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Dealing with employee misconduct outside of work hours

In a world where the boundaries between working hours and after hours are increasingly being blurred, how to deal with the misconduct of employees outside of work hours continues to be a concerning issue for many employers. It is clear employees have the right to enjoy their own leisure time as they see fit without being encumbered by the obligations of their employment. The Courts, cognizant of this issue,  have traditionally adopted a cautious approach when addressing out of work hours conduct through the lens of employment.



Employers are finding themselves more regularly defending claims about out of hours conduct by employees in the context of worker’s compensation/negligence claims and unfair dismissal claims. But how will the law treat a particularly egregious incident by an employee which occurs outside of work hours? What are an employer’s risks and when will they have the right to act? What about when the out of work hours conduct occurs at a location where the employee is required to be by their employer?

These vexed questions continue to be addressed by Courts and Tribunals in differing fashions and with different results depending on the law and principles being applied in the assessment of the outside of work hours conduct.  Both areas of law tend to assess the outside of work hours conduct in different ways.

In the worker’s compensation/negligence context, the question is whether the out of hours work conduct giving rise to an injury suffered by an employee has a sufficient connection or nexus to employment to deem the injury one which is arising out of or in the course of the employee’s employment.

The leading decisions in this area (the High Court decision in Comcare v PVYW (2013) 250 CLR 246 and the Full Federal Court decision in Westrupp v BIS Industries Ltd [2015] FCAFC 173) have established the principle that out of work hours conduct injuries are only held to occur in the course of employment if the employee attended the place where the out of hours conduct occurred, or engaged in the outside of work hours activity giving rise to the injury because the employer encouraged or induced them to do so.

In an unfair dismissal context, ‘outside of work hours’ conduct is assessed through a different lens. In that context, the question of whether an employer can rely on outside of work hours conduct as a valid reason for dismissal depends on whether the conduct is of such a nature it could be said to breach an express or implied term of the employee’s contract of employment.

In the leading case on this consideration, Rose v Telstra Corp Ltd [1998] AIRC 1592, it has been established there are three circumstances in which an employee’s employment may be validly terminated because of out of hours conduct:

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

In practice, these principles have been applied in a manner that requires there to be a connection between the out of hours conduct and the employee’s employment.

Despite this “connection with employment” seemingly being a similarity between the tests applied under the workers’ compensation/negligence and unfair dismissal jurisdictions, the history of the assessment of outside of work hours conduct under these tests have seen analogous situations assessed differently.

For example, in the Westrupp decision, which applied the worker’s compensation/negligence principles, the outside of work hours incident occurred when an employee was assaulted by a fellow employee at a tavern in a camp at a remote mine site operated by the employer. The Court there determined that because the employee was required to be at the camp on the mine site and the employer had provided access to the tavern for employees, this meant the employer had “induced” the employees to be at the place where the incident occurred.

By contrast, in the Rose decision, which applied the unfair dismissal principles, a similar set of circumstances occurred where an employee was terminated after a fight in a hotel room with another employee during a work trip funded by the employer. Despite the almost analogous circumstances to the Westrupp decision, the Tribunal in Rose determined the incident did not have the requisite connection with employment because the conduct occurred outside of work hours, the employee was not in uniform, and the incident occurred in a private place.

The two decisions sit uncomfortably side by side but demonstrate the tensions which exist within the law and its treatment of outside of work hours conduct. What is clear is that workplace legislation is beneficial legislation protecting employees. Hence, any interpretation of legislation will favour the employee NOT the employer.

These somewhat conflicting outcomes regarding similar conduct create uncertainty for employers in how to deal with outside of work hours conduct which can be difficult to manage.

The recent case of Schokman v CCIG Investments Pty Ltd [2021] QSC 120 (27 May 2021) provides a useful case study about how the application of these principles can lead to unusual results. In Schokman, the Court rejected a worker’s negligence claim, finding a medical condition of the victim which was exacerbated by an incident where the worker’s colleague urinated into the victim’s mouth at 4 am while in shared accommodation was not an injury arising out of or in the course of the worker’s employment.

The worker, who suffered from two sleeping disorders known to the employer, was employed at an island resort and was required by the employer to live on the island and share accommodation owned by the employer.

During the urination incident, the worker was asleep when his colleague urinated into his mouth after a night of drinking. The incident caused the worker to suffer an attack related to his sleeping disorder.

The Court accepted the employer, CCIG, owed the worker a duty to take reasonable care to avoid exposing the worker to unnecessary risk of injury and to devise, establish, maintain, and enforce a safe system of accommodation. The Court also accepted the relevant risk which CCIG needed to protect the worker from was a risk of the worker having a confrontation or unpleasant interaction with the roommate which could give rise to a risk of injury.

However, the Court concluded the incident did not have the sufficient connection or nexus with the course of employment – although the incident occurred in accommodation owned by the employer, the act of urinating itself and the presence of the two employees in the shared accommodation was not sufficiently connected with the business of the employer as a provider of resort services.

With respect, it is our view this conclusion would, or at least should, be defeated on appeal. It appears to us to be out of step with the principles in Comcare and in Westrupp. Here, the incident was between two employees, in accommodation where the employees were required to be as part of their employment and arose out of intoxication which occurred at a staff bar. It is difficult to see how it could be concluded the injury occurred in circumstances where the employees were not encouraged or induced by the employer to be there.

Would the Court have found differently if applying the principles of the unfair dismissal decisions to the set of facts in Schokman? Based on the decision reached, the likely answer would be no.

However, we again argue that the conduct in the Schokman case would have given rise to a valid reason for the termination of employment. The urination incident was clearly misconduct – it was an assault by an employee on a fellow employee. It also occurred in accommodation which the employees were required to live in, and the urinating employee had become intoxicated because of the consumption of alcohol at the staff bar. Viewed objectively, it is difficult to see how this conduct could be sufficiently characterised as not going to the heart of trust and confidence between the employer and employee. The employer needed to be able to trust its employees to conduct themselves appropriately in the accommodation and the urinating employee did not do this, exposing a fellow employee to a serious risk to their health and safety at the same time. In our view, this clearly would meet the categories of conduct described in the Rose decision. The simple way of testing how it goes to the heart of the contract is – could these two employees be expected to work together again? The answer is no.

It is clear there will continue to be tension in the law as to how these outside-work-hours conduct matters are dealt with, and this will continue to create uncertainty for employers and employees alike.

Lessons for employers

  • Always seek legal advice before terminating the employment of an employee for outside of work hours conduct.
  • Ensure there are clear and enforceable policies and guidelines that apply to employees in relation to outside of work hours conduct that occurs at employer-funded events, trips, and activities. This is particularly important where an employer provides accommodations and requires an employee to reside there.


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