Don’t Let the Christmas Grinch Spoil Your Office Party

This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.

With Christmas only a few short weeks away, many employers will be spreading holiday cheer among staff by hosting holiday parties and other seasonal events. Such occasions are a great opportunity to build staff morale and demonstrate appreciation for hard work performed throughout the year. Difficulties and risks can arise when the party carries on and extends beyond a “work event” to a social event that happens to involve co-workers. The distinction between formally sanctioned work events and informal social gatherings among co-workers may not be readily apparent, but can have significant consequences for the employer if something goes wrong.

In Poole v. Lombard General Insurance Company of Canada, 2012 BCCA 434 (“Poole“), a group of employees attended a dinner paid for by the employer that was considered a “work event”. The dinner was a routine part of the firm’s strategy for fostering collegiality and boosting morale. After the dinner, several employees went to a nearby nightclub to continue the evening. Apart from a few drinks, the employer did not pay for the nightclub event. Two employees were dancing together at the nightclub. One co-worker fell on the other on the dance floor causing her to strike her head on the floor and resulting in a “mild traumatic brain injury”. The injury effectively ended her career, and her damages were assessed at approximately $6,000,000. To read more from the case click here.

The injured employee sued the employer and the employee who fell on her. The injured employee ultimately settled her claim against the employer for an undisclosed sum, and her claim against the other employee for approximately $1,050,000. Despite the settlements, the Court still had to determine if the employer’s liability insurance applied. The issue was whether the events at the nightclub were sufficiently connected to the injured employee’s employment to justify a finding that the employer was covered by its insurance. The Court’s conclusion was that the events were not closely connected enough to the employees’ employment to trigger coverage under the policy. This meant that the employer’s insurance coverage did not cover the loss and the employer had to pay the settlement proceeds from its own pocket.

Lessons for employers are:

  1. A clear dividing line should be drawn between events that are formally approved and organized by the employer, and events that are not;
  2. Employers should consider obtaining event specific insurance coverage. Check the terms of your coverage; and
  3. If these steps are not taken, an employer may be caught in the difficult position of being liable to an injured employee, but without insurance.