06 August 2015 - Post by:David Pygott
Summer in the City brings with it, for many, a chance to head out of the office on a well earned break. For others, however, particularly students anxious to undertake work experience to support a future job application, the summer is often a time to head in the other direction. Many institutions run formal graduate recruitment schemes over the summer months. Securing a place on one of these can form the foundation of a successful career. Formal graduate recruitment programmes are unlikely to give rise to litigation risk. But what of ad hoc internships, or one-off work experience placements? These are not without controversy and a number of firms have policies that prohibit or limit them.
The Bribery Act 2010
In English law, the offer of an ad hoc internship to, for example, the son or daughter of a client, potentially gives rise to legal issues, particularly if it is done with some intention or expectation that the client will at some point ‘return the favour’. Section 1 of the Bribery Act 2010 makes it an offence for a person to give a financial or ‘other advantage’ to another person, intending to induce that other person to ‘perform improperly’ an activity connected with a business or carried out in the course of their employment. The activity has to be one that the person is expected to perform impartially, in good faith or from a position of trust. What ‘improper performance’ means in any particular case is to be judged by reference to what a reasonable person in the UK would expect. A similar offence may be committed under section 2 of the Act where a person requests, agrees to receive, or accepts such an ‘advantage’.
The relevant Bribery Act offences also have a cross-border element to them: the Act is clear that they can be committed in England even where the activity intended to be ‘performed improperly’ has no connection with the UK, and is performed outside the UK. Under section 7 of the Bribery Act, a commercial organisation (for example, the employer of someone who committed an offence under the Act) could itself be guilty of an offence in such circumstances, unless it has in place adequate procedures designed to prevent such conduct.
Is it really an offence?
There is currently no English case law on whether the offer of an ad hoc internship or work experience placement to the relation of a client could involve the commission of an offence under the Bribery Act. Were such a matter to be tried, the exact circumstances (application process, suitability of the candidate, nature of the placement, decision maker, intentions of those offering the placement, and any benefit that flowed back to the firm as a result) would be examined in detail.
A question of fact and degree
In some respects, the debate here is similar to the debate about the Act’s effect on corporate hospitality, an issue that was very much in focus at the time the Act was passed. In March 2011, the UK Ministry of Justice published guidance in which it suggested that an invitation to a client to attend a rugby match in the UK as part of a public relations exercise designed to cement good relations was ‘extremely unlikely’ to involve an offence under section 1. This was because there was unlikely to be evidence of an intention to induce ‘improper performance’. One could envisage analogous reasoning applying to short, one-off work experience placements, depending on the circumstances. However, the wide wording of the Act arguably leaves the question open and raises issues of fact and degree. Under English criminal procedure, the final decision would in any event be made by a jury based on the evidence before it in a particular matter, not by the Ministry of Justice.
The regulatory angle
For people working in a UK-regulated financial services firm, a conviction for a Bribery Act offence would raise fitness and propriety issues and could have an effect on careers beyond that of the intern. And this is just under English law. A number of other countries (notably the United States) also have similar laws with extra territorial effect.
So, if your firm’s policy prohibits or limits offers of ad hoc internships or work experience placements, it exists for a good reason. In principle, compliance with it should reduce litigation risk. If your firm does not yet have such a policy, or has one that might need refreshing (now that 5 years or so have elapsed since the Bribery Act was passed) this summer may be the time to act.