Many employers are deciding this year that Christmas parties are more trouble than they're worth. And it's not only the financial crisis that's putting them off - there's also the threat of legal action when the festive spirit gets out of hand, writes Brian O'Connell

A FEW YEARS ago, staff at a Gloucester company and their families dragged themselves along to the annual Christmas work do. Walking along a red carpet, fire jugglers and fireworks greeted their arrival at a marquee set up in a local football stadium. The event for the 200 employees of web hosting company Fasthosts was organised by then 25-year-old company owner Andrew Michael. The host for the evening was Jonathan Ross, while Boney M and The Darkness provided the music, as complimentary Cristal champagne and vintage wines kept things festive. In previous years, Sugababes, Girls Aloud and Cheeky Girls (presumably during an off year) had entertained the staff.

All in all, the annual Christmas shindig cost the company £600,000. It put paid to the image of Christmas staff parties as being all about soggy sausage rolls, lewd remarks and remorse.

A year later, in May 2006, Michael sold the company, which he started from his bedroom aged 17, and netted a £46 million profit. So perhaps, in hindsight, he could afford to flash the cash. But, it seems, just like expense accounts and bulging bonuses, lavish staff parties are becoming a thing of Christmases past.

Many companies have made savings by limiting this year's parties to employees, excluding partners and wives, while free bars are also reportedly in shorter supply.

In recent weeks, several Irish companies are reported to be scaling back on this year's staff parties. With recession looming, some are reluctant to splash the company dosh on lavish affairs. Tighter finances and looser morals are threatening to lay siege to the annual Christmas get-together. With company bonuses under scrutiny and pay freezes in operation in many businesses, perhaps it's inevitable that Christmas cheer is more muted this year.

Staff parties can often cost a company in the region of €80 per employee, making the outlay of larger companies significant. Some staff also expect Christmas bonuses on top of a night out. In industries which have experienced large-scale redundancies and layoffs in recent months, there are question marks over the suitability of the remaining employees using limited company resources to party.

Last week, it was reported that TV3 are one of those companies to have cancelled its annual staff party. This decision followed the announcement of redundancies and major cutbacks. A spokesperson said: "We are doing things a little differently at TV3 this year. Each department will celebrate Christmas in its own way. Due to the fact that 15 people were recently made redundant, we felt that a big Christmas party would be inappropriate."

BRIDE ROSNEY, RTÉ'S director of communications, says the State broadcaster is also conscious of changing times.

"For the last number of years we have had a marking of the Christmas period with a 'mince-pie' reception in our main canteen in Donnybrook," she says. "All are aware of current difficult economic circumstances and Christmas events will be dealt with appropriately in that context, while marking the season for all."

Responding to a tip-off that Bord Gáis had cancelled its head-office get-together, I sent an e-mail to the company. Its spokesperson replied: "Bord Gáis has scaled back its budgets for Christmas events, but believes it is still important to acknowledge the efforts and contribution made by all staff during the year. The format is being reviewed, but the annual staff party has not been cancelled."

And what about the banks, in some people's eyes the ones who spoiled the party for the rest of us? AIB decided in October to cap the amount spent on its Christmas parties at €75 per head, which makes you wonder what it amounted to during the good times. Each department and branch will now be responsible for organising its own celebration.

"I'm sure some staff are wondering if we need a Christmas party at all, while others feel we work harder in the down times, so staff should be acknowledged," says a spokesperson, before adding: "We're all aware of where the share price is though."

Permanent TSB says there will be no change in the way its Christmas parties, usually modest affairs arranged locally, are organised.

Despite repeated requests, Guinness, well known for an active staff social calendar, failed to supply any information. Parent company Diageo also failed to respond to queries.

BUSINESS CONSULTANT Pamela Fay says that while many companies are undoubtedly scaling back this year, it is still important for many businesses to mark the Christmas season.

"As many employees have an expectation at Christmas time that they'll have a party, this could cause bad morale," she warns, before advising: "If companies are not having parties, then they should do something else, in small teams perhaps, to say thank you. Other things that would be more low-key and that employees would value could be an extra day's holiday, a voucher for dinner so that they can enjoy a night out with their partner, or a gift voucher. It doesn't have to be a big gift, but it is the thought that counts."

It is important, Fay says, that companies don't have a knee-jerk reaction to the economic downturn. The benefits of Christmas parties include increased communication, better morale, a sense of appreciation for hard work done through the year and, above all, fun.

"There are cautions around parties though," she warns. "And some businesses have been on the receiving end of legal cases because of things that have happened at Christmas parties. It's worth remembering they are deemed to be an extension of work."

Above all, employees should enjoy the evening but ensure that they don't do anything that will end up on the company noticeboard the next day.

Fat chance.

If you happen to be in Gloucester, best to keep Jonathan Ross away from the company answering machine, and don't take your eyes off those Cheeky Girls . . .

Ghosts of Christmas past How the party line has changed

From boozy lunches to hot-air balloons, the nature of Christmas parties has changed dramatically in recent years. More and more employers are looking at the Christmas get-together as a chance for team-building, while trying to limit the amount of drunken behaviour and inappropriate conduct.

Several high-profile cases in Ireland and the UK have made many employers nervous of following traditional Christmas party lines. Insensitive jokes or innuendo could find an employer dealing with a case under the Unfair Dismissals Acts (usually for constructive dismissal), under the Equality Acts or, more often then not, for bullying or harassment.

In a recent case, Lesley Richardson v Avant Shipping Agencies Ltd, the claimant alleged that she was subjected to verbal abuse by her manager at the office Christmas party, because of her pregnancy. The tribunal held that the Christmas party incident was a case of gross misconduct by the manager and Richardson was awarded €25,000.

In the UK, one of the most litigious parties ever held was in 2003, at investment banker Merrill Lynch. One senior lawyer was accused of making "disgusting and lewd" comments to a female employee, who later received an out-of-court settlement reported to be in the region of £1 million.

So, in order to limit the potential for inappropriate behaviour, bosses are looking for new ways to spread the Christmas cheer. All of this is good news for a company such as Creative Events, which has seen a noticeable shift in the way organisations celebrate the end of year.

"In the last five years, a lot of companies are thinking outside the box and altering the nature of the annual get-together. Bosses are trying to make the events far more activity-based," says managing director Martin McIver. "This year, for instance, very popular is a 'drum for fun' night, where staff learn to play as part of a samba drumming band, creating very much a Mardi Gras vibe without the excessive behaviour. "Another favoured choice this year is a magic night. We teach the staff the basics of magic and the theories behind it, and they have to then create and perform their own tricks."

Events managers are now offering party buses, complete with live band and bar on board. Activities include everything from treasure hunts to mini X Factorcompetitions.

There is a significant drop in demand for larger, more lavish events, and a return to smaller, low-key affairs. At the height of the Celtic Tiger, one Irish company requested a full-scale working fairground at Punchestown for a staff day out, complete with Ferris wheel, bumper cars and hot-air balloons.

It might be a while before we return to those days, according to Martin McIver.

"We have seen a 50 per cent drop-off in the higher end of the market," he says. "Our attitude, though, is that the current scaling back is a very knee-jerk reaction.

"They say the first thing to go in a recession is fun, which I don't think is right. But I think it's fair to say most companies are scaling back a little."