Recent and forthcoming changes to the UK’s corporate criminal liability regime significantly increase the risk of construction companies falling foul of the law through the conduct of employees.

This is likely to be unfamiliar territory for many companies in the sector, so understanding changes in the legal landscape is crucial to reduce exposure to investigation and prosecution, along with all adverse consequences such as damaged customer and supplier relationships, reputational harm and unexpected financial burdens.

“Conduct to which constructors are vulnerable, such as facilitating modern slavery and environmental offences, will fall within the legislation”

Historically, the basis for imposing corporate criminal liability in the UK has been limited: a company only attracted criminal liability if a “directing mind and will” (almost always a director) was liable. The individual criminal conduct was attributed to the business through the ‘identification’ principle. As such, the company itself could be guilty of a criminal offence.

However, the 2022 Economic Crime and Corporate Transparency Act (ECCTA) – already in force – has broadened the identification principle to include ‘senior managers’ of the organisation, whether or not they are directors. So, certain listed offences, such as fraud and bribery committed by a senior manager when acting within the scope of their actual or apparent authority, can now be attributed to the company, creating potential criminal liability. There is no need for there to have been an intention to benefit the company.

Under the Crime and Policing Bill, which is likely to become law in 2026, all criminal offences – not just those currently listed in the ECCTA such as fraud and bribery – committed by a senior manager, again acting within the scope of their actual or apparent authority, will be attributable to the company, thereby creating potential criminal liability. Conduct to which the construction industry is particularly vulnerable, such as facilitating modern slavery and environmental offences, will fall within the legislation.

A senior manager means an individual who plays a significant role in “(a) the making of decisions about how the whole or a substantial part of the activities of the body corporate […] are to be managed or organised, or (b) the actual managing or organising of the whole or a substantial part of those activities”.

It is important, therefore, for construction companies to be aware that the population of employees whose criminal conduct can now be attributed to the organisation, the ‘senior managers’, has grown.

Ensuring compliance

Training and awareness of criminal law risk, particularly fraud and bribery, must be enhanced and cascaded to those who perhaps previously were out of scope. That an employee was trained would not provide a defence were they and their employer to face criminal proceedings (perhaps unfairly), but training plainly mitigates the risk of criminal offending in the first place.

Additionally, a fresh look at relevant compliance policies and procedures would be sensible – something many companies are doing in any event with the advent of the new corporate offence of ‘failure to prevent fraud’.

The changes to corporate criminal liability come at the same time as the government’s publication of the policy paper, Tackling Construction Industry Scheme fraud – designed to target tax evasion – and its commitment to “a review of responsible business conduct, focusing on global supply chains of businesses operating in the UK”.

Agencies such as the Serious Fraud Office and the Competition and Markets Authority have made it clear that aggressive enforcement is a priority.

The construction industry should therefore ensure it is alive to, and understands, the new and changing landscape of corporate criminal liability. Doing so would mitigate risk, help in dealing with criminal investigations and proceedings should they take place, and enhance good and ethical corporate governance.

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