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Company Christmas parties: ‘tis the season to be

December 13, 2013

Insurance brokers OAMPS have issued guidance to businesses staging company Christmas functions, reminding them that the rules associated with regular business operations still apply during such functions.

The advice states: "employees like their hard work to be recognised, and managers see the value in celebrating with colleagues as it builds morale and has a positive effect on employee engagement. But there is a downside."

What can go wrong?

End of year celebrations and Christmas functions are a normal business practice. But employees need to be reminded that when they are attending a company function, the rules associated with regular business operations still apply.

Alcohol is often served at end of year celebrations and Christmas functions. Excessive drinking can impair judgment. At a company sponsored event, if an employee consumes too much alcohol and damages property or injures another person, the employer may be held liable.

Equally, if a manager verbally or physically abuses an employee, they may be liable as well as the company. This has led to an increasing amount of lawsuits arising from the actions of co-workers at company-sponsored functions.

Alcohol isn't the only contributor to this spate of lawsuits.

OAMPS Practice Leader Natasha Barker explains "many things can go wrong at company sponsored events. Some clients participate in boating races or have parties on boats that have obvious risks and hazards to participants.

"It is wonderful to be creative and adventurous and spend money on unique options for end-of-year functions but the required insurance for mishaps and injuries needs to be in place."

Barker gives the example: "one company had a Hawaiian theme for their function. A grass skirt caught fire from a candle, starting a blaze that obliterated the building and caused minor burns to employees.

"Who would have thought something fun such as this, that was meant to be an employee benefit, could actually be an employer liability?"

Insuring a liability-free party

If you are wondering 'would my insurance cover me for this?' The answer is generally yes; most commercial liability policies include cover for your legal liability arising from Christmas functions.

However, most insurers picture a standard Christmas party in the office or perhaps a restaurant. Companies these days are offering their staff more exciting events which could fall outside the intention/scope of your policy coverage, especially when they are mixed with serving, selling or distribution of alcohol.

The question is whether your business needs special insurance against liability arising out of social entertaining or corporate sponsored events with higher risk activities involved.

There have been cases where employees had been drinking at office parties and become inebriated when laws exist that alcohol cannot be served to an intoxicated person.

The employees helped themselves to drinks behind the bar, transferring the liability onto the employer responsible for supervising the event. The judge held the employer accountable for providing too much alcohol and too little guidance.

Furthermore, the employee attempted to drive home and incurred an injury after a car accident. This employee was able to win a finding of liability against their employer, of which there was no insurance cover in place. It cost the company over a million dollars in damages.

Employers have a duty of care to safeguard their employees from harm. Even hosting a party at a restaurant, hotel or other location managed by a third party will still not necessarily pass on any potential liability to this venue and its bartenders and wait staff. This is because the legal system may still invoke the duty of care of the employer, assessing how well managed the event is to protect employees.

Legal experts advise employers to take caution, cross check their insurance program with their

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