Christmas period: Christmas party case study

Richard Clegg and Maria Hoeritzauer of Osborne Clarke continue a series of articles on Christmas period issues with a case study about a work Christmas party, which highlights the risk to employers of potential discrimination claims.

Lynne and Sue head up the social committee of a manufacturing company, Lookatus Ltd, which has 100 employees. Both have been employed by the company for over 25 years. They have come up with a few ideas for the annual Christmas party and are excitedly going through them with the rest of the social committee. At the request of the managing director, Jane the HR manager is attending the committee meeting in case anything too risqué is suggested.

Lynne suggests that at the start of the party there is a secret Santa present giving. Sue jokes that she hopes to pick Bill, a 60-year old computer technician, to receive her secret Santa gift. She laughs: "He is so bald I can get him a wig. What a crack! At his age, he'll think it's a laugh to get his youthful looks back." Jane wonders if the company could be vulnerable to a disability discrimination claim if Lynne goes ahead with her plan.

Baldness is not a disability for the purposes of the Disability Discrimination Act 1995 (DDA). However, Lookatus Ltd must take care or it could find itself liable for a claim under the DDA if Bill's hair loss is related to a disability that it knows, or could reasonably be expected to know, about. Bill may also have a potential claim of age discrimination if he feels that he is being discriminated against and/or harassed on this ground, albeit that the joke is coming from Sue, who it can be assumed is also older (having been at the company for a long time). Such discrimination and harassment are likely to be difficult to justify; the fact that Sue believes that Bill will think that it is a "laugh" will not be a defence. Unless the company takes appropriate steps to ensure that all employees, including Sue, are aware of the standards of behaviour expected (ie that discrimination and harassment are forbidden), it is likely be found liable for Sue's discriminatory behaviour.

If Sue does not curb her comments, Bill may feel that he is being bullied and that, by not taking steps to prevent Sue's behaviour, the company condones it. As a minimum this could affect his morale. At worst, it could be used in a claim that the implied term of trust and confidence between the company and Bill has been breached.

To avoid discrimination claims, Jane should remind the social committee that, although the secret Santa sounds fun, offensive or inconsiderate gifts should not be exchanged. A statement along these lines should be issued to all employees when the secret Santa is announced. Employees should be made aware that if they receive an inappropriate gift they have the right to raise a grievance, and that the company may take disciplinary action against the giver of such a gift.

Lynne and Sue suggest a formal sit-down dinner dance with a dance band and a raffle. Lynne thinks that bottles of sherry and port would be suitable raffle prizes. Chrissy, another committee member, complains that this would amount to age discrimination. She says that the arrangements will be popular with only the older members of the workforce. She explains that there are a substantial number of young workers who would prefer a disco rather than a dinner dance, and she suggests MP3 download vouchers as prizes.

Again, there may be issues of age discrimination if Lookatus Ltd adopts Sue and Lynne's suggestion and, as a consequence, Chrissy and her young colleagues feel that they are being subjected to a detriment on account of their age. However, Chrissy would need to demonstrate that a dinner dance does disadvantage young employees - it may be that her concerns are not commonly shared. Also, the company may be able to show that its decision is justified; it has to take account of all employees, young and old and a dance band may provide a happy compromise. It would be advisable for Jane to say that something that the majority of the workforce will enjoy should be arranged - perhaps a band that can play a variety of music, or a band at the start of the evening followed by a disco later.

Of more concern is the suggestion that there will be a raffle with alcohol as prizes. Jane should advise Lynne and Sue to take care. A raffle with alcoholic prizes may offend employees whose religion forbids gambling or alcohol. Giving alternative prizes, or donating the money to charity, may be more appealing options. In any event, it may be unwise to provide additional alcohol to that already made available. This may contribute to employees becoming intoxicated and behaving in an unacceptable manner, or putting their health and safety at risk (for example, on the journey home). Further, sherry and port may be perceived as drinks favoured by older people. If prizes are to be given, something that can be enjoyed by all age groups and religions should be chosen, such as book vouchers.

The finance manager is listening and becomes very concerned as the plans get more and more extravagant. He tells the meeting that the company cannot afford a band and suggests that a cheaper entertainer is booked. He mentions Happy Harry who was a famous comedian in the 1970s. Jane recalls that his act was renowned for derogatory racist jokes.

It is likely that Happy Harry's racist jokes will upset some staff. However, following the House of Lords decision in Macdonald v Advocate General for Scotland; Pearce v Governing Body of Mayfield School [2003] IRLR 512 HL, the company is unlikely to be liable for claims under the Race Relations Act 1976 (RRA). Although Burton and Rhule v De Vere Hotels (1996) IRLR 596 EAT (commonly referred to as the "Bernard Manning case") previously suggested otherwise, it was overruled in Macdonald. However, the company will be liable for a discrimination claim under the RRA where it has a discriminatory reason for not preventing the potential discriminatory treatment. It is also worth noting that, in Gravell v London Borough of Bexley EAT/0587/06, the Employment Appeal Tribunal noted that Macdonald had dealt with a different statutory regime, before the introduction of a specific definition of harassment. Therefore, it is advisable that employers avoid situations where third-party racial harassment could be alleged.

Whether or not an employer will be liable for third-party harassment (other than third-party sexual harassment - see below) is a matter that is the subject of consideration in the forthcoming Equality Bill. Employers need to keep a watch on developments in this regard.

