Are employers liable for the conduct of employees outside of work hours?

The lines between work and play have become increasingly blurry over recent years.

If you think about how workplaces were 40 years ago, so much has changed. Most communications used to be sent by fax or letters in the (snail) mail. Working from home was not a ‘thing’. There were no mobile phones. People clocked in, clocked off and went home.

Now in our post COVID world, more people than ever are working from home regularly. Technology allows for instantaneous communications between employees. Social media impacts most of our lives. These changes have implications for how employers need to address the behaviour of their employees both during and after normal working hours.

In short, an employer in limited circumstances may dismiss, discipline or be found to be liable for the conduct of an employee outside of the workplace. But like all people related matters, relevant legislation needs to be carefully considered against the specific circumstances of an incident, and clear employment contracts, policies and communication are necessary.

The following three key areas of workplace law apply when determining whether or not an employer is liable for addressing the conduct of an employee;

1. Unfair dismissal
2. Worker’ compensation
3. Sexual harassment

UNFAIR DISMISSAL

If an employee is dismissed for out of hours conduct, it can be found to be unfair dismissal in certain circumstances. This depends on numerous factors such as the nature of the out of hours conduct, the express and implied terms of the employment contract as well as the effect of the conduct on other employees and the company.

The Fair Work Commission has used the following principles to assess whether or not  employee conduct outside of work is sufficiently connected to their employment so as to warrant any disciplinary action by the employer;

‘…in certain circumstances employment may be validly terminated because of out of hours conduct. But such circumstances are limited:

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

In essence, the employee’s conduct must be of such gravity or importance as to indicate a rejection or repudiation of the employment contract.’

Let’s take a quick look at two unfair dismissal cases which were brought before the Fair Work Commission. The outcomes of each case help to demonstrate when employers can and cannot dismiss an employee based on their conduct outside of work.

Read here about how to avoid unfair dismissal claims.

Unfair Dismissal Cases:

Example 1:

Rose v Telstra [1998]

Two employees who were friends went to a nightclub together while travelling for work. The two men later engaged in a physical and verbal altercation when they returned to their shared hotel room. One of the employees was terminated by Telstra due to improper conduct.

The employee appealed this to the Fair Work Commission and Telstra was found to be guilty of unfair dismissal due to a number of factors, including;

• The incident took place outside of work hours and not in a public place.
• The employees were not in uniform and not on call.
• The employee who was fired did not discredit or cause serious damage to Telstra with his behaviour.

Example 2:

Sydney Trains v Andrew Bobrenitsky [2022]

The employee was fired after he was convicted of driving a motor vehicle while he was almost four times over the legal limit. It was his third drink driving offence and his licence was suspended for 6 months.

Originally the employee was found to have been unfairly dismissed, yet this was overturned on appeal upon consideration of a number of factors, including;

• The employee turned up to work the day after being charged with being four times over the limit.
• The employee failed to notify his employer of his offence.
• On two other occasions prior to termination, the employee had attended work with alcohol in his system.

Ultimately it was reasoned that there was a ‘relevant connection’ between the misconduct of the employee and their ability to carry out their duties. Inherent to his role as a train driver was the expectation for the employee to exercise a high standard of care to ensure the safety of passengers during every shift. Therefore, Sydney Trains was within their rights to terminate the employee.

Read about How to Conduct a Disciplinary Meeting.

WORKERS’ COMPENSATION

Generally speaking, a worker is entitled to compensation if they experience an injury “in the course” of their employment. Determining compensation claims can become tricky though if the employees’ behaviour led to their injury or the injury occurred outside of work hours but at a work-related location.

The Courts have found that the following incidents occurred “in the course of” employment and therefore the employees in each case were entitled to compensation:

• A nurse who injured her back while volunteering to help set up for her work Christmas party.
• An employee who was injured during an altercation with another employee (which he did not instigate) while at a tavern within the camp of a remote mine site, on the basis that the employer had induced the employee to be at the campsite and the employee had not engaged in misconduct.
• A fast-food worker who broke her leg while climbing a three-metre ladder to the restaurant roof to smoke a cigarette before her shift commenced because she was on an ‘ordinary recess’ when she was injured.

