Keeping HR Managers up at night: Outsourcing services in exchange for incurring liability?

Do you know what your Service Provider is doing on your behalf?Keeping HR Managers up at night: Outsourcing services in exchange for incurring liability?

In this global marketplace, many corporations are increasingly moving their staff from one location to another to maintain and gain competitive edge. Relying on Adam Smith’s principles on division of labor, it’s usually better to outsource some of the benefits that multi-national corporations provide to employees transferring on inter/intra-country assignments. A must-have service for the assignee is relocation services.

A few reasons for outsourcing relocation services is because of the economies of scale, relocation companies’ expertize, experience and knowledge. To illustrate, I know what a comfortable chair looks like, I know how to use a hammer, nails and screws, but I have never built a chair before. Should I build my own chair or should I buy from a “chair expert?” If I want a good chair, built on time and with minimal effort, the obvious choice is to buy. The “chair expert” has built many chairs and knows how to quickly and efficiently navigate the process to timely deliver a good product. If I build a chair, I will be engaging in trial and error without any guarantee that the chair will be fit for its purpose of sitting. While I may be able to eventually build a chair, it would take me a lot longer than it will take the furniture manufacturer. 

The same scenario applies to the provision of relocation services. If you don’t provide the service to thousands daily, don’t start today. You will make mistakes, it will cost you more money and will most likely take you a longer time to complete the process, either successfully or unsuccessfully.

When the decision has been made to outsource your company’s relocation services, how do you make a selection? In a business environment, ignorance is usually not blissful. Do you know that in the process of outsourcing your company’s relocation services, you may be incurring liability? 

Most of us are familiar with the Foreign Corrupt Practices Act (FCPA), the UK Bribery Act (UKBA) and their extra-territorial reach. And we hope (yes, hope) that staff are compliant with the corporate Code of Conduct. But how familiar are you with your Service Provider’s processes and compliance with laws? If the relocation Service Provider violates either the FCPA or the UKBA while providing services, you can always claim ignorance, right?

No, not so fast. Deliberate ignorance cannot be a defense. You must conduct due diligence on your outsourced Provider so that you don’t unwittingly incur liability if your Provider bribes Customs officials or commits some other atrocity on your behalf. For example, please see, Panalpina bribery case.

If you decide that outsourcing your relocation services makes sense, then you should ask them the following questions as a minimum:

1. Does the Provider have its own employees or does it use contractors to provide services? 

2. If the Provider contracts out your service, is there a written agreement?

3. Do they carry out background checks on their employees?

4. Does the Provider have an employee Code of Conduct that specifically outlaws bribery and corruption?

5. Does the provider give regular and effective anti-bribery and corruption (ABC) training to its employees?

6. Is the ABC training formalized and training records kept on each employee?

7. Does the Provider have current adequate insurance to cover all possible eventualities?

8. Does the Provider have a data privacy policy that at least adheres to EU standards?

9. Does the Provider and its officers have a clean global criminal record?

10. Are the services being provided in high-risk countries?

Conducting due diligence and asking your Service Provider these questions at the beginning of the process will avoid issues arising later on.

This article was written by Nelson Akinrinade, Crown’s Group Compliance Officer. Questions and comments are welcomed, please contact Nelson at