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Does My Business Need a Conflict of Interest Policy in England?

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During business, conflicts of interest can arise. They can be wide-ranging, and serious potential conflicts of interest could be considered ‘bribery’ under UK law. Therefore, it is essential to clarify to your staff what a conflict of interest can look like in your business. A way to do this is through a conflict of interest policy. This can ensure that your staff conduct their work honestly and with integrity. It can also ensure that your business protects its reputation and complies with the law. This article will explain a conflict of interest policy and whether it is in your business needs one.

What is a Conflict of Interest?

UK law defines conflicts of interest as unethical behaviour leading to decisions made for the wrong reasons. You want your staff to make decisions based on your company’s best interests, not their own personal interests.  

The most well-known conflicts of interest are those that include bribery and corruption. However, there are other lesser-known forms, which include:

  • conflicting roles – an environmental group will feel that their Chairman is in conflict if  they take a paid position at an oil company;
  • political views – a female rights charity will not expect an employee to publicly run for office for a political party that only includes males; and
  • property interests – a minister for Indigenous affairs who owns shares in a deforestation company logging sacred Indigenous land. 

Why Have a Conflict of Interest Policy?

Implementing a conflict of interest policy for your business will clarify to staff any behaviour or action that is not acceptable. Your policy should focus on employees, workers and directors, and agencies. Your conflict of interest policy should broadly apply to these external roles. This helps your business demonstrate that it takes a zero-tolerance approach to conducting affairs in an unethical or illegal manner. It shows that this standard applies to individuals that work alongside your business.

A well-drafted policy demonstrates that your business takes conflict of interest seriously. It also provides you with a legal avenue for ending contractual relationships with other parties due to a breach of the policy. If you do not have a suitable policy, it can make it difficult to argue that your business has a genuine ‘zero-tolerance’ attitude toward unethical behaviour.

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Main Objectives of a Conflict of Interest Policy

The most serious breaches of a conflict of interest policy tend to be a clash of financial interests or unethical reasoning behind business decisions. Therefore, it is vital that you have a list of actions or behaviours your business will not tolerate. These should be detailed in your conflict of interest policy. 

The legal definition of bribery includes your business making decisions due to being promised an ‘advantage’. The meaning of ‘advantage’ can be anything of value. This can potentially catch business owners like you and directors acting innocently and in good faith. Therefore, be aware of the potential consequences of your actions before entering agreements to advantage yourself to the detriment of your company.

Bribery Under a Conflict Of Interest Policy

Let us look at three examples of bribery as a conflict of interest which you may want to include in a policy.

  1. You need to award a contract to one of three businesses. During an informal conversation with a director of one of those companies, they offer a spare ticket to a Liverpool FC game. You go with them and, a week later, award their company the contract.
  1. You have the task of selecting the best candidate out of five remaining job applicants. One of the stronger candidates mentions that she helps at her sister’s clothing store nearby. She says that if hired, she would give a ‘30% discount’. You hire her and three weeks later, enter the store and accept a 30% discount.
  1. You are considering taking on an individual as a client. However, they lack the documents required to pass your business’ money laundering rules. They mention that they have been friends with your partner since their school days and give you a pricey piece of jewellery as a ‘gift’ for her. You take them on as a client in breach of your money laundering policy.

All three scenarios could be bribery under a standard conflict of Interest policy. Ultimately, if a competing interest impacts your ability to make a fair decision, this will be considered a conflict of interest. 

Examples of Non-Financial Conflicts of Interest

There are also non-financial conflicts of interest which you should include in your policy.

For example, if you run a group of private schools, your conflict of interest policy is likely to include a requirement for academic staff to report any conflicts arising from their household. Staff must inform the school of any individual previously convinced of a sex or child-related offence. even if they only visit the household for two days.

Similarly, if you run a law firm, you must guard against job applicants with criminal records for fraud or identity theft. This is because they would potentially have access to financial accounts and confidential information within the workplace.

Key Takeaways

A conflict of interest policy details the type of behaviour that is not allowed when making decisions for your business. Most companies must have one so that you and your staff know how to behave and protect your business interests. These will vary depending on the type of business you run. While some conflict of interest risks are relatively universal, others apply to organisations operating in specific sectors. 

If you need help with a conflict of interest policy, our experienced commercial contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

Could my business be harmed by not having a conflict of interest policy?

If your business does not have a conflict of interest policy, conflicts of interest may likely occur as those associated with your business are less clear on what is regarded as unethical or unacceptable behaviour. 

Why do conflict of interest policies apply to agency workers, contractors and third parties?

A well-drafted conflict of interest policy should apply to agency workers, contractors and third parties to demonstrate that your business has a  zero-tolerance approach to conducting its affairs

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Thomas Sutherland

Thomas Sutherland

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