Bribery Act 2010 – How contractors and recruitment agents are affected

The Bribery Act 2010 will come into force on 1st July 2011. New guidance has been released which confirms that corporate hospitality will be excluded from the regulations, as long as it is reasonable. However, it is possible that referral fees paid by service providers to recruitment agents may be caught by the new rules.

Implementation of the Act, originally planned for April, has been delayed to give firms more time to ensure they have adequate procedures in place to comply with the rules.

The Act itself will create four new criminal offences; bribing another, being bribed, bribing a foreign official, and failing to prevent bribery.

The fourth offence is the most significant, as it puts the onus on businesses to ensure they have adequate procedures in place to prevent acts of bribery from taking place.

Significantly, the rules apply not only to employees but to any other individuals acting on behalf of the company.

The Ministry of Justice has published new guidance and a ‘quick start guide’ which you can access here.

Corporate Hospitality

The new guidance has removed much of the uncertainty around the issue of corporate hospitality. Businesses may continue to provide hospitality and entertainment to clients, as long as it is reasonable and proportionate.

“…you can continue to provide tickets to sporting events, take clients to dinner, offer gifts to clients as a reflection of your good relations, or pay for reasonable travel expenses in order to demonstrate your goods or services to clients if that is reasonable and proportionate for your business.”

Facilitation payments, however, are not excluded from the terms of the Act. Payments of this type are typically made to officials for performing a job they were already obligated to do.

What about agency referral fees?

Currently, some umbrella companies and other service providers pay referral fees to recruitment agents for referring contractors to them. It would appear that such practices may come under the scrutiny of the Act, as financial inducements will naturally influence the behaviour of recruiters in deciding which service provider to recommend to contractors.

We expect to hear views from industry insiders on this topic in the run-up to 1st July!

Companies now have three months to prepare for the implementation of the Bribery Act 2010, in a busy year which includes the implementation of the Agency Workers Directive, and changes to the way IR35 is enforced.

Partner Contractor Accountants

Last updated: 22nd March 2022