Look gift horses in the mouth
18 December 2006
25 October 2013
13 January 2014
Fifth Circuit decision exposes contractors to vicarious liability for double damages when employees receive personal kickbacks
9 August 2013
4 November 2013
12 August 2013
Plenty of day-to-day business is conducted over a meal. There is also little doubt that the giving and receiving of gifts is seen by most as a normal part of developing good relations with customers and suppliers. This is particularly pertinent at Christmas.
But should there be any limits to what may be offered or accepted? When can hospitality or a gift be construed as influencing a person's decision? This issue is often highlighted in surveys of business practices that concern people most. It is also one of the most common items in codes of business ethics that provide guidance to staff.
Rio Tinto's 'The Way We Work: Our Statement of Business Practice' states: "Gifts and entertainment are only offered or accepted for conventional social and business purposes and then only at a level appropriate to local circumstances."
Cable and Wireless's 'Ethics Policy' says: "You must not accept any form of gift, service or hospitality, directly or indirectly, which might lead the giver to think they are going to benefit in some form.
"This includes presents, meals, transport, hotel stay, entertainment - or even drinks. If you do accept a gift, other than a nominal token, you should tell your line manager."
Therefore a policy on good practice regarding gifts and hospitality should set out: what can be accepted without disclosure; what should be recorded; and how staff can seek further guidance.
In terms of what can be accepted, some companies help employees by putting a monetary limit on the value of gifts that can be accepted. But what may seem to be minor to a senior manager could be worth a lot more to a junior employee, and the duties of senior staff may require them to attend events where hospitality is generous. In addition, companies operating outside the UK need to consider relative monetary values. A £25 limit on gifts in the UK may be considered lavish to some employees in poorer economies.
A principle that can be applied to determine an appropriate level is that of reciprocity. Ask yourself: "If my supplier offers me tickets to a test match, would I be able to reciprocate?" If the answer is no, then do not accept.
No code of ethics allows the acceptance or giving of cash gifts. Giving small monetary payments, for example just to speed up a normally legal service, is now illegal under UK law anywhere in the world.
A number of organisations operate gift registers in which gifts over a certain value must be recorded. Gifts that exceed the value may sometimes have to be accepted by a member of staff; in such a case it should be made clear that you do it on behalf of the organisation.
A policy on gifts and hospitality has to be consistent with other aspects of the organisation's code of ethics in encouraging high standards of personal honesty and integrity. To ensure a transparent culture around gifts and hospitality issues, open discussion about it should be encouraged and a way provided for staff to obtain guidance if in doubt.
Because a policy cannot cover all situations, the provision of a clear set of decision-making principles will help employees. These can take the form of questions. For instance:
Behaving ethically is the obligation of all staff. Good practice suggests that everyone should be aware of the requirements for reporting offers and acceptance of gifts and hospitality; consult their line manager if in any doubt as to the right thing to do or suspect that they have been offered a gift or significant hospitality with the intent of unduly influencing them; and inform their line manager (or another senior manager) if they suspect that the policy is being contravened.