But for employers, Christmas party fervour can quickly turn sour if they're not aware of, and prepared for, the legal risks and liabilities they potentially face if things go awry.

Thomson Playford Cutlers partner Tony Vernier explained that attendance by employees at a work Christmas party or function is considered to be "in the course of employment", and, as a result, employers have legal obligations to their employees.

Significantly, said Vernier, employers need to be aware that those obligations may extend beyond the period of the Christmas party itself. "There's a grey area ... does it just involve the Christmas party? Or the party after the Christmas party? You need to be very careful [in considering] when the employment connection ends," he said. "You've got to look at a variety of factors... such as where the function is held. Who paid for it? Who organised it? Where was it advertised? Who controlled it? Who paid for and provided the alcohol?"

He pointed to the high-profile case of Carlie Streeter v Telstra Corporation [2007] AIRC 679 which stole media headlines with its themes of drunken sex romps. While not the key finding, it was significant that the case proceeded on the basis that conduct involving Telstra employees occurring in a privately paid for hotel room, well after the work Christmas party had concluded, was done "in connection" with their employment.

Vernier said sexual harassment issues are the number-one risk factor employers should have on their radar, followed by OH&S concerns (particularly in connection with excessive consumption of alcohol) and workers' compensation claims. "Under workers' compensation laws if you get injured travelling to and from work ... then you can make a workers' compensation claim. So if people hurt themselves - even on the way home from the Christmas party - it could mean a workers' comp claim," he said. "It hurts the employer because premiums go up and there could be many thousands of dollars involved in that."

Another potential pitfall is negligence.

"If you allow people to drink - and drink in excess of what they should be doing - and you know that and condone that, then if they get hurt at the party or get hurt going home, then you owe them a duty of care and you could be negligent as an employer," he said.

The law, Vernier explained, requires employers to take "all reasonable steps" to prevent inappropriate behaviour, and suggested some practical actions employers could take to minimise their liability should an incident occur.

First he advised training both manager and lower level employees up on the business's drug and alcohol and discrimination policies, then sending out reminders prior to the event emphasising the need for sensible behaviour around alcohol consumption. He also suggested reminding employees that they themselves could face disciplinary sanctions for inappropriate behaviour at work functions.

- Zoe Lyon