The government recently announced that it was delaying for a second time the implementation of the Bribery Act 2010 which was originally intended for October 2010, then pushed back to April 2011. It has now been delayed again as the Ministry of Justice acknowledges that it has passed its own January deadline for publication of guidance. The guidance is due for publication imminently and once published, the Bribery Act is likely to be implemented very quickly.
Under the Act if a person “offers, promises or gives a financial advantage to another person with the intention of causing that other person to improperly perform a public or commercial function in any jurisdiction, or if a person rewards that other person for improperly performing a public or commercial function in any jurisdiction”, that person will be committing a criminal offence and will be subject to criminal penalties.
The Act also creates a corporate offence if an associate of a company (meaning an employee or agent of the organisation) commits the offending activity, although there is a defence available if the organisation had adequate procedures in place with the intention of stopping such corruption. ‘Adequate procedures’ is not defined in the Act and we await the guidance from the Ministry of Justice to provide greater detail in this area.
Recruiters will want to know whether incentive payments or rewards offered by organisations they deal with will be covered by the Act, for example referral payments or offering corporate hospitality to potential clients.
In regard to corporate hospitality the Ministry of Justice states that ”reasonable and proportionate hospitality or promotional expenditure which seeks to improve the image of a commercial organisation, better to present products or services, or establish cordial relations, is recognised as an established and important part of doing business”. Only lavish hospitality with the intention of securing particular business appears intended to be caught by the Act.
With reference to referral fees, recruiters offering candidates a reward for referring other candidates to them, the reward is unlikely to be seen as a bribe because it is not a reward to induce someone to improperly perform a function. In contrast, other types of referral fees, such as where umbrella companies offer a financial reward to recruitment consultants who refer candidates to them, do have the potential to be caught under the Act perhaps because of the usual lack of transparency. However, the guidance may create greater certainty in this area.
Whilst guidance is awaited, recruiters will be forced to put on hold any planned reviews of their procedures and contracts. Once the guidance is published, Lawspeed will be available to provide advice as to how these documents can be amended to fulfil duties under the new legislation. Recruiters should also note when reviewing their procedures, the Lawspeed team are extremely partial to chocolate and cakes!