Conflict of Interest Policy

Overview

[Company name] endeavours to ensure its workers carry out their duties ethically, responsibly and without improper influences, and thereby protect the integrity of the business. Accordingly, [Company name] treats conflicts of interest seriously.

This policy is designed to enable the identification and effective management of conflicts of interest.

[Company name] may amend this policy from time to time without notice in its absolute discretion.

Any person to whom this Policy applies who breaches this Policy or who coerces, encourages or assists another person to breach this policy may be subject to disciplinary action.

Does this policy apply to me?

The policy applies to you if you are employed by [the Company] (whether full-time, part-time, casual or temporary) or if you are a contractor to [the Company]. It applies no matter what level of seniority and no matter what length of service.

What is a conflict of interest?

For the purpose of this policy, a conflict of interest includes both a duty-interest conflict and a duty-duty conflict.

A duty-interest conflict of interest occurs when there is a real, potential or perceived conflict or inconsistency between a worker’s duties and their own personal interests including family, financial, business or social interests. A conflict of interest may be financial or non-financial in nature.

For example, a duty-interest conflict of interest arises when:

  • A manager decides to hire an applicant who is a family member or friend of the manager;
  • A worker enters into a purchasing, supply or other contract on behalf of [the company] with another entity in which the worker holds a financial interest;
  • [insert other examples that are relevant to your company]

Note: the above list contains examples only and accordingly is not intended to limit the range of circumstances in which a duty-interest conflict arises.

A duty-duty conflict of interest occurs when there is a real, potential or perceived conflict or inconsistency between two or more of the worker’s duties arising from their engagement with [the company].

For example, a duty-duty conflict arises when:

  • A person is required to represent or serve the interests of two or more clients whose interests are in conflict;
  • A person is in possession of confidential information about one customer and is required to take on another project or role where there is a real risk of that confidential information being disclosed without the customer’s permission.
  • A conflict of interest may exist even if you endeavour not to be, or believes that you will not be, influenced by the conflicting interest or duty.

A reference in this policy to a conflict of interest includes a reference to real, potential and perceived conflicts of interest. These are not mutually exclusive categories:

  • A real conflict occurs when there is an actual conflict of interest (that is, an actual conflict between your duties or between your duty and your private interest(s));
  • A potential conflict occurs when there is a possibility that a conflict of interest might arise in the future; and
  • A perceived conflict occurs when there is a reasonable perception that there could be a conflict of interest.

Procedure for identifying, declaring and reporting conflicts of interests

Identify conflicts of interest
You are required to actively consider whether any real, potential or perceived conflict of interest arises in the course of your employment or contract.

If you are unsure about whether there could be a conflict of interest, they should speak to [designated person].

Areas where a conflict of interest commonly occur (but by no means are the only areas in which a conflict of interest could occur) include:
making hiring or promotion decisions;
procuring goods or services;
[insert other examples that are relevant to your company].

Declaring and reporting conflicts of interest

You are required to declare all conflicts of interest that affect you to [insert appropriate person].

You must notify [insert appropriate person] as soon as practicable if relevant circumstances relating to the declared conflicts of interest change.

You are also required to report to [insert appropriate person] all conflicts of interest you observe or are otherwise aware of involving persons (other than yourself) engaged by [the company].

Register of conflicts of interest
[Insert appropriate person] is responsible for recording all declared conflicts of interests into a register of conflicts of interest (see clause 4.4).

[Insert appropriate person] is also responsible for recording reported conflicts of interest considered by [insert appropriate person] as constituting conflicts of interest (see clause 4.6).

The register of conflicts of interest should include the following information in respect of each case of conflict of interest:

  • The duties and personal interests that give rise to the conflict;
  • The circumstances which give rise to the conflict;
  • When the conflict of interest arose, or in the case of a potential conflict of interest, when the conflict of interest is expected to arise;
  • The names of all stakeholders who may be affected by the conflict of interest (such as clients, employees, managers);
  • The proposed action taken to effectively manage the conflict (see further section 5 below).

Procedure for managing conflicts of interest

[insert appropriate person] is responsible for managing conflicts of interests.
The appropriate action to be taken in effectively managing conflicts of interest will depend on the particular circumstances of each case. The focus should be on resolving conflicts of interest, where possible.

[NOTE: Two options dealing with the method for managing conflicts of interest have been proposed below. Option 2 would be preferable from an effective risk management perspective, particularly in respect of significant conflicts of interest. However,

Option 2 is based on the company having a certain organisational structure that may not exist in smaller companies, and accordingly, Option 1 has been proposed for such cases. Delete as appropriate.]

[Option 1] [insert appropriate person] is required to exercise their discretion to determine and implement the most appropriate action for effectively managing the conflict of interest in each case.
OR
[Option 2] [insert appropriate person] is required to report to and consult with [the company’s] risk committee/ board] to determine and implement the most appropriate action for effectively managing the conflict of interest in each case.

[Insert appropriate person] must document the management action to be taken (including any subsequent changes in management action taken) in the register of conflicts of interest. [If Option 1 is pursued] [Insert appropriate person] must also state the reasons for the management action taken including any subsequent changes to action taken.

The following non-exhaustive factors should be considered in determining the appropriate management action to be taken:

Options to resolve the conflict of interest;
The significance and consequence of the conflict of interest including likely impact on [the company’s] business and reputation;
The impact of the proposed management action on the conflicted worker and other key stakeholders;
The extent of the conflicted worker’s involvement in the relevant decision making process;
Whether another person is capable of carrying out the duties of the worker.

As a guide, action that may be taken to effectively manage the conflict of interest include (but is not limited to) the following:

(a) No action required
This may be appropriate where, for instance, it has been assessed that there is no real conflict of interest nor reasonable likelihood of a conflict of interest eventuating, or the conflict relates to a very insignificant matter.

(b) Forfeit the conflicted interest
The conflict of interest may be resolved by forfeiting the conflicted private interest. For example, if you have received an inducement, you may be required to relinquish it.

(c) Relieve the worker of their duties
The conflict of interest may be resolved by relieving you of the duty that gives rise to the conflict. For example, the decision-making responsibility may be temporarily transferred to another person until the conflict of interest no longer exists.

(d) Other action
There are a number of other specific measures that may be taken to effectively manage the conflict of interest without necessarily resolving the conflict of interest, including:

  • Appointing an independent person to supervise the decision making process;
  • Requiring you as the conflicted person to leave the room while discussions take place;
  • Restricting your access to information; and
  • Withdrawing you from participating in key or critical decisions.

[insert appropriate person] should continue to monitor the conflict of interest and, if appropriate (because, for example, the relevant circumstances change), change the management action initially taken.

Free Conflict Of Interest Policy Template

Download, edit and distribute this free Australian Conflict of Interest Policy template to ensure your employees are aligned and your business is protected from issue arising from conflicts of interest.

By downloading this template, you agree to use it at your own risk and under your own legal advice. Nothing on this site should be considered legal advice.