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Challenges in planning the holiday party

By Yosie Saint-Cyr, LL.B., Managing Editor at HRinfodesk.com---Canadian Payroll and Employment Law News, October 2008

The holiday season is fast approaching and so are end-of-the-year corporate events such as the holiday party. There are some real challenges when planning your office holiday party or finding the perfect corporate holiday gift for your clients or employees. Employers also face a number of risks when holding these events. These include serving alcohol to employees, keeping religion out of the workplace and preventing sexual harassment. These challenges can be met with some extra planning. Employers need to be responsible, inclusive and aware.

Our latest HRinfodesk poll asked participants What is your greatest challenge with planning such an event? Surprisingly, 44 respondents out of 170 (25.88%) indicated that employee participation was their greatest challenge. Some other challenges included drinking and inhibitions diminished by alcohol (42/24.71%) and budget and taxability issues (18/10.59%). However, 32 respondents out of 170 (18.82%) thought planning such an event had no challenges-it is a breeze to plan.

Below is a breakdown of the results of the poll on the topic of possible challenges when planning holiday parties. We are also providing a comprehensive overview of the topic and the legal implications.

What are some of the main challenges?

Companies can be liable if an employee has an accident after drinking at a holiday party. Employers also need to be sensitive to the diverse backgrounds and beliefs in their workplaces. And they should remember that liability for sexual and other types of harassment doesn't stop at the office.

Employers may be held vicariously liable for the actions of their employees. One important point to remember is that the law imposes a duty of care on employers to provide a safe workplace and protect employees from harm, including harm resulting from an employee's own actions. “Harm” can mean physical harm, damage to property and violence, but also consists of sexual and other forms of harassment. Employers can also be held liable for injuries or damages caused by an employee to themselves or to a third party after an employee gets drunk at a company-sponsored event. For that reason, it is appropriate that holiday party plans take into account some simple measures to ensure employee safety and minimize the risk of claims.

Vicarious liability is the term used when organizations are ultimately responsible for an event or property, and are held legally liable for the actions and negligence of their employees and volunteers. Organizations could be vicariously liable for negligent, intentional or unintentional actions of those operating on their behalf. In other words, employees' actions in the course of employment are considered to be the actions of the organization, and consequently, if an employee acts negligently in the course of her or his duties, the organization will be held personally liable. This vicarious liability can even extend to intentional acts of civil wrongs (torts) done by employees or agents of an organization that cause harm to a third party. Such intentional torts include such actions as harassment, assault and battery.

Employee participation

Given the state of the economy and recent uncertainties, employees could certainly use the diversion of a celebration with their co-workers. However, employee participation at a company holiday party will depend on the work environment, on management styles and on the organization's respect of employees' well-being, values and cultural differences.

Valuing individual differences is more than just words. Diversity means creating an environment where all employees respect each others differences, learn from one another and are provided with the opportunity to succeed.

Nonetheless, employers cannot force employees to participate and attend such events. Mandatory attendance at functions can result in workers' compensation or other claims if an attending employee is injured or harmed, for example. The reason is that an employee may be considered to have been acting in the course of employment if “the degree of expectation from the employer that all employees would attend is high enough”, then a close correlation between the social activity and the employment is apparent and a court may infer that attendance was expected of all employees.

To promote employee voluntary participation:

  • Involve employees in identifying concerns about the work environment; for example, form a committee of employees and managers to resolve environmental problems
  • Give employees a chance to participate in decision-making, and listen to their input and suggestions
  • Keep your employees informed through ongoing communications
  • Be inclusive:

    • Make your holiday events non-denominational-festivities, decorations and general celebrations should not contain references to any particular
    • religion so as to avoid claims of favouritism or bias; employees may also be reminded that this is a time for celebration and that intolerance and harassment based on religious practices will not be tolerated
    • Plan events outside regular work hours
    • Make it clear that attendance is entirely voluntary and that non-participation will not be noted by the company in any way

In addition, including spouses or partners can cause family members to feel included in the employee's work life, increasing both job loyalty and enjoyment at home. This has a dual benefit of making employees more cautious and circumspect in their behaviour.

Drinking and inhibitions diminished by drinks

Over-drinking is the major threat, because it can lead to slipping and falling, unwanted sexual advances, fights between co-workers, and car accidents, to name a few.

Recent court cases have broadened the scope of employer responsibility for monitoring employee behaviour at company-sponsored events where alcohol is served. Therefore, it is crucial that employers understand the legal responsibilities and risks that such events involve, including the know how to reduce the potential for legal liability. Employers who serve alcohol at parties must be very careful and absolutely aware of their legal obligations when hosting an event on or outside company premises or at the home of the business owner/manager.

Due to the nature of the employer-employee relationship, courts have clearly stated that the standard of care on an employer is higher than that on a tavern owner or a social host. In addition to the general duty to maintain a safe workplace, employers who provide alcohol at a company hosted party are obligated to:

1. Monitor the amount of alcohol consumed by employees; and

2. Take positive steps to prevent an employee from driving home after drinking.

Employers have a serious duty to safeguard their employees; this duty includes insisting employees turn over their car keys if they plan to consume alcohol at a company-hosted party; paying for a cab to take an employee home safely after a company hosted party; calling the police if an employee insists on driving when he or she has consumed alcohol at a company party; calling a contact to come and take the employee home; or physically stopping the employee from hurting himself or herself and others.

