It's office party time, but do employers know what their liability is? Kate Payne explains

The office Christmas parties are looming - employees expect to let their hair down and enjoy themselves - excess consumption of alcohol, tasteless jokes and ill-advised sexual behaviour are rife.

On such occasion, should firms be concerned about the behaviour of their staff?

Employers can be held liable for acts of their employees that are committed in the course of their employment.

In the past this liability was seen as being fairly limited, but it has recently quite dramatically expanded and may now cover social events outside office hours.

The traditional office party will usually be found to take place 'in the course of employment'. Managers should, therefore, not ignore incidents of bad behaviour. Tribunals increasingly take a dim view of employers who neglect their responsibilities during festive celebrations.

So, how can companies protect themselves from potentially costly and damaging claims? The crucial thing is to be seen to have taken steps as were reasonably practicable to prevent unacceptable behaviour taking place.

A sensible starting point is to dismiss, from the outset, the notion that 'anything goes' at the office party.

A written policy can be adopted which takes a balanced approach between the employer not wishing to be a killjoy while establishing clear guidelines.

It is helpful to give some examples of what constitutes unacceptable behaviour. It should be quite clear that certain types of conduct will have disciplinary consequences that could result in dismissal.

Firms should concern themselves with the amount of alcohol consumed as they may be blamed, at least in part, for any drunken behaviour. The fact that managers have condoned or encouraged excessive drinking will serve as a mitigating factor in respect of any charges of misconduct that result.

They should also remember that their liability does not end until staff return to sobriety, and so they should take all reasonable steps to ensure employees do not attempt to drive home while intoxicated.

Aside from moral obligations, employers who fail to deal effectively with complaints of harassment may face claims for breach of contract or stress-related illness, or expose themselves to liability for sex or race discrimination or constructive dismissal claims.

To avoid such liability, employers should follow swift, fair and thorough disciplinary and grievance procedures. The Christmas break may complicate matters, but it will not justify any failure to follow normal procedure.

And employees are not the only concern.

Even the choice of venue and entertainment may cause trouble. The venue must be accessible to disabled people and should not preclude anyone from certain religions.

It is also wise to vet any entertainers and speakers to ensure that their comments and acts do not constitute any form of harassment or discrimination.

A successful celebration is one that reflects well on the company. Otherwise it may take more than a couple of painkillers to deal with the aftermath.