Seasonal Gifts & Entertainment: Avoiding ethical, reputational and legal pitfalls

December 11, 2018 | David Krebs, Derek Hoffman | Saskatoon

This time of year is when we typically reach out to our customers, suppliers and employees to show appreciation and celebrate the season and end of year. Businesses foster relationships and build trust by interacting with their network, an important part of being in the business community. That being so, organizations need to be mindful of certain guardrails in this area, particularly when interacting with public/government officials. Poorly timed or extravagant hospitality, entertainment and gifts can present reputational, legal and even criminal liability under Canadian law (and foreign laws that apply to Canadian companies).

Here are some practical do’s and don’ts in this area, based on decisions and guidance by enforcement agencies and our practical experience in the area. Note: some industries (for example, the health and life sciences sectors) will have more specific or stricter rules than the general guidelines listed below:

  • Ensure a gift is not viewed as a “bribe”: laws usually do not prohibit gifts; they prohibit giving bribes. The risk is that the way a gift is given, to whom it is given or the context, makes it viewed as a bribe to obtain business or another business-related advantage. Consider the “newspaper test”: what would it look like if it was published in tomorrow’s edition of The Globe and Mail?
  • Stick to your organization’s policy on gifts and entertainment: employees should not exceed the limits set out in a policy without senior review and approval (if there is no policy, consider implementing one).
  • Avoid awkward situations: gifts and extravagant entertainment during business negotiations or pitches can create the impression of improper influence.
  • Stick to modest gifts or non-personal items: the more excessive the gift, the higher the risk.
  • Hospitality should be conducive to building relationships: for example, sending a customer to a hockey game with their spouse without company representation raises red flags with enforcement agencies.
  • Consider the recipient: many organizations, both public and private, have policies that prohibit accepting personal gifts. This can make things uneasy for the customer.
  • Beware of “local custom”: some gift-giving practices may be “normal” but that doesn’t mean they are legal locally or under Canadian law.
  • Indirect risks: Your partners/third-parties/agents’ conduct can create unforeseen or unknown risks in this area, for example, giving a gift to a government official on your behalf.

Having clear internal rules regarding seasonal gift practices is a sound way to avoid unnecessary risks during the holidays. If you have any particular questions or concerns you’d like to discuss, don’t hesitate to contact us.

 

Disclaimer
This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

Miller Thomson LLP uses your contact information to send you information electronically on legal topics, seminars, and firm events that may be of interest to you. If you have any questions about our information practices or obligations under Canada’s anti-spam laws, please contact us at privacy@millerthomson.com.

© 2018 Miller Thomson LLP. This publication may be reproduced and distributed in its entirety provided no alterations are made to the form or content. Any other form of reproduction or distribution requires the prior written consent of Miller Thomson LLP which may be requested by contacting newsletters@millerthomson.com.