Laurence Howland explains why flooring companies should pay attention to new corporate crime laws.

IF you’re running a flooring business that supplies and fits commercial spaces – shops, hotels, bars, or restaurants – criminal law might not be something you think about too often. But a series of significant legislation changes introduced last year, means it’s time to take note.

Thanks to the changes, it’s now far easier for your business to be held criminally liable if a senior manager or employee commits fraud or other economic crimes, even if you had no idea what they were doing.

Whether you’re managing a handful of jobs locally or coordinating large projects across the country or even overseas, these changes could affect you and your business. Being prepared might save you time, money and stress.

What’s changed?
For more than 50 years, the law made it hard to prosecute companies unless a director or board-level executive was personally involved in the wrongdoing.

This idea, known as the ‘identification doctrine’, meant that criminal actions by site managers, salespeople or subcontractors were personal crimes and didn’t impact the wider business.

But in October 2023, the law changed with the introduction of the Economic Crime and Corporate Transparency Act (ECCTA), which included two major developments:

Failure to prevent fraud
If your business meets two of the following criteria: having more than 250 employees, an annual turnover over £36m or balance sheet assets over £18m, then you now have a legal duty to prevent fraud committed by staff, subcontractors, or agents.

If fraud happens and you cannot show you have taken reasonable steps to prevent it, your business could face prosecution.

This legislation covers offences such as falsifying invoices or quotes, misrepresenting costs in tenders, or diverting payments or kickbacks through supplier arrangements.

For large-scale flooring contractors, fit-out firms, or suppliers working with multiple subcontractors or sales reps, this change is significant.

Senior manager liability for all businesses
The second and perhaps even more far-reaching change, is Section 196 of the ECCTA, which applies to every business, regardless of its size.

It states that if a senior manager commits an economic crime and they were acting within the scope of their role, your business can be held criminally liable too.

This means if one of your project managers, finance leads, or area supervisors overcharges a client, fiddles with invoices or abuses supplier relationships for personal gain, your business could be prosecuted.

This can happen even if the directors had no knowledge of what was going on. So, for flooring firms with on-site project leads, admin staff handling payments, or regional teams working independently, this is a legal risk that shouldn’t be ignored.

What’s coming next?
As if that wasn’t enough to take on board, there’s more on the horizon, with government currently reviewing the Crime and Policing Bill, which aims to go even further. If passed, this would make companies liable for any crime committed by a senior manager during their work – not just financial crimes.

This could include harassment, assault, or unauthorised data sharing, all of which could land your business in legal trouble if not properly considered, accounted for and managed.

What you should do now
So, what does this mean in practice? Do you need a legal department and a stack of compliance paperwork? Not necessarily, but you do need to show you’re taking reasonable steps to manage risk.

Here are some simple, practical actions you can take:

• Update employment contracts – Include clear responsibilities concerning conduct, finance handling and anti-bribery.
• Provide basic fraud awareness training – Make sure project leads and admin staff know what’s acceptable and what’s not.
• Review internal processes – Look at how quotes, payments and supplier contracts are managed and recognise whether there is proper oversight.
• Have a clear whistleblowing policy – Encourage staff to speak up if something doesn’t feel right.
• Document your controls – Even simple things like checklists, sign-offs, or dual approval for payments can make a big difference.
  
  None of this needs to be complicated or expensive. Most firms already have the bones of these systems in place, it’s just about tightening them up and keeping a record that shows you’re serious about doing things properly. And if any concerns linger, seek independent professional support.
  
  The bottom line
  The message from lawmakers is clear: businesses must take responsibility for how their people behave. That doesn’t mean controlling everything, but it means having the right policies and procedures in place, especially when you delegate responsibility to senior staff or trusted contractors.
  
  In the flooring trade, reputation is everything. These new laws are a reminder that legal compliance now plays just as big a role in protecting your business as workmanship and service. Take a little time to get your house in order now and you’re far less likely to face big problems down the line.
  www.howcompliance.co.uk
  Laurence Howland is lead consultant of How Compliance