Have yourself a merry little Christmas
Everyone loves a good Christmas party and a well-planned corporate gathering can do wonders for morale. But as headlines have shown, employers are becoming increasingly alive to the risks they face from the simple act of trying to reward staff.
Secret Santa, a ready supply of alcohol, late nights and the blurring of the corporate command structure can give those in HR cause to wish the season of goodwill over – and quickly too.
It’s not hard to find examples where employees have overstepped the mark and have later been sacked. Take the 2012 case that involved retail display solutions firm, Display by Design. It was involved in a claim (Gimson v Display By Design Ltd) after a works Christmas party when an employee had a disagreement with colleagues and subsequently punched one in the face causing serious injuries.
The company instigated its disciplinary process and dismissed the employee for gross misconduct. The employee appealed to the Tribunal saying the incident was outside of the workplace and nothing to do with the firm; the Tribunal rejected this argument because “the events after the works Christmas party were sufficiently closely connected to work to have had an impact on the working situation”.
The main issues for employers
The problem for employers, says Dylan Rowlands, an employment solicitor at the BPIF, is that they have to deal with “anything and everything… fighting, assault, drunkenness, and discriminatory acts against other employees and venue staff.”
What should be of real concern to employers is a legal principle called vicarious liability. This can make them, in certain circumstances, liable for anything employees do wrong in the course of their employment – including discriminatory acts and personal injury. It gets worse: “An aggrieved person,” says Rowlands, “will inevitably try to bring the employer into the frame if they can because they will probably have the deeper pockets and will have the benefit of employer’s liability insurance.”
As Mark Stevens, an associate at law firm VWV, explains, vicarious liability applies to a party situation because “work social events can be considered ‘an extension of the work place’”.
Through a 1999 case, Chief Constable of the Lincolnshire Constabulary v Stubbs and others, Rowlands illustrates how a situation can play out: “A female police officer was subjected to sexual harassment by colleagues in a pub even though this was outside working hours. The Employment Appeals Tribunal said that social events immediately after work or at an organised leaving party were within the course of employment.”
Stevens thinks the same. He cites the 2016 High Court case of Bellman v Northampton Recruitment where members of staff and the managing director went for post party drinks at their hotel after returning from the golf club where the party was held. “When the conversation turned to ‘work politics’ the managing director became verbally abusive. An altercation ensued that ended with the managing director repeatedly punching a member of staff (the claimant) and leaving them with a life-changing brain injury.” The judge initially held that the employer was not, in this specific case, liable for the managing director’s actions as the Christmas party itself had taken place at the golf club, which employees were expected to attend. The judge said that the drinks at the hotel were no longer part of the company event. The Court of Appeal overturned this decision, however, finding that as the wrongdoer was the managing director and that the incident happened at an “after party” while work issues were being discussed, there was sufficient connection between the wrongdoer’s job and the wrongful conduct to mean that a finding of vicarious liability against the company was appropriate.
For Amanda Trewhella, a senior associate at law firm Freeths, the initial ruling was surprising. She thought that if it had stood “it would have by no means been a free pass for employers”.
There’s another case, noted by Stevens, which is also worth keeping in mind. He says “the decision in Bellman can be contrasted with the 2004 ruling in Livesey v Parker Merchanting where sexual harassment, which had occurred in the car on the way home from a work event was held to be a continuation of the harassment at the party, and therefore there was no reason to distinguish the events in the car.”
Reducing the risk of incidents
But employers can protect themselves says Stevens. He says “that employers can defend a claim of vicarious liability by proving that they took all reasonable steps to prevent the employee from doing the wrongful act.” This includes reminding employees that the party is a work event and also the standard of behaviour that is expected.
Trewhella takes the same line. Her advice is that employers should remind staff of any relevant policies such as a code of conduct, equal opportunities policy and bullying and harassment policy.
The impact of technology shouldn’t be underestimated either, says Rowlands: “In this day and age, the policy should deal with pre/post event social media – Facebook Twitter, Instagram, etc,” adding, “it should also deal with ‘next day hangover absenteeism’”.
Another issue to note, says Trewhella, is to beware how much alcohol is provided to employees at the party. “You have a duty of care in relation to your employees’ safety during the party and this can also extend to ensuring that they get home safely. In particular, it is important to make sure that they do not drink and drive home.” It’s for this reason she suggests ending the party before public transport stops running or arranging a mini bus or taxis.
From the perspective of corporate self-preservation, Rowlands thinks it sensible that a senior member of staff should stay sober to deal with any issues that arise and to ensure that a clear recollection of events is available from a first-hand witness.
“Remember,” he adds, “if you do provide a ‘free bar’ then ensure that is it limited to a small number of drinks per individual.” He warns employers, while stating the obvious that it is illegal to buy alcohol for under-18s: “If you provide young, inexperienced employees access to unrestricted amounts of alcohol then you cannot really be surprised at the results.” He’s also of the view that soft drinks should also be provided as part of any free bar system.
But what of allegations that are made? Stevens says that no matter the cause, they should be treated seriously and dealt with in accordance with the relevant disciplinary procedure. “If allegations are not treated seriously, this may exacerbate the issue or give rise to future complaints.”
Logically, Trewhella says that the process depends on the situation and the seriousness. “If, for example, an employee has harassed another employee, or a fight broke out, then the employer should act straight away to resolve the immediate issue, perhaps by getting those involved a taxi home. Then once they are back in the office the misbehaving employee should be disciplined in accordance with the company’s established procedures.”
