I have outlined some of the ways employers can ensure they comply with the new Act – please click here.

This article is only intended as guidance. There are many issues to consider, so employers should seek legal advice where necessary to ensure they are not contravening the Act, or inadvertently breaking other laws when implementing compliance measures.

If you would like any legal advice regarding the Bribery Act and its implications on your business, please contact me at michael.delaney@mablaw.com.

A bribe is defined in section 1 of the Act as “a financial or other advantage” offered, promised or given to “induce a person to perform improperly a relevant function of activity, or to reward a person [for doing so.]”

This definition covers many “advantages”, including gifts, hospitality and entertainment, political or charitable donations, sponsorship and publicity.

Employers should note the following:

1. A “financial or other advantage” is still a bribe even if it is given or paid after the event; and

2. Employers or other individuals can be liable even if they unwittingly give or receive a bribe.

Section 7 of the Act introduces a criminal offence for the failure of a commercial organisation to prevent bribery by an “associated person” for its benefit. The statutory definition of “associated person” is very wide, and it covers those people who perform services for, or on behalf of, the employer (e.g. employees, agents and subsidiaries.) However, other people working for the employer, such as consultants, agency workers and volunteers, will also be “associated persons” for the purposes of the Act. Consequently, an employer is potentially responsible for the actions of a wide range of individuals, some of whom it may have only minimal control over.

Breaching the Act: The penalties

* Individuals who breach the Act could be imprisoned for up to ten years; and

* Commercial organisations can face an unlimited fine and be prevented from tending for public contracts.

Preparing for the Bribery Act: The key principles for employers

In March 2011, the Government published Guidance on the Bribery Act which set out six key principles to give commercial organisations assistance in planning, implementing, monitoring and reviewing their anti-corruption and bribery policies and procedures before the Act comes into force.

1. The employer’s anti-corruption and bribery policies (and related policies) should be clear and accessible to all those people who work for them and who  fall within the definition of “associated person”;

2. The management team should establish a zero-tolerance culture regarding bribery and corruption, and ensure that all workers, and those that the company does business with, are fully aware of the company’s anti-corruption and bribery policies;

3. Employers should be fully aware of the bribery risks they face in their sector(s) and in the countries or regions in which they do business. They should carry out regular and comprehensive risk assessments;

4. Employers must take steps to ensure that they know who they are doing business with;

5. Employers should embed anti-bribery principles into their internal controls, recruitment and remuneration policies, operations, communications and training; and

6. Employers must decide who will be responsible for monitoring and reviewing their policies and procedures. They should ensure that they have effective financial and auditing controls that pick up potential and actual irregularities.

Staying on the right side of the law: The key considerations for employers for 1 July and beyond

Employers should consider the following issues to ensure that they do not contravene the Bribery Act, and should seek legal advice where necessary.

1. Recruitment: carry out additional background checks and vetting during the recruitment process (e.g. bankruptcy checks, criminal record checks and additional references);

2. Inductions: include training on the company’s anti-corruption and bribery policies and procedures for all employees and workers (e.g. agency staff, voluntary workers and independent consultants);

3. Expenses: carry our regular audits and ensure there is evidence as to how and why money was spent for each expenses claim submitted;

4. Hospitality: create a hospitality policy, including clear guidance on both the giving and receiving of gifts;

5. Disciplinary procedures: amend disciplinary policies and procedures to make it clear that any breach of the company’s anti-corruption and bribery policies (and related policies) may amount to gross misconduct. Employers may wish to (1) consider making it a specific contractual requirement that employees and other workers comply with these policies and procedures, and (2) consider whether it should be a contractual requirement for some workers to report any suspicions or knowledge they have of a breach of these policies;

6. Bonus and commission schemes: review these schemes to ensure that, as far as possible, they do not unintentionally encourage employees to ignore bribery and corruption risks. Employers should also review incentive arrangements to ensure they do not unintentionally incentivise workers to act improperly or illegally;

7. Whistleblowing: set up a comprehensive and up-to-date whistleblowing policy. All workers should be made aware of its existence, understand how it applies and be given access to a copy of it;

8. Investigating potential breaches: ensure that every incident of a suspected breach is investigated and documented. All investigations should be fair and confidential; and

9. Discrimination: ensure that any anti-corruption and bribery policies and procedures are not based on racial stereotyping of certain nationalities.

This article is intended to simply highlight the main issues and potential problems that employers may face when trying to comply with the Bribery Act. There are many issues (and pitfalls) to consider, so employers should seek legal advice where necessary to ensure that they are not contravening the Act, or inadvertently breaking other laws when implementing compliance measures.

If you would like any legal advice regarding the Bribery Act and its implications on your business, please contact me at michael.delaney@mablaw.com.

From 1 January 2011, tax-free expenses paid to a worker to cover their travel costs from home to a temporary workplace (including related subsistence and accommodation costs) will no longer form part of that worker’s pay for national minimum wage purposes.

The change followed a consultation in 2010 and was prompted by Government concerns that the travel and subsistence schemes were exploitative, as (1) participating temporary workers often had little understanding of how the schemes actually worked, (2) the schemes could adversely impact on an employee’s access to social security benefits, and (3) the employer retained most of the financial benefit from the scheme.

Those employment businesses and “umbrella companies” that have workers who are both paid the national minimum wage and who participate in these schemes must ensure that these workers receive the national minimum wage after expenses deductions have been made.

To find out what else in changing in employment law in 2011, please click here.

Training is a professional requirement but for many doctors the cost of courses comes out of their own pockets.  They rightly want to know whether it is possible to obtain tax relief for these costs.

The case of CRC v Dr Piu Bannerjee (heard in the Court of Appeal) goes some way to answering some of those questions.  The taxpayer worked for the NHS as a specialist registrar in dermatology.  For those who aren’t familiar with the exact terminology, a registrar is still in training.  Under the terms of her contract she was required to attend external training courses.  She claimed back the expenses incurred in this training but HMRC argued against this.

The issue was whether the expenses incurred in attending the training courses and defrayed by the taxpayer were wholly, exclusively and necessarily in the performance of the duties of her employment.  HMRC argued that attendance at the course was simply a means to better performing her duties, improving her professional skills and as part of her training.  This meant that there was a duality of purpose behind the training and therefore it would not meet the test of exclusivity.

The Court of Appeal held that the taxpayer had been ‘employed exclusively for training purposes’, not just to attend to patients on the ward, but also to attend the compulsory training that was part of her obligations to her employer – and therefore there was no ‘dual purpose’ in incurring the related expenses.  The result was that HMRC’s appeal was dismissed.

Conclusion

This case could have ramifications not just for other doctors but for other professions too with rigorous professional training requirements (such as architects, surveyors, solicitors, accountants and actuaries).  Each case needs to be considered going forward, and it might be possible in some cases to amend prior returns in light of this decision. 

It also highlights the benefit of proper advice in preparing tax returns.

If you would like advice on claiming expenses or in relation to your tax return, please contact James Odds on james.odds@mablaw.com or 01923 202020.

Some employers allow payment of personal expenses for their employees as well as business expenses.  Have a clear expenses policy in place. If certain expenses have to be authorised in advance then express that in the policy. When a claim is submitted, check it, do not just approve it. Question the employee. If you continue to spot inconsistencies in an employee’s expense claim, act upon it and subject them to a disciplinary hearing.  

Do not get into a situation where the employee may have made substantial sums resulting from a dishonest act.