An example of a case for when an employee was found to not be entitled to compensation as the employer was not liable for their injuries is Comcare v. PVYW [2013]. In this case, the employee stayed overnight at a local motel which had been booked by her employer. Whilst at the motel, the employee engaged in sexual intercourse with an acquaintance. In that process, a glass light fitting above the bed was pulled from its mount and struck the respondent on her nose and mouth, causing her physical injuries.

The Courts found that, in order for the employer to be held liable, the circumstances in which the employee was injured must be connected to an inducement or encouragement by the employer. In this specific case, the employer did not induce or encourage the employee to engage in that activity and was therefore not required to pay any compensation.

Read about How to deal with long term absences of Employees.

SEXUAL HARASSMENT

Sexual harassment jurisdictions take a wider approach to when an employer will be liable for the out of work conduct of employees than other jurisdictions.

The Sex Discrimination Act 1984 (Cth) defines sexual harassment as:

• Engaging in an unwelcome sexual advance or request for sexual favours, or other unwelcome conduct of a sexual nature, in circumstances where a reasonable person would anticipate that the person harassed would be offended, humiliated, or intimidated.
• Vicarious liability of the employer arises when the sexual harassment is done “in connection with the employment” of the employee, except in circumstances where the employer has taken all reasonable steps to prevent the conduct occurring.

Once again, we can look at examples of different workplace law cases in determining employer liability for incidents of sexual harassment.

Example 1:
Keenan v Leighton Boral Amey NSW Pty Ltd [2015]

During a Christmas function outside of the workplace, a male employer attempted to stroke another female employee’s face and said to another female employee ‘I used to think you were a stuck up b****. He also grabbed the head of another female employee and kissed her. The male employee was dismissed however appealed his termination.

It was found in this case that was no instance of vicarious liability – the conduct was not in connection with the employment because the social interaction that occurred was not ‘organised, authorised, proposed or induced’ by the employer. It was ruled that the male employee should be reinstated and that the employer had not met the grounds for dismissing the employee on the grounds of sexual harassment.

Example 2:
South Pacific Resort Hotels Pty Ltd v Trainor [2005]

A female employee was sexually harassed in accommodation provided for, and operated by her employer. Her harasser was a fellow employee who was also residing at the same accommodation, in a separate room, for the purpose of his work. The sexual harassment occurred outside working hours in the female employees’ room.

In comparison to the first example case, it was found that the employer was liable to pay damages to the female employee in this case. Her harasser was a fellow employee residing in the same accommodation. Therefore, it could not be said their common employment was unrelated.

Read also about this recent Sexual Harassment case at Westpac.

Should any boundaries be placed on employees interacting outside of work hours?

Employers can’t ban personal relationships outside of work. However, a Personal Relationships Policy should be implemented in order to manage the potential for conflicts of interest, particularly where there are power balances.

Such policies can require all employees to disclose sexual, romantic or other close relationships with other employees or alternatively only where they think there is a conflict of interest, or where there might be a perception of a conflict of interest.

Can an employer discipline or dismiss an employee due to their personal social media posts?

Potentially, yes if:

• The post identifies (directly or indirectly) that the person is an employee of the organisation;
• The post is visible during working hours;
• There are organisational policies on social media use that the employee has been trained in; and/or
• The post breaches the law (for example, it discriminates against or bullies someone) or breaches the values, code of conduct, or policies of the organisation.

In summary

Circumstances are somewhat confined where an employer is able to direct out of hours employee conduct. The Rose and Telstra case in particular offers a good standard for principles to apply to.

Workplace policies are essential:  important for clarity of expectations, to be relied upon for conduct issues, and to defend an employer’s vicarious liability.

Employment contracts are also essential as the base and primary agreement between an employer and employee about expectations of conduct and performance.

If you’re unsure about your employer liability and how to handle out of hours misconduct or other behaviour, contact Harrisons for advice.