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Bribery Act 2010: How to ensure compliance

20 Jul 2011

Neil Dwyer, head of employment at Hay & Kilner, advises all businesses to take action now to prepare for the new Bribery Act

The Act came into force on 1 July 2011. Employers need to take steps to ensure that employees are made aware of their anti-corruption ethos. Relevant employees should be involved in a risk assessment to identify where a risk of bribery may arise and notified of an appropriate policy and procedure that will enable the employer, under threat of prosecution, to defend its position.

Whose unauthorised bribery could an employer be liable for?
An employer will be liable for the actions of “associated persons”. That would include all employees and any party who is performing services for the employer or on its behalf such as contractors or agents. Liability will be possible if a bribe is paid with the intention of obtaining or retaining business or a business advantage for the employer.

What are now criminal offences?

The Act creates new criminal offences of:

  1. offering or receiving bribes;
  2. bribery of foreign public officials; and
  3. failure to prevent a bribe being paid on behalf of a commercial organisation.
  4. Hospitality – where employees should draw the line

The Act will not prohibit reasonable and proportionate hospitality which is recognised as an established and important part of doing business. The Government Guidance adopts a permissive tone on this subject and provides that “bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or established cordial relations is recognised as an established and an important part of doing business and it is not the intention of the act to criminalise such behaviour”.

How an employer can defend itself?
A full defence is available to employers if they have adequate procedures in place to prevent bribery. In responding to the new legislation, the Guidance focuses on six high-level principles and advocates a “risk-based proportionate and common-sense approach to the design of policies and procedures”. “The objective of the Act is not to bring the full force of the criminal law to bear upon well-run commercial organisations that experience an isolated incident of bribery on their behalf”. Neil Dwyer, employment law expert at Hay & Kilner Solicitors, advises employers to carry out the following tasks:

Carry out a risk assessment of all activities to identify where a risk of bribery may arise.
Confirm top-level commitment to eradicating a culture of bribery by the board establishing a culture within which corruption is eliminated. A senior officer should be directly responsible for overseeing the anti-corruption programme

Carry out a due diligence assessment before any major business relationship or project.
Implement clear policies and procedures to minimise the opportunity for corruption and to clarify the approach that those responsible should take when negotiating contracts. There should also be a clear policy on gifts and entertainment.

Ensure effective implementation. The policy must be publicised to all employees and agents. Put financial controls in place to minimise the risk of bribery.

Monitor and review

After the initial alarm employers should welcome the recent Guidance and can draw much comfort from its permissive tone. Many organisations have already expressed the view that, even before the Act, bribery would not be tolerated from a “rogue” employee or agent, because it damages the goodwill of a commercial business, particularly if their operation is global. By following the guidance, employers can put themselves in a better position with regard to the goodwill and value of their brand. Prior to 1 July, employers should be preparing an anti-corruption policy, carrying out a risk assessment and publicising the anti-corruption culture to all employees and agents.

For further information on any employment issues contact Neil Dwyer on 0191 232 8345 or email neil.dwyer@hay-kilner.co.uk.

Please note:
This article is not legal advice; it is intended to provide information of general interest about current legal issues. Please contact us to discuss how the contents of the article may affect you.