Conflict of interest policy template
Copy the text below and replace everything in square brackets with your company details.
1. Purpose
This policy helps employees of [Company Name] recognise, declare and manage situations where their personal interests could conflict with their duty to the Company, so that business decisions are made on merit and seen to be made on merit.
2. Scope
It applies to all employees, directors, trainees and consultants of [Company Name], and to the interests of their relatives. It covers dealings with suppliers, contractors, customers, distributors, landlords, competitors and job applicants.
3. Definitions
- Conflict of interest: any situation in which a personal, family or financial interest could influence, or reasonably appear to influence, an employee's judgement at work.
- Relative: spouse, parent, child, sibling, parent-in-law, sibling-in-law, and any person living in the same household.
- Related business: a firm or company in which the employee or a relative is an owner, partner, director, employee or holds a financial interest above [Amount].
4. Policy
Having a conflict is not wrong in itself. Hiding it is. Employees must declare any actual, potential or apparent conflict, including these common situations:
- A relative owns, works for or has a stake in a supplier, customer, contractor or competitor you deal with.
- You hold a financial interest in such a business, or lend money to or borrow money from it.
- You take a directorship, partnership or paid advisory role in a related business. Outside employment is also covered by the Moonlighting Policy.
- You would be involved in hiring, supervising, appraising or setting pay for a relative or close friend.
- A supplier or customer offers you a personal loan, discount or favour not available to the public.
- You could use Company information to buy land, shares or a business for yourself or a relative.
5. Procedure
- Declare the situation in writing to your reporting manager and HR, using the form below, as soon as you become aware of it.
- Within [Number] working days, the manager decides, with [Finance Head or Compliance Officer] where money is involved, whether to take no action, remove you from the decision, change the approver, ask you to give up the interest, or decline the transaction.
- The decision is recorded and filed with the declaration.
- Every [April], employees at [Grade] and above, and all staff in purchasing, sales, hiring and accounts, submit an annual declaration, even if it is nil.
- Failing to declare a known conflict is misconduct under the Disciplinary Action Policy, and a contract obtained through an undeclared conflict may be cancelled.
6. Responsibilities
- Employees: declare conflicts promptly and step back from decisions until told how to proceed.
- Managers: decide on declarations fairly and quickly, and keep a record.
- Finance and purchasing: check new vendors against employee declarations before approval.
- HR: run the annual declaration round and keep the records.
7. Exceptions
Small holdings of shares in listed companies bought through the stock market, below [Amount], need not be declared unless that company is a direct supplier, customer or competitor of [Company Name].
8. Review
[HR Head Designation] and [Finance Head Designation] review this policy every [24] months and after any case in which an undeclared conflict caused a loss.
Declaration: I, [Employee Name], [Designation], [Department], declare that (a) I have no conflict of interest, or (b) I have the following interest: [person or business, nature of interest, approximate value]. I will update this declaration if my circumstances change.
Signature: [Signature] Date: [Date]
What to include
Examples from your own business
Pick situations your people actually face: a cousin's transport company bidding for a contract, a purchase manager's spouse selling packing material, a sales executive running a dealership on the side.
A clear definition of relative
Say who counts as a relative. In Indian families, in-laws and members of the same household can matter as much as immediate family.
Declaring is the duty
Make it plain that the breach is failing to declare, not having a conflict. When employees fear punishment for declaring, they stop declaring.
Who decides and how
Name the decision-maker for each level and the possible outcomes, so declarations lead to a recorded decision rather than an email that nobody answers.
Annual nil declarations
Ask sensitive roles for a yearly declaration even when there is nothing to declare. A signed nil declaration is strong evidence if an undeclared interest surfaces later.
Link to vendor onboarding
Have purchasing check new vendors against employee declarations before approving them, so conflicts are caught before money moves.
Common mistakes to avoid
- Treating every declared conflict as wrongdoing, which discourages people from declaring.
- Letting an employee who declared a conflict stay in the vendor selection meeting anyway.
- Collecting declarations once at joining and never again.
- Defining relatives so narrowly that in-laws and household members are left out.
- Approving new vendors without checking them against employee declarations.
Run it in ZeniaHR
Store each signed declaration and the manager's decision in the employee's Employee Documents, with an expiry date set to the next annual round so renewals stand out. For the yearly round, post a Company Wall announcement that requires acknowledgement and use the who-acknowledged report to chase pending staff. The organization assignment in employee records shows each person's department, grade and reporting manager, which tells you who should decide on a declaration.
See it on your own data
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Book a free demoSee pricingFrequently asked questions
What is a conflict of interest at work?
A conflict of interest is a situation in which an employee's personal, family or financial interest could influence, or appear to influence, a decision they make for the company. Examples include buying from a relative's firm, holding a stake in a supplier, or appraising a family member. The conflict must be declared so the company can manage it.
What should an employee do if a relative works for a supplier?
Declare it in writing to the reporting manager and HR before taking any further part in decisions about that supplier. The company will usually move approvals for that supplier to someone else and record the arrangement. Staying silent and continuing to approve orders is what turns an ordinary family link into misconduct.
Is having a conflict of interest misconduct?
No. A conflict of interest is not misconduct in itself, and many are unavoidable in small towns and family businesses. Misconduct lies in failing to declare it or in taking part in a decision while hiding it. Once declared, the company can manage it by changing the approver, removing the employee from a decision or asking them to give up the interest.
How often should conflict of interest declarations be collected?
Collect one at joining, one every year from staff who make purchasing, sales, hiring or payment decisions, and a fresh one whenever circumstances change, such as a spouse joining a vendor. Nil declarations matter as well, because they show the employee was asked and confirmed there was nothing to declare.