Where employees drink large amounts of alcohol, drive, and subsequently get into a car accident causing significant injuries to the employees or others, employers may be found vicariously liable for the actions of their employees. Courts show no mercy when making awards for damages in these types of cases. Despite the fact that plaintiffs are found to be partly responsible for their own fate, employers have been ordered to pay plaintiffs large sums of money for their portion of responsibility.

When serving alcohol, the following steps can help minimize the risks for employers:

  • Promote a healthy workplace culture by taking a clear stand on substance use at events like holiday parties; make sure your policies include clear rules about drinking including at all company-sponsored events
  • Encourage responsible drinking; offer alternative activities like dancing, games or sports
  • Always have healthy food choices and non-alcoholic beverages available
  • Restrict and monitor the amount of alcohol consumed by each guest (e.g., use a drink voucher system or hire a bartender rather than offering a self-serve or open bar)
  • Close the bar one hour before the planned end-time of the activity and provide non-alcoholic refreshments
  • Provide transportation or taxi vouchers to party guests for their trip to the event and back home, if they have consumed alcohol and should not drive.
  • Host events at a hotel or a restaurant where a commercial host with qualified staff will serve and monitor the consumption of alcohol; this won't free employers of liability, but it will provide a safer setting for staff
  • Check insurance coverage and obtain “special events” coverage if necessary
  • Supervisors and managers should set a good example by remaining sober

Harassment and sexual harassment

Alcohol consumption decreases inhibitions, and holiday parties often result in claims of harassment or sexual harassment. As a result, it makes sense to review anti-harassment policies to make sure they are up-to-date and cover company-sponsored social events. A reminder to employees that their conduct must conform to the policy during such events is wise and strongly recommended.

An employer is liable for discrimination contrary to human rights legislation that occurs at work, and may also be liable for any harassment (which is a form of discriminatory conduct) that occurs outside of work hours at employer-sponsored social events.

An employer should consider taking the following steps to reduce both the risk of harassment of its employees at social functions and the risk of liability for such harassment:

  • Establish and communicate a harassment policy that clearly states the policy extends to employer-hosted social events, such as holiday parties, client receptions and other similar social events
  • Ensure the policy sets out an obligation to bring forward knowledge of behaviour that is contrary to the policy and clearly sets out the process for bringing a complaint; the policy should set out procedures for reporting, investigating and dealing with the complaint
  • Communicate the message that holiday parties are work-related activities
  • Be aware of employees' conduct at events and follow up on complaints
  • Supervisors and managers need to know that the company expects them to set an example of professionalism at the holiday party; moreover, supervisors and managers should be given anti-harassment and sexual harassment training, including holiday party scenarios
  • Employers should consider inviting spouses and significant others-this can significantly reduce the incidences of harassment or offensive behaviour
  • Take steps to limit the consumption of alcohol

Budget and taxability issues

Employees are generally subject to tax on the value of all benefits he or she receives by virtue of his or her employment. The Canada Revenue Agency (CRA) has taken the position that a party or other social event generally available to all employees and paid for by an employer will be a non-taxable privilege as long as the intangible benefit cost per employee is reasonable. The CRA has dictated that up to $100 per person is reasonable and will be non-taxable. Anything beyond this amount (such as adding transportation home, or overnight accommodation) will result in a taxable benefit.

The CRA also reviewed the policy on gifts and awards for taxation year 2001 and subsequent tax years. Employers may give employees two non-cash gifts (for special occasions such as Christmas, birthdays, weddings or similar events) tax-free. However, the cost of the gift must be $500 or less a year. The cost incurred is tax deductible for the employer. If the cost exceeds the $500 threshold, the market value of the gift must be included in the employee's income.

This policy change made it easier for employers to administer their gifts and awards programs because it removed the burden of determining the fair market value of small gifts and awards. Revenu Quebec modified its gifts and awards legislation to incorporate the same policy, retroactive to January 1, 2001.

For more, read the CRA bulletin Income Tax - Technical News, 15 on Christmas Parties and Employer-Paid Special Events at www.cra-arc.gc.ca/E/pub/tp/itnews-15/itnews-15-e.html#P53_5185.

For additional information on gifts, awards and social events, visit the CRA website at www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/bnfts/gfts/menu-eng.html.

Importance of planning

Although a great number of respondents indicated that they encounter no challenges when planning their holiday parties, employers do need to plan ahead when hosting holiday parties. They can do this by developing and implementing a policy for company social events. This can be used year-round, as well. It may be the holidays, but the responsibility for employee safety is an issue for all seasons.

To avoid liability, employers should take precautions in the preparation for such events. They should set up and communicate clear guidelines to all employees and supervisors/managers on proper conduct and employer expectations. By following a few simple steps, employers can feel confident that a safe and enjoyable time will be had by all.