She also thinks it sensible that others aware of the incident should be given the opportunity to discuss what has happened with their line manager or HR to ensure that there are no further issues likely to arise. This would also be an opportunity to find out whether anything occurred that the employee would want the company to take further.
But there is another potential question for an employer: what should happen when an incident occurs that leads to the arrest and imprisonment of an employee?
Here Stevens cautions employers to “avoid a knee-jerk response to incidents of this nature and investigate what has happened very carefully.” He says that one option is to suspend the employee on full pay, “but whether suspension is the right step will depend on what has happened, whether the employee is able to work (in any capacity), and the content of any relevant policies regarding suspension.”
Ultimately Rowlands says the situation is that same as for someone who doesn’t attend work because of inclement weather: “They are in breach of contract – no pay, possibly treated as unauthorised absence and disciplined accordingly. If an employee is caught drink driving, then the written policy should deal with it. If a need to drive is an essential requirement of the job and there is a clause to that effect in the contract of employment, then with care it is possible to dismiss.” He also advises that short-term prison sentences are not likely to be enough to dismiss an employee.
PLANNING FOR CHRISTMAS
Exemption for the party
According to HMRC’s own rules, the cost of throwing a Christmas party for staff, or a party for staff at any other time of the year, is exempt for tax purposes provided certain circumstances are met. The rules allow the exemption if the function(s) cost £150 including VAT, or less, per head (including partners); the function(s) are held annually; and that they must be open to all employees (even if they don’t all decide to attend).
The figure of £150 is not an allowance, if the cost per head exceeds £150 then the entire event is disallowed in respect of any tax exemption.
There is no restriction on the number of events each year that an employer can hold, so it could have a summer party and a Christmas party and provided that both events were open to everyone and the combined cost did not exceed £150 per head, then both would be allowable
Giving trivial gifts
Gifts given by employers to employees are generally taxable unless they qualify as trivial benefits. To qualify as being a trivial benefit it must cost less that £50 to provide; cannot be cash, a voucher or something that is readily converted into cash; isn’t given as a reward for work or performance; and isn’t given because of a contractual obligation. This exemption would cover staff gifts such as chocolates at Christmas or Easter and flowers sent on the birth of a baby.
Firms may give gifts to clients that incorporate a conspicuous advertisement for the business – for example, a branded golf umbrella, mouse mat or diary. These items should be tax deductible. However, gifts that consist of food, drink, tobacco, or any voucher that can be exchanged for goods are not tax deductible, even if the festive chocolates are emblazoned with the business logo. There is a further restriction in that the cost of the gift cannot exceed £50.
There is a relaxation of the rules where a company makes a gift of one of their products, and the item is given away during the ordinary course of that business, to advertise to the public generally. For example, if the business is a chocolatier, then it could make Christmas gift of chocolates to the general public for promotional purposes and obtain a tax deduction for the cost of the chocolates.
Christmas gifts to charities are also tax deductible.
If (Christmas) music is played in the business – whether from an iPhone, internet stream, CD or the radio – a PRS for Music licence will be needed. PRS for Music collects and distributes money for the use of the musical composition and lyrics on behalf of authors, songwriters, composers and publishers. It’s also possible that a PPL licence is needed to play recorded music in public. PPL collects and distributes money for the use of recorded music on behalf of record companies and performers.
Plan for bank holidays
While online banking is almost ubiquitous, firms need to be aware of the disruption to the banking schedule over the period.
Christmas Day falls on a Tuesday while predictably Boxing Day is a Wednesday and New Year’s Day is the following Tuesday (a second day on Wednesday in Scotland). This means deposits will take much longer to clear than normal. HSBC, for example, doesn’t send automated electronic payments on non-working days. With cheques, funds are generally available on the third working day after deposit, but it’s not until the sixth day after deposit that funds become non-returnable. That said, some banks are now allowing images of cheques to be banked electronically. With this new process, a cheque submitted on one weekday should become cleared funds the next working day. Check with the bank to see if this is available.
Alternatively, Faster Payments should go through within two hours, but generally instantly. However, a Faster Payment can take until the following day to show up in an account. A wise business will move monies a day or so earlier than needed, especially when salaries need paying between Christmas and New Year.
Allied to this, it’s worth planning for any tax bill payment deadlines. For example, those with a tax year ending on 31 March will have a Corporation Tax bill that is due on 1 January – nine months and a day after the year end. Christmas and the New Year bank holidays will delay the payment process and it’s worth adding extra time to avoid falling foul of the delays; a number of banks including TSB and to a lesser extent, NatWest and Barclays, have had systems failures that have left customers unable to access their accounts. Missed payments mean automatic penalties and give HMRC an excuse to investigate the business.
Exercise caution with Faster Payments. A destination bank account that is mis-keyed will mean money going to the wrong destination, instantly, and because of confidentiality will be difficult to retrieve.
Royal Mail posting dates
Items that need to arrive before Christmas should be posted early. To this end Royal Mail publishes the last recommended posting dates for items to reach extreme parts of the UK (and the world). The detail is online at http://www.royalmail.com/greetings
To arrive in time for Christmas, inland 2nd class has to be sent by 18 December while Special Delivery needs to be posted by 22 December. A full list for overseas destinations is also published.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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