The morning-after lawsuit

It was only 9.30 when events took a nasty turn for the worse. Dave, the assistant manager for a firm of estate agents in Manchester, had been drinking since lunchtime, along with his boss and half of the department. So by the time the official Christmas party got underway in a nightclub nearby, spirits were high - and stomachs empty.

"We were all on the dance floor having a good time. Dave was there too, being loud and aggressive," a colleague recalls. "All of a sudden there was shouting, and then a crash. We turned and saw Dave and Brian from accounts thrashing about on the floor. It looked pretty nasty."

Apparently, Dave hadn't been seeing eye-to-eye with Brian for some weeks. Office resentment, fuelled by alcohol, had turned into a violent bar- room brawl. The club owner angrily surveyed the wreckage - broken glasses and chairs and an upturned table. Dave, all bruised and bolshie, was sacked on the spot. Still, the outlook was far worse for his boss - he began the New Year with a double hangover: legal claims for damaged property and for unfair dismissal.

Dave's employer lost on both counts. Liable for the club owner's costs, the company also had to pay Dave compensation. The employment tribunal ruled that it was the employer's responsibility that things got so out of hand. Their view was that Dave's bad behaviour should have been stopped before it was too late.

This sorry tale is not unique. Across the country each Christmas, people will be paying more for their party excesses than just a hangover. The only people with reason to be cheerful about all this are the legal profession.

"It's become a fact that misconduct reaches its high point at the office Christmas party," says Trish Embley, an associate at the law firm Eversheds. "During the early months of each year, our caseload is dominated by employers who encourage staff to let their hair down - by providing a free bar, for example - but then try to discipline them for Christmas party excesses such as fighting, sexual harassment, vandalism and drug abuse."

Interestingly, few people seem to "let go" in quite such a licentious way in the privacy of their own homes. So why pick an office party? Perhaps it's the potent combination of 12 months of strait-laced behaviour followed by one night let off the leash. Often, emotions bubbling under during the year have a habit of surfacing during festive celebrations - whether they're sexual, aggressive or otherwise.

Take a recent case involving a male employee who exposed himself at his office's Christmas "do". A female colleague filed a formal complaint. On closer inspection, however, it emerged that she had encouraged him. Others are not so lucky. In a separate incident, three female office workers set upon a male colleague, stripping him near-naked. Although he enjoyed the attention, a number of other staff members did not and filed sexual harassment charges.

To many of us, seasonal shenanigans are as traditional a part of Christmas as mince pies and mistletoe. It's a perceived pay-off, the occupational psychologist Bridget Hogg explains.

"The `I can drink what I like because it's free' culture is underpinned by a belief that you work hard all year so your boss owes you a little fun at Christmastime," she says. "But trouble starts when people think the office party is a truly informal, social situation. It's not."

Behaviour that might be tolerated among friends could wreak long-term damage on working relationships developed across the rest of the year. In other words, snogging, stripping and fighting are all no-no's if you want to retain a shred of dignity in the office the following morning. Inhibitions are there for a very good reason - self-preservation. "It can only make your job harder if your staff have seen you doing a drunken strip in front of the Christmas tree," says Debra Allcock of the Industrial Society. "It may sound party-pooperish, but seasonal goodwill and free alcohol is an increasingly dangerous combination."

Each January, the Industrial Society's legal helpline is flooded with calls from employers trying to sort out "tricky situations" arising from the Christmas bash, she says: "They don't want to turn to the law and they go to extremes to sort things out amicably, but sometimes there's not another choice."

Incidents roughly divide into two camps: abuse, both physical and verbal; and harassment, both sexual and racial. In almost every case, however, alcohol is the catalyst. The heady mix of free drink and bonhomie offers a potentially explosive outlet for pent-up passions which have been quietly simmering for the rest of the year, says David Berry, who runs a personnel counselling service for a City finance firm.

"If someone feels constantly put down, or thinks that a colleague is regularly invading their space, it is at Christmas that all of these pressures come to a head," he explains. "Work-related insecurities and inter-office rivalries that are kept in check for the rest of the year can bubble over in the apparently informal surroundings of the office Christmas party - with disastrous results."

By the same measure, mild flirtation can develop into full-blown passion with just a few glasses of Chardonnay. Which is all fine and well if both parties are consenting, less so if the attention is unsolicited and unwelcome.

Eversheds highlights a number of scenarios regularly making appearances in the New Year caseload. There is the furtive return to company premises after the Christmas "do" to have sex with a colleague - often clear grounds for unlawful entry. Or the Christmas party where partners are invited too. A number of cases have arisen from guests who, jealous of attention being paid their spouse by a glamorous co-worker, end up in a fight.

Then there's rowdy behaviour - and we're not just talking about the office riff-raff. Another case involved a company which took its senior staff to a restaurant for a festive meal. Half of the directors were subsequently arrested after light-hearted roll-throwing with a rival department on a neighbouring table got out of hand and punches were thrown. The restaurant filed for damages - and won.

Disciplining the wrong-doers, however, is not a clear-cut affair. "Often, alcohol is viewed to be the mitigating circumstance," Ms Embley explains. True, you shouldn't drink to excess and abuse your colleagues, but if your employer has provided the booze, then it has an obligation to ensure it is consumed responsibly.

In one recent case, a high-street retailer sacked a couple for lewd behaviour at a Christmas party in front of colleagues and invited guests. The pair took their ex-employer to a tribunal for unfair dismissal - and won. The reason? No one had attempted to tell them that their behaviour was unacceptable and one of the company's directors had actually appeared to have egged them on.