In any event, the company should steer clear of booking Happy Harry. It may face potential claims that it has breached the implied term of trust and confidence if his jokes cause particular offence to employees, and his act is unlikely to be conducive to good employee relations.

Jane advises against booking Happy Harry. Thinking about third-party harassment reminds her of a previous incident. She recalls speaking to another employee, Dawn, at a recent departmental party. During the evening Dawn came to her crying. She told Jane that one of the waiters had been sexually harassing her all evening. He was complimentary at first but his behaviour soon degenerated into making lewd comments and she felt very uncomfortable. Jane is worried that there may be a similar incident at the Christmas party.

Equal Opportunities Commission v Secretary of State for Trade and Industry [2007] IRLR 327 HC clarified that third-party sexual harassment is within the scope of the Equal Treatment Directive (2002/73/EC). This resulted in subsequent amendments to the Sex Discrimination Act 1975 by the Sex Discrimination Act 1975 (Amendment) Regulations 2008 (SI 2008/656) to protect employees from harassment by a third party. These amendments came into effect on 6 April 2008. However, liability for third-party sexual harassment is subject to a three-stage test, that:

• the third party subjects a woman to harassment in the course of her employment;
• the woman's employer has failed to take such steps as would have been reasonably practicable to prevent the third party from doing so; and
• the employer knows that the woman has been subjected to harassment by a third party in the course of her employment on at least two other occasions.

(The provisions apply also to protect men.)

Although a single act of a waiter harassing an employee at the party should not expose the company to risk, it will be vulnerable where that employee has been harassed on at least two previous occasions by the same or different third parties.

Lookatus Ltd can reduce the risk of a similar situation to that experienced by Dawn arising at the Christmas party, by asking the venue and catering providers to remind their own staff of the standards of behaviour expected. The company should also advise staff that, if they have concerns at or after the party with the behaviour of other Lookatus employees or staff working at the event, they should raise their concerns so that the matter can be dealt with. It may also be appropriate to offer counselling to affected employees and to remind them of their right to raise a grievance.

Lynne and Sue show the committee the draft wording for the invitation. It says that husbands and wives may also come along. Jodi, another committee member, mentions that she knows of a few employees who have recently celebrated civil partnerships or who are living with long-term partners. She asks if these partners can also be included. She would like to bring her girlfriend along.

If the company is inviting spouses, the invitation must also be extended to civil partners. However, the company is not under a legal obligation to extend invitations to boyfriends and girlfriends. If it does so this must be regardless of whether employees are in a same-sex or different-sex relationship. Failure to invite civil partners where spouses are invited, or failure to invite same-sex partners where different-sex partners are invited could result in successful claims of discrimination on the grounds of sexual orientation.

Lookatus Ltd could limit the party to employees only. The finance manager should be happier with the reduced costs.

During the party Jane sits down beside Lynne, who is involved in a discussion about the meaning of Christmas with the rest of the table. Lynne, who is giggling and slurring her words, says that she is an atheist. In front of Sue she says to Sue's husband, who is known to be a devout Christian: "So are you going to be boring and pray all day on Christmas Day? You best send Sue round to me to make sure she has some fun." Lynne turns to Sue and states: "Sue, I know you're not one of them. I will be really upset if you don't come and spend at least some of the day with me to enjoy some real festive cheer." Lynne asks the rest of the table to remind Sue that she is now due round at her house on Christmas Day.

Sue may feel that Lynne is harassing her and her husband on the ground of her husband's religion or belief. She could bring a claim under the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/1660) against both Lynne and the company. Following Saini v All Saints Haque Centre and others EAT/0227/08, it is not necessary for the harassment to be on the ground of the religion or belief of the victim, for a claim to succeed. The religion or belief may relate to a third party, in this case Sue's husband.

Although Lynne probably has no intention of harassing Sue, and her behaviour is not intended to be malicious, it may fall within the statutory definition of harassment. Harassment is defined in the anti-discrimination legislation as unwanted conduct that violates a person's dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment for him or her. The Acas guide for employers and employees - religion or belief and the workplace (PDF format, 565K) (on the Acas website) states that harassment "may involve nicknames, teasing, name calling or other behaviour which may not be intended to be malicious but nevertheless is upsetting". It is no defence that the workplace culture is one where jokes are readily made by employees at each others' expense, although it should also be remembered that the Acas guide is not legally binding and one joke may arguably be insufficient to establish harassment. However, if Lynne persists in her banter or these remarks are just the latest in a series she has already been making to Sue, Sue will have a stronger case.

Jane should draw Lynne aside and explain to her that her comments may be offensive. Lynne should be advised that such comments are in breach of the company's policies on discrimination and harassment. On the basis that Lynne appears to be a little the worse for wear through alcohol, Jane should encourage her to stick to soft drinks or, depending on her state, send her home (using a taxi or arranging for her to be picked up).

Jane should also speak to Sue and her husband to check that they are not upset and explain to Sue that she may, if she wishes, raise a formal grievance or discuss the matter informally if she prefers. To avoid such situations arising in the first place, all employees should be reminded before the party that harassment will not be tolerated and may lead to disciplinary action.

Next week's article will be FAQs on issues concerning the Christmas period and will be published on 15 December.

Richard Clegg (richard.clegg@osborneclarke.com) and Maria Hoeritzauer (maria.hoeritzauer@osborneclarke.com) are solicitors at Osborne Clarke.

Further information on Osborne Clarke can be accessed at www.osborneclarke.com.