Workplace Christmas Parties: Celebration Or Legal Minefield?

As the festive season approaches, many Australian workplaces are preparing for their annual Christmas parties - a time to unwind, celebrate achievements, and foster team spirit. However, these events are not without risk.

Increasingly, employers are having to navigate the legal minefield that has been caused by their employees' conduct during work-related social functions, particularly sexual harassment.

Why Christmas Parties Are Legally "Work"

Under Australian law, workplace obligations do not end at the office door. Work Christmas parties, even when held off-site or after hours, may be considered extensions of the workplace. This means that employers retain their duty of care and may be held vicariously liable for any misconduct that occurs during these events.

Work Health and Safety

The Work Health and Safety Act 2011 (NSW) imposes a primary duty of care on persons conducting a business or undertaking (PCBU) to ensure, so far as is reasonably practicable, the health and safety of workers while they are at work in the business or undertaking. This duty extends to ensuring the health and safety of other persons who may be affected by the work activities.

Additionally, the Act emphasises the importance of managing risks and ensuring a safe environment, which includes psychological health and safety. In the context of a work Christmas party this could encompass considerations such as alcohol consumption, venue safety, and behaviour at the event.

Harassment

Employers in Australia must comply with overlapping federal and state anti-discrimination laws. Christmas parties can be considered part of work for the purposes of state and federal anti-discrimination laws if there is a sufficient connection to the employment relationship.

Off the back of the Australian Human Rights Commission's Respect@Work: National Inquiry into Sexual Harassment in Australian Workplaces, it was recommended that amendments be made to the Sex Discrimination Act 1984 (Cth) (SDA) to provide better protection for workers from sexual harassment and other forms of sex discrimination, harassment, and unfair treatment in the workplace. These amendments include:

• imposing a positive duty on employers and persons conducting a business or undertaking to take reasonable and proportionate measures to eliminate, as far as possible, certain discriminatory conduct, including unlawful sexual harassment - s47C(2)(b), SDA.
• Lowering the test for a finding of sex-based harassment under the SDA, from unwelcome conduct of a seriously demeaning nature to unwelcome conduct of a demeaning nature - s28AA(1)(a), SDA.
• Making it clear that it is unlawful for a person to subject another person to a workplace environment that is hostile on the ground of sex - s28M(2)(c), SDA.

Lessons learnt from the ghosts of Christmas parties past

There are a number of cases that highlight what can go wrong when your employees are either the perpetrators or recipients of bullying and/or sexual harassment:

• In Keenan v Leighton Boral Amey NSW Pty Ltd [2015] FWC 3156 - an employee was dismissed for his conduct at a work Christmas function, which included making undesired romantic and sexual propositions to a colleague, telling his manager to"F*ck off", kissing another colleague in an unsolicited manner, and addressing remarks to a colleague that were bullying in nature.

The Fair Work Commission accepted there was a valid reason for the dismissal due to the employee's behaviour, however, it determined the dismissal was harsh because of the employee's good employment record, the isolated and aberrant nature of the conduct, the role alcohol had to play in the incident.

• In Nicita v Ernst & Young [2025] ACTSC 478 - a senior partner at EY was charged with assault following a bar incident in August 2023. At the time, he was already on a "first and final warning" for inappropriate comments he allegedly made at a Christmas party in 2022. In November 2023, EY terminated his partnership agreement for breaching his obligations, violating the firm's code of conduct, and failing to disclose the criminal charge to EY or the Law Society. The Supreme Court of ACT held that the assault charge fell within the definition of "Just Cause" in the partnership agreement and, as a result, EY was permitted to terminate the senior partner's partnership interest.
• The Federal Court decision in Magar v Khan [2025] FCA 874 saw a former restaurant supervisor awarded damages in the sum of $305,000 plus costs (one of the highest awards for a sexual harassment claim in Australia), after being subjected to repeated sexual harassment by the owner of the company that employed her.

Key Takeaways

Christmas parties can be a legal risk if not properly managed. Employers who fail to take reasonable steps to prevent harassment may face legal action from their employee(s) as well as reputational damage.

To reduce these risks, we would suggest considering the following proactive steps in planning this year's workplace Christmas party:

• Conducting risk assessments of workplace events to identify potential risks of sexual harassment.
• Implementing and communicating clear workplace behavior policies that address sexual harassment and other misconduct.
• Providing training on acceptable workplace behavior and the consequences of misconduct.
• Establishing confidential and effective complaint and investigation processes to address allegations of sexual harassment.
• Monitoring workplace culture and taking early action to address inappropriate behaviour before it escalates.

If you are unsure about your obligations, we recommend you seek legal advice early.

Contributor
Angus Dowey, Lawyer

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.