occurred between two (2) employees in a serviced apartment they were sharing while attending a work related conference.
The risk that you bear as an employer is that any action by an employee commenced for sexual harassment will more likely be heavily pursued against you as you will have a higher capability to pay any award of damages rather than the employee individually. It is imperative that employers take an active approach to mitigate the risks of sexual harassment in the workplace and at workplace social events.
Likewise with sexual harassment, racial discrimination is a large risk at functions where employees are likely to be drinking. The decision in Gama v Qantas Airways Ltd (No 2)  FMCA demonstrates the high degree of control employers are required to have over their staff.
In this case, the Federal Court found that Qantas was vicariously liable for racial discrimination where the remarks were made by, or in the presence of a supervisor and therefore considered to be condoned by Qantas.
We recommend that to guard against potential sexual harassment or racial discrimination, employers should have some senior management employees who are not drinking monitor the event and ensure that patrons are comfortable, and no employees commit an act of misconduct.
A reminder of the employer’s expectations should also be circulated prior to the event to provide employees with a clear reminder of acceptable conduct at workplace social events.
What to do if misconduct occurs?
It is important to seek legal advice before you act against an employee that commits misconduct at a work function. If you wish to discipline an employee, whether that be termination or a formal warning, you should consider whether the conduct occurred in circumstances where the conduct occurred in connection with the employee’s employment.
We note that the decision of Keenan v Leighton Boral Amey NSW Pty Ltd  FWC 3156 is a reminder that employers are required to monitor and control the service of alcohol at social functions and take advice prior to termination of employees.
At this event, Mr Keenan made a number of derogatory comments to senior employees and Directors of the employer. More concerningly, at an afterparty (not sanctioned by the workplace), Mr Keenan also approached a female employee and made inappropriate sexual advances to her. This conduct resulted in the female employee being found in the ladies’ bathroom in hysterics.
The FWC ultimately determined that the conduct following the party was not employment related and could not be relied upon as the after-party was not condoned or endorsed by the employer. The FWC in this case determined that the actions at the workplace event did not justify dismissal and the employee succeeded in proving that his dismissal was harsh, unjust or unreasonable.
It is important to ensure that you are aware of your obligations at work social events and the potential implications that may result from actions of misconduct by your employees. Should you have any questions or concerns, please contact one of our employment lawyers for advice.