Bad behaviour during an after-hours work party: Does it deserve summary dismissal?

The Federal Court of Australia recently addressed an unfair dismissal case where a senior employee challenged his termination after an after-hours work celebration.

The worker argued that the employer's investigation was flawed, his conduct did not amount to serious misconduct, and that proper termination procedures weren't followed.

The case examined critical workplace issues including the boundaries of after-hours conduct, what constitutes a proper workplace investigation, and when behaviour rises to the level of serious misconduct warranting immediate dismissal.

After-hours work party

The dispute arose from events in early 2020, when the employer, a construction company, was engaged in bushfire recovery works on the NSW South Coast.

Due to the project's location, the company arranged temporary accommodation for its staff, including a rental property in Pambula where several employees were staying.

The worker, who held the position of commercial leader with an annual salary over $400,000, attended a BBQ at this property to celebrate achieving a significant project milestone.

The gathering started peacefully around 6pm with a BBQ and drinks. Evidence showed similar gatherings had been organised previously at other locations.

One resident testified that the property owner had given permission for such gatherings, saying they could "make as much noise as they wanted" as long as they stayed away from the back balcony.

However, around midnight, the situation changed when the property owners received noise complaints from an elderly resident living in a separate part of the house. After unsuccessful attempts to reduce the noise through phone calls, the owners entered the property around 1am.

This led to a confrontation where the worker allegedly used offensive language, though evidence later showed the property owners might not have heard these comments directly.

Investigation into the after-hours conduct

The day after the incident, the employer suspended the worker and launched an investigation. The investigating team collected statements from multiple witnesses and obtained an audio recording from the property owners.

This recording captured the worker using offensive language, though the court noted these words were "barely audible without intentionally seeking to hear them out."

A key issue emerged during the investigation: despite having the audio recording, the employer never asked any witnesses, including the property owners, whether they had heard the offensive language at the time. As the court observed:

"More tellingly, during its investigation, [the employer] never asked a single witness, let alone the [property owners], whether they heard these words, and, if so, whether they were said or directed towards the [property owners]."

The termination decision-making process became a central focus of the case. While the commercial director claimed he alone made the decision to terminate, evidence suggested the managing director may have been involved. The court noted:

"[The commercial director's] evidence was that he was to be the only decision-maker and the [document] was poorly expressed on his part... [but] there were other people involved in each of the three processes (or in the single process of which there were three parts)."

Work party misconduct and reputational risk

The employer argued that the worker's conduct posed a serious risk to its reputation, particularly given the sensitive nature of the bushfire recovery project. The commercial director testified:

"So having a party, swearing at people, making allegations, changing those allegations, there's a high chance that [the property owners] will go and tell their friends and people. It will become public knowledge what happened."

The court emphasised the importance of context when assessing misconduct:

"Whilst [the worker's] conduct was not ideal, and it was imprudent for him to be using profanities, at least in the vicinity of subordinate employees and members of the public (albeit in a private home well after midnight), it had to be considered by reference to all of the objective contextual facts."

The decision highlighted that isolated incidents require careful consideration:

"[I]solated conduct usually would not suffice. Each case must be considered in the light of its particular circumstances, but nevertheless, the seriousness of the act of termination and the effect of summary dismissal are factors which place a heavy burden on the employer to justify dismissal without notice."

Inappropriate party behaviour as ‘serious misconduct’?

The court ultimately determined that the employer failed to establish the conduct amounted to serious misconduct warranting summary dismissal:

"Although [the worker's] conduct may be regarded as not being ideal or prudent, it was, to that extent, a lapse in judgment... [the employer] had not established that it amounted to misconduct warranting summary termination."

The matter was remitted for further determination of specific issues around the termination decision-making process.