Workplace culture key factor for ability to terminate for intoxicationMarch 29, 2015
The Informant: Issue 3
A recent decision of the District Court of New South Wales has highlighted that in addition to a standard workplace policy framework, the ‘culture’ that an employer fosters towards alcohol in the workplace will be a key consideration when assessing the ability to terminate employees for alcohol related incidents.
Background: what the case was about?
In Mitchell-Innes v Willis Australia Group Services Pty Ltd1, Mr Donald Mitchell-Innes brought a claim for wrongful dismissal against his former employer, Willis Australia Group Services after being summarily dismissed for being intoxicated at a work conference.
Mr Mitchell-Innes was a General Manager at Willis with eight years service. In October of 2012, Mr Mitchell-Innes attended a staff dinner held prior to Willis Group’s training conference. After the dinner, Mr Mitchell-Innes and another colleague continued on to a local hotel where they drank until the early hours of the morning.
At the next day’s conference, Mr Mitchell-Innes arrived supposedly smelling strongly of alcohol, talking loudly, slurring his words, making animal noises and throwing lollies.
After an investigation into the incident, Willis summarily terminated Mr Mitchell-Innes’ employment as a result of his condition and conduct at the conference.
Mr Mitchell-Innes’ employment contract did include a termination clause that gave the Willis Group the ability to terminate Mr Mitchell-Innes’ employment if he was found to be guilty of ‘serious misconduct’.
However, whilst Willis Group’s workplace policies (which were incorporated into their employment contracts by reference) did refer to ‘intoxication’ as misconduct which would be subject to disciplinary action, only intoxication of a level that could ‘seriously damage the Willis Group’s reputation’ or ‘endanger the well-being of the Willis Group’s staff’ was defined in the policies as being ‘gross misconduct’ which could lead to summary dismissal.
Accordingly, the District Court of New South Wales held that in order for Mr Mitchell Innes’ conduct to have warranted summary dismissal it would have needed to be “of such aggravated character that it strikes the employment contract down immediately, completely and permanently.”
The District Court of New South Wales found in Mr Mitchell-Innes’ favour, awarding close to $300,000 in damages for wrongful dismissal. Critically, the court not only took into consideration Mr Mitchell-Innes’ long and previously untarnished employment wisely, but also the Willis Group’s generally lax and tolerant nature towards alcohol in the workplace.
The Court noted that alcohol consumption was not uncommon within the Willis Group workplace culture and employees were expected to socialise and consume alcohol with clients and prospective clients and the Willis Group routinely reimbursed alcohol expenses resulting from employee gatherings or entertaining clients.
Accordingly, the District Court of New South Wales found that Mr Mitchell-Innes’ conduct at the conference did not cause the requisite level of damage to the Willis Group’s reputation to constitute serious misconduct and thus the Willis Group’s summary dismissal of Mr Mitchell-Innes was inconsistent with its own policy framework.
What does the decision mean for employers?
The case is another clear illustration of how an employer’s culture and values in the workplace can have a major impact on the way in which a court will assess the appropriateness of disciplinary action taken against employees.
In this case, the employer’s policies failed to appropriately define what was to constitute ‘serious misconduct’ with regard to alcohol consumption and as such, the court gave credence to the Willis Group’s expectation of its staff to socialise and consume alcohol when entertaining clients. Even though the employee may have overstepped the mark in a public forum, because the employer did not consider its own policy framework and culture before making the decision to terminate, the case resulted in a hefty damages bill.
The trap that many employers find themselves falling into is that they do not adequately consider their own culture, values as well as the industry they work in when initially formulating and drafting their workplace policies. For instance, when formulating workplace policies:
- Have you considered the culture you want to promulgate towards certain aspects in your workplace (such as alcohol) and is this realistic and practical – will it be able to be consistently applied? How do you want this culture articulated and reflected in employee contracts and workplace policies?
- Have you considered the dynamics of your industry and the level to which alcohol consumption will be tolerated? Will 5pm social Friday drinks be encouraged or at least condoned? Do certain safety considerations or contextual factors necessitate a zero-tolerance policy towards alcohol, and will this apply to all staff on all occasions?
How can we help you?
FCB has extensive experience in and knowledge of the vast cultural differences across the broad range of Australian industries and workplaces. We regularly assist businesses draft, develop and implement practical policies and procedures which are tailored for effectiveness within their own industrial and cultural framework, which assist clients to reduce their exposure to claims relating to managing conduct and other workplace matters.
Are you concerned about your workplace culture? Would you like to talk to us about strategies could can use to improve the culture in your business? Please call us on (02) 9922 5188 or email us at firstname.lastname@example.org.
1Mitchell-Innes v Willis Australia Group Services Pty Ltd (No 2) (Unreported, District Court of New South Wales, Taylor DCJ, 8 December 2014