Get up to 30% off your annual plan for a lifetime!
(Ends June 30)

Get up to 30% off your annual plan for a lifetime! (Ends June 30)

How to Manage Conflicts of Interest in the Workplace

Loyalty to one’s workplace is a vital component of employment. Decision making and actions by employees should be fair and always within the interest of their employer. Lower staff numbers in a small business make conflicts of interest easy to spot, damaging workplace culture and staff trust. Follow the steps below to identify, prevent and deal with conflicts of interest. 

Get your Casual Employment Agreement now for free.

Hire casual employees in any industry. This Employment Agreement (Casual) is essential when hiring new employees for your business.

Types of Conflict


The most well-known type of conflict, this involves family members or friends who are working together at the same company. As a result, favouritism and benefits due to the connection could cause biases in decision making.


Involving two employees who have a romantic relationship which has developed outside of the workplace. This can result in unequal treatment of certain employees over others for promotions or other opportunities.


An employee accepting gifts from a vendor can, in turn, cloud their judgement and motives when dealing with that particular vendor. For example, the ability to act in the best interests of your business could be impeded on by a staff member receiving bribes. Further, the discovery of financial conflict could impact the reputation of your business.


A current employee working for a competitor or uncovering trade secrets to a third party. Consequently, personal staff information or details about the goods and services that you offer could be revealed. 

How to Prevent Conflicts of Interest

1. Ask Employees to Disclose Any Conflicts of Interest

Honesty really is the best policy. Asking future employees directly to report any conflicts of interest allows for transparency. Ultimately, this approach helps you to decide whether you should proceed to hire them as an employee and the implications for your business.

2. Create a Conflict of Interest Policy

Drafting up and creating a Conflict of Interest Policy is vital for every business.

They include:

  • Types of Conflicts
  • Identifying Conflicts
  • Managing Conflicts

This establishes the expectations of your business and your staff. Staff should have a copy of the policy they can refer back to throughout their employment.  

3. Avoid Nepotism

As the owner of a small business, you have the ability to decide who you wish to hire. Certainly, family and friends are an easy option as you know of their skills and suitability. Yet, as a rule of thumb, you should avoid hiring relatives or friends and if you do, make sure you hire them based on merit. Above all, this can ensure, as an owner, you are preventing any possible conflicts that may impact on your decision making. 

4. Create a plan for managing conflicts of interest in your small business

In the event that a conflict of interest does arise, prepare yourself with a plan to resolve the conflict. Mapping out all the steps and how to move forward can be found in your Conflict of Interest Policy. Further, