‘Tis the season when I cast a bit of lawyerly ‘humbug’ on your yuletide cheer—or at least provide a few pointers on how to avoid the fallout from employee or management misbehaviour over the holidays. That’s because this is often the time of year when small and mid-sized business owners find themselves facing a sled-full of risks and liabilities.

In past years I’ve discussed the potentially costly ramifications from social host liability and ways to ensure employees party safely while at a work-sponsored event. The takeaway was simple: the risks associated with workplace social events are very real for employers and should be managed carefully. The best advice for employers hosting these events: monitor employee alcohol consumption, choose the right location for a holiday party and provide homebound transportation for employees when the party winds down. In the age of social media it would also be prudent to discuss social media etiquette with staff in advance (what they might post on Twitter or Facebook lives forever, after all). That’s in addition to reviewing workplace conduct policies before any holiday gathering, and reminding employees that for all intents and purposes, they’re still at work when sipping egg nog with colleagues at company-sponsored events.

But there are other concerns you should bear in mind when it comes to work holiday parties and related activities (beyond making them fun and enjoyable for your hard-working employees, of course).

Client parties

The first is how workers behave when invited to parties outside the office. At this time of year, many organizations and their employees will be invited to holiday dos hosted by your clients or service providers. There’s nothing wrong with that, except when copious amounts of alcohol (and in some cases, even drugs) are supplied and your people are encouraged to really let loose. Many do, only to wake up the next morning facing a discipline or termination meeting with management.

The point to remember is that employees and managers are still representing your organization even while being entertained by clients. Ensure you have detailed policies in place outlining a zero-tolerance policy for any client-site social behaviour that you wouldn’t tolerate in your own workplace, and keep the definition broad—covering everything from disruptive drunkenness to sexual harassment.

On that latter point, the Alberta Court of Appeal recently upheld the dismissal of a 55-year-old Syncrude executive who was terminated for sexual harassment while being hosted at a client dinner and after-party. Despite having a clean work record, the manager was found to have engaged in blatant sexual harassment during the evening in question, which led to the client requesting to be removed as their main point of contact. The Court decided that given Syncrude’s strong anti-harassment policies—of which the executive was well aware—and potential damage to their business reputation, the dismissal was reasonable. In other words, being away from the office doesn’t mean a business’s stated anti-harassment policies no longer apply.

READ: Should you impose morality clauses on your employees? »

Office hook-ups

The second point revolves around holiday hook-ups. For whatever reason—and I suspect many of them are alcohol-related—this is the time of year when more colleagues engage in romantic dalliances outside of the workplace (and sometimes even inside, but we’ll save that for a future column). Many of these romances are first kindled at holiday parties.

While there’s nothing illegal about dating a person with whom you work, organizations face challenges when a manager or senior staffer engages a more junior employee in a romantic way. Risk exposures abound for the employer in this scenario—think sexual harassment, or even potential human rights or extortion risks if the alleged victim seeks an out-of-court settlement or attempts to inflict damage on your brand reputation.

Make sure your workplace policies include rules around employees dating, including disclosure and conflict of interest rules. Then train everyone from C-suite executives to interns to ensure they’re clearly communicated and well understood.

READ: How to Marry Your Secretary »

Gifts

Lastly, your policy review and revisions shouldn’t end with potential romantic encounters—you may also need to police the acceptance of presents. Why? This is the time of year when your employees or managers may receive gifts from clients or service providers. In some industries, these are simply viewed as ‘thanks’ for an ongoing business relationship. In others—think the media or government agencies, for example—they’re seen as a clear conflict of interest that could sway coverage, policy or business decisions.

Some companies will allow employees to accept gifts with open arms. Others ban the practice altogether. The main point to remember is that your organization needs to establish clear policies and procedures on the matter. Arguing after the fact that an employee was wrong to accept a Christmas gift from a service provider, and was subsequently terminated for her actions, simply won’t pass muster in a court of law.

With all of that said, there’s no reason why your next holiday get-together can’t be an enjoyable one that helps drive employee engagement and brings your people together. It simply pays to think proactively and prepare for certain, potentially challenging, scenarios before they leave your organization in a compromising position.

READ: How to Avoid Christmas Gift Gaffes »

Laura Williams is an employment lawyer and founder of Williams HR Law in Markham, Ont. She has more than 15 years experience in providing proactive solutions to employers aimed at reducing workplace exposures to liability and costs that result from ineffective and non-compliant workplace practices.

READ: Is the Office Christmas Party Worth It? »

Do you have rules in place to deal with these potential problems? Let us know in the comments below.

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