Bribery Act & Proceeds of Crime - Written by on Wednesday, August 31, 2011 1:43 - 0 Comments

Top tip: Employment contracts & whistleblowing provisions

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By Ed Goodwyn, Partner & Morag Hutchison, Senior Associate Pinsent Masons LLP

One of the features of many Adequate Procedures is likely to be a whistleblowing hotline or other mechanism enabling employees to ‘speak up’ about possible bribery.

In many cases this will be a voluntary scheme.

However, what if an organisation wants to impose a contractual obligation on employees to whistleblow internally?

While on the face of it attractive a move along these lines can create problems.

Inserting anti-bribery provisions into new employee’s contracts of employment is fairly straightforward.  The employer will simply need to insert the relevant clauses into the contract and issue it to the new employee for signature.

Changing the contracts of existing employees is potentially more problematic as the usual rules governing changing employment terms will apply.

If the employee agrees to change their contract of employment to include anti-bribery provisions the process will be straightforward. It will simply be a case of asking the employee to sign a new contract containing the provisions.

But why would or should an employee agree to a change to an employment contract which imposes a new obligation if there is nothing in it for them?

One opportunity to do so would be where the employee is signing up to a new contract for example if they have been promoted or have agreed to move to a new role. Another option would be to tie in any salary rise on the basis that the employee signs up to the new contract.

However, if an employee does not agree to the change the employer will have to decide whether they want to terminate the employee’s contract of employment and offer them a new contract containing the anti-bribery wording.

This approach has significant risks attached to it as it could result in the employee refusing to sign the new contract and raising a claim for unfair dismissal and trigger other employment (labor) law requirements.

This is an unappealing prospect.

A pragmatic solution?

On way forward may be to consider amending existing employee policies instead of contracts.

Generally speaking it will be easier to insert anti-bribery provisions into the organisations existing policies, including their Disciplinary Policy, as, unlike contracts of employment, policies and procedures tend to be “non-contractual”.

It is not unusual to see a statement at the start of an organisation’s policies and procedures or Staff Handbook which states that they do not form part of the contract of employment and can be amended at any time without first obtaining the consent of the employees, but by simply giving the employees notice of any change.

Disciplinary policies generally contain a list of acts or omissions that the employer would consider to be gross misconduct. The type of behaviour that an employer may want to include in the list of examples of gross misconduct in the Disciplinary Policy in connection with the anti-bribery legislation could include failing to report a breach of the anti-bribery policies whether it was the individuals themselves who acted in breach or they have failed to report the breach by a colleague.

In this way, where an employee was to breach this obligation, despite it being in the policy, disciplinary proceedings can be brought against the employee.  If the employer wishes to define such a breach as an act of gross misconduct capable of leading to summary dismissal, he will need to ensure that this sanction is well understood by the employees.  This will mean that the employer will need to consider how it should notify the employees of the change of policy and ideally ensure it has evidence that the employees understand it.

There is, as they say, more than one way to skin a cat…

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