Employers have a legitimate interest in regulating employee behaviour in certain circumstances — but they do not have an unfettered right to control an employee’s private life. Determining when out-of-hours conduct becomes a workplace matter is complex and requires a careful legal and factual assessment.

The Legal Framework

The starting point is that an employment relationship does not equate to total subordination of an employee’s autonomy. However, the courts and the Fair Work Commission (FWC) have consistently recognised that where an employee’s out-of-hours conduct has a significant and adverse effect on the workplace, it can justify disciplinary action — including dismissal.

Out-of-hours conduct may be relevant where it:

• Is inconsistent with the continuation of the employment relationship.
• Damages the employer’s interests.
• Is incompatible with the employee’s duties and obligations.

Lawful and Reasonable Directions

An employer’s ability to regulate conduct outside work stems primarily from the implied duty of employees to follow lawful and reasonable directions.
A direction is lawful and reasonable if:

• It relates to the scope of employment.
• It involves no illegality.
• It is reasonable in the circumstances.
  (See R v Darling Island Stevedoring & Lighterage Co Ltd; Ex parte Halliday; Ex parte Sullivan (1938) 60 CLR 601.)

There must be a sufficient connection between the conduct and the employment for any policy or direction to be enforceable. Factors include statutory and contractual obligations, the nature of the role, and the impact of the conduct on workplace safety and performance.

Implied Duties and Statutory Obligations

An employee’s implied duty of fidelity and good faith is often the legal hook for out-of-hours misconduct. Employees must not:

• Act in conflict with the employer’s interests.
• Breach confidentiality.
• Cause detriment to the employer.

Further, employers may be liable under:

• Anti-discrimination legislation
• WHS obligations
• Industrial instruments (such as anti-bullying provisions)

This liability often justifies regulating certain private conduct.

When Out-of-Hours Conduct Justifies Dismissal

To justify termination, the conduct must:

• Be likely to cause serious damage to the employment relationship.
• Damage the employer’s interests.
• Be incompatible with the employee’s duties.
  (Rose v Telstra Corporation Ltd [1998] AIRC 1592)

The FWC will assess:

• The nature and circumstances of the conduct.
• The employee’s role and duties.
• The effect on the employer’s business and other staff.
  (Ventia Australia Pty Ltd v Pelly [2023] FWCFB 201)

Common Categories of Misconduct

Harassment and Discrimination

Acts of sexual harassment, racism or bullying occurring after work can create liability for employers and justify dismissal. In Keron v Westpac Banking Corporation [2022] FWC 221, inappropriate conduct at a work-related social event was found to have a sufficient workplace connection.

Drug and Alcohol Use

While employers cannot police what employees do in their own time, substance use that results in impairment or breaches drug and alcohol policies can justify termination. (Sharp v BCS Infrastructure Support Pty Ltd [2015] FWCFB 1033; Sydney Trains v Goodsell [2024] FWCFB 401.)

Criminal Conduct

Not every criminal offence committed privately will be relevant, but offences that damage trust or are inconsistent with the employee’s role may provide a valid reason for dismissal. (Sydney Trains v Bobrenitsky [2022] FWCFB 32; Hussein v Westpac Banking Corporation (1995) 59 IR 103.)

Social Media Activity

Inappropriate or damaging comments made on social media, even outside working hours, may breach policies and undermine trust (Linfox Australia Pty Ltd v Stusel [2012] FWAFB 7097).

Key Takeaways for Employers

1. Assess the connection — Out-of-hours conduct must have a clear and material connection to the employment relationship.
2. Ensure directions and policies are lawful and reasonable — Overly broad or vague restrictions on private behaviour are likely to be unenforceable.
3. Investigate properly — Employers must make findings on the balance of probabilities, not rely on allegations alone.
4. Apply procedural fairness — Even where there is a valid reason, a dismissal may still be found unfair if the process is flawed.
5. Be mindful of vicarious liability — Where conduct affects other staff or clients, employers may be held responsible.