Australia: Beyond the four walls: the shifting boundaries of the modern workplace

This article first appeared in Precedent, the journal of the Australian Lawyers Alliance, issue 135, published in August 2016. It has been reproduced with the kind permission of the ALA. A PDF version of the article can be found here. For more information about the ALA, please go to: www.lawyersalliance.com.au.

You've heard it before – the boundaries of the workplace are changing. In this ever-connected world, where we can log on remotely, speak to people from cars, and check emails from our bedrooms, where does the workplace end and our private life begin?

No longer can employers consider the physical boundaries – the office, the warehouse, the workshop, the building site – as defining the workplace. If an employee is injured while performing work from home, does that injury arise from the course of employment? If an employee harasses another on Facebook from home is that considered to have occurred 'in the workplace'?

Fortunately, a number of recent cases provide guidance to employers on this disruptive and evolving issue.

Festive fisticuffs

The Fair Work Commission (FWC) has recently considered whether an employee's conduct at an employer-sponsored social event occurred 'in the workplace'.

In Keenan v Leighton Boral Amey Joint Venture [2015] FWC 3156, Mr Keenan attended a work Christmas party, organised and paid for by the employer, where unlimited, free alcohol was served. During the Christmas party, Mr Keenan generally behaved inappropriately, telling a company director to 'f*** off' when he tried to join a conversation, asking a female colleague for her phone number, and saying to another female colleague 'who the f*** are you? What do you even do here?'

After the official Christmas party had ended, Mr Keenan went to the public section of the venue upstairs with some of his colleagues. There, Mr Keenan called one female colleague a 'bitch' and kissed another on the mouth in 'an unsolicited and unprovoked manner', telling her he was 'going home to dream about [her]'.

Mr Keenan estimated that from the time of his arrival at the Christmas party until about 11.15pm, he drank a total of about ten beers and one spirit. The FWC accepted that Mr Keenan had become drunk quickly. Mr Keenan had not been refused service of alcohol at any point during the Christmas party and in fact he served himself beer during the night. No one addressed Mr Keenan about his inappropriate behaviour, told him he should stop drinking, or asked him to leave the function.

The employer undertook an investigation into the complaints arising from Mr Keenan's conduct at the Christmas party and gave Mr Keenan an opportunity to respond to the allegations. Ultimately, the employer made the decision to terminate Mr Keenan's employment because of his conduct at the Christmas party, and as a result, Mr Keenan filed an unfair dismissal application with the FWC.

In a somewhat surprising decision for employers, the FWC found that Mr Keenan had been unfairly dismissed because the conduct in question occurred after the official Christmas party had ended and therefore a higher level of misconduct was required to warrant Mr Keenan's dismissal.

While the FWC found that Mr Keenan kissing another employee on the mouth constituted sexual harassment under the Sex Discrimination Act 1984 (Cth), the FWC held that the incident had not been sufficiently connected to Mr Keenan's employment because the social interaction at the upstairs bar was not 'in any sense organised, authorised, proposed or induced' by the employer.

With regard to Mr Keenan's conduct at the official Christmas party, the FWC found that, while unpleasant, it was not sufficiently serious to justify dismissal. It considered that while some misconduct may have constituted a valid reason for dismissal, that being his aggressive question 'Who the f*** are you? What do you even do here?' to a female colleague, the substance of this allegation was not sufficiently communicated to Mr Keenan and he therefore did not have a proper opportunity to respond to the allegation.

Vice President Hatcher found that Mr Keenan's behaviour had been the result of his intoxication and stated:

The FWC took into account Mr Keenan's good work record and considered that there were substantial disciplinary alternatives available to the employer in lieu of dismissal.

In finding that employers must adjust their expectations of employees where unlimited alcohol is provided at the employer's expense, there are implications on how employers organise social events. For example, the FWC was particularly critical of the employer for not having a person in charge of monitoring the venue's service of alcohol. In view of these findings it is essential that employers delineate official work functions from social functions which are likely to be considered private social events.

Conduct at an official work Christmas function was also considered in McDaid v Future Engineering and Communication Pty Ltd [2016] FWC 343.

The employer, a WA-based engineering company, organised a Christmas party which involved a day of go-karting followed by an event at their offices that evening where the employer supplied alcohol without setting a limit on how much employees were permitted to drink.

It was uncontested that Mr McDaid got very drunk and pushed a senior colleague into a swimming pool, fully clothed. When Mr McDaid's boss told him to leave, Mr McDaid responded 'You f*** off.'

Mr McDaid then pushed his boss hard enough for him to fall backwards and crash into a gate, after which both men exchanged blows. Mr McDaid had his employment terminated on the basis of his conduct at the Christmas party.

As in the Keenan case, the FWC was critical of the employer for supplying employees unlimited alcohol, Commissioner Williams said it was 'unsurprising' that Mr McDaid had been terminated for his conduct and found the dismissal to be fair, with Commissioner Williams saying:

High Court hijinks

In Comcare v PVYW [2013] HCA 41, the High Court of Australia was required to consider whether an injury sustained by an employee while having sex in a hotel room on a work trip was a compensable injury which occurred in the course of employment.

In 2007, the public servant (whose name was supressed) was sent to a country town by her employer to provide training and to look at budget reviews. Once she had finished her work for the day, the public servant called a friend to have dinner. Following dinner, they went back to her hotel room to have sex, during which a light fixture fell from above the bed, injuring the public servant's nose and mouth severely enough that she had to be taken to hospital. She later developed depression and was unable to continue working for the government.

The public servant made a claim for workers' compensation through Comcare, the government's insurance provider. Comcare initially accepted the claim, but later rejected it.

Initially, the case went to the Administrative Appeals Tribunal (AAT), which found that the government and Comcare were not liable for her injuries. However, the Federal Court found the AAT had erred in its finding, saying that the employer was liable for everything that happened in the hotel room except 'misconduct' because the public servant was on a work trip and the hotel was chosen by the employer.

On appeal, the High Court had a simple proposition before it: Did the injury (regardless of what caused it) occur within the 'course of employment'?

In considering this question, the High Court held that simply being present at a certain place does not establish that the injury arose 'in the course of employment'.

The High Court set out the following determining factors:

1. Initially, determine if the employee suffered an injury, but not while engaged in actual duties.
2. Consider what the employee was doing when the injury occurred, and how the injury was brought about – did it arise out of an activity or a place?
3. If it arose at and by a 'place', such as a wall falling on the employee, did the employer induce or encourage the employee to be in that 'place'?
4. If it arose out of an 'activity', did the employer induce or encourage the employee to partake in that activity?

The High Court's rationale is that inducing or encouraging an employee to be at a particular place does not provide the necessary connection to employment where an employee is injured while engaged in an activity at that place.

Although the public servant had been present in the hotel room, being the 'place', because her employer induced or encouraged her to be there, her mere presence was not what caused the injury to occur. The injury arose out of an 'activity' she engaged in without her employer's inducement or encouragement. Therefore, the High Court held that the injury did not occur within the course of employment and the employee was not entitled to compensation.

The lesson for employers is that care needs to be taken when directing employees to work remotely or offsite. The same type of risk assessment conducted in the physical workplace needs to be undertaken when employees are performing work outside of the physical boundaries of the employer's workplace. Employers must also be clear about the duties an employee is expected to perform while working remotely or at an off-site location.

Not in the office, but still in the workplace

In Vergara v Ewin [2014] FCAFC 100, Ms Ewin made allegations of sexual harassment against Mr Vergara, a labour-hire accountant who had been brought in to work with her. Ms Ewin alleged that Mr Vergara engaged in the following conduct:

1. Turning off the office lights and touching her hand, followed by asking her to go to a pub with him across the road from the workplace. At the pub, Mr Vergara sexually propositioned Ms Ewin and tried to kiss her when out on the street.
2. The following day, Mr Vergara again sexually propositioned Ms Ewin while they were both at the offices of KPMG.
3. The day after that, Mr Vergara requested a sexual favour from Ms Ewin, and then following an evening work function in a bar, Mr Vergara had non-consensual sexual intercourse with Ms Ewin back at the workplace.

The Sex Discrimination Act 1984 (Cth) provides that it is unlawful for a person to sexually harass another person at a place which is a 'workplace of either or both of those persons' and defines a workplace as 'a place at which a workplace participant works or otherwise carries out functions in connection with being a workplace participant'.

The Federal Court found that Mr Vergara sexually harassed Ms Ewin, including that he engaged in non-consensual sexual intercourse, and awarded Ms Ewin $474,163 in compensation.

Mr Vergara appealed the Federal Court's decision to the Full Court of the Federal Court on various grounds, including that the King Street footpath and Waterside Hotel in Sydney did not constitute a 'workplace' under the Sex Discrimination Act 1984 (Cth).

The Full Court of the Federal Court accepted that Ms Ewin had agreed to go to the pub because there were other witnesses there, and she did not wish to remain in the offices with Mr Vergara alone after hours, saying:

'Ms Ewin did not go to the Waterside Hotel in acceptance of Mr Vergara's sexual advances but, on the contrary, because she wanted to deal with what she had repeatedly sought to discourage.'

'...going to the Waterside Hotel was triggered by a need to deal with the resumption of Mr Vergara's unwanted sexual advances... [which] had commenced at the workplace'.

The Full Court of the Federal Court dismissed Mr Vergara's appeal on the basis that the function of both Ms Ewin and Mr Vergara at the hotel was to deal with what had commenced at the workplace and therefore they were 'carrying out a function' in connection with being a workplace participant.

Beyond four walls

The case law clearly demonstrates that the workplace extends beyond the physical boundaries of an employer's place of business. The predictions and reports as to the future of work indicate we are moving towards more flexible workplaces and contingent workforces. While many organisations will continue to provide flexible working arrangements as part of a modern and mobile workplace, careful consideration and planning needs to go into how these more nebulous concepts of the workplace will be managed. Communicating expectations will go a long way toward helping employees to understand the delineation between 'workplace' and 'non-workplace', both in terms of 'place' and 'activity', in the absence of physical boundaries and traditional parameters.

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories