While the law changes on a daily basis, its evolution generally goes unnoticed by the majority of the public. It is therefore not often that changes to the law have a radical and far-reaching impact as those arising from the new Bribery Act 2010 and Equality Act 2010. These two Acts impact all UK businesses and the oil and gas industry should take note of both important new laws.
Bribery Act 2010, effective April 2011
Introduced to deal effectively with increasingly sophisticated, cross-border bribery, to enhance the UK’s reputation as a commercial centre and to allow British businesses to compete more effectively in international markets, the passing of the Bribery Act 2010 has created one of the toughest anti-bribery and anti-corruption regimes in the world, making it even broader than the renowned FCPA (Foreign Corrupt Practices Act) in the US.
The Act introduces four new bribery offences: the general offences of paying and receiving bribes (public and private sector), the bribery of foreign officials and the failure of commercial organisations to prevent bribery (corporate offence). Particular attention should be paid to corporate hospitality and facilitation payments.
A very significant change for businesses under the Act is the new ‘corporate offence’ of failure to prevent acts of bribery committed for their benefit. The Act puts the onus on commercial organisations (companies and partnerships incorporated in the UK, or which carry on a business, or part of a business, in the UK) to show they have “adequate processes” in place to prevent bribery, or face severe penalties, including an unlimited fine, with the individuals responsible for the bribe who may face imprisonment or an unlimited fine, if found guilty.
Under the old law, a company is likely to be guilty of a bribery offence only if its very senior management were involved. Under the ‘”corporate offence”, the company may be guilty even if no one within the company knew of the bribery. Since the company’s only defence is to show that it had “adequate procedures” to prevent bribery, there is therefore a heavy burden on commercial organisations to ensure that their anti-corruption policies, procedures and training are sufficiently robust to stop any employees, subsidiary, agents or other third parties acting on the commercial organisations’ behalf from committing bribery.
Perhaps even more radical than the “corporate offence” itself, is the fact that all of the offences have extra-territorial application, meaning not only are offences commited by British nationals or corporates/indivduals ordinarily resident in the UK (irrespective of whether the offence took place in the UK) caught by the Act, but an act or omission of which only a part of the offence takes place within the UK is also caught. In addition, the “corporate offence” applies to commercial organisations which have a business presence in the UK, regardless of whether the bribe is paid or the procedures are controlled from the UK.
Although the offences created by the Bribery Act 2010 do not come into force until April 2011, it would be best practice for all businesses to put in place adequate policies and procedures as soon as possible so as to avoid any harsh penalties and ensuing reputational damage.
The Equality Act 2010, effective October 2010
Long heralded as a major overhaul of the UK’s discrimination laws into a single piece of legislation, a significant proportion of the Equality Act’s provisions came into force on October 1.
The Act not only simplifies and harmonises the different strands of discrimination law that have developed in a piecemeal fashion over the last 40 years, but also introduces some key new initiatives to tackle continuing actual and perceived inequality in the workplace in respect of discrimination on the basis of nine protected characteristics, being gender, age, pregnancy/maternity, marital status, gender reassignment, disability, race, sexual orientation and religion/belief.
The range of issues covered by the Act is extensive, so I have only sought to illustrate three examples of the measures, which will have immediate impact on business.
In an attempt to reduce discrimination against disabled individuals in gaining employment, pre-offer questions about disability and health (subject to limited exceptions) are now, effectively, unlawful. Post-offer, an employer can ask health questions, normally to consider whether any specific adaptations are required for the job, however any withdrawn job offer after such a disclosure would require the employer to prove that this was not due to discrimination. The Act impacts widely on all areas of employment but with recruitment a key trigger point, it would be sensible for companies audit their recruitment process for compliance.
The Act has sought to tackle the continuing pay gap between men and women, by providing greater transparency in respect of pay. Secrecy clauses in contracts of employment, handbooks and salary review letters are no longer enforceable, allowing employee to make inquires and assess if they are being paid equally to others who do not share a protected characteristic, for example, sex, and being prevented from victimisation for doing so.
The application of the Act also extends beyond the realms of employment to include the provision of goods and services. Therefore, the recently-publicised incident of the homosexual couple being refused a room at a bed and breakfast would, under the new legislation, be unlawful discrimination on the grounds of sexual orientation.
Penelope Warne is head of Energy at international law firm CMS Cameron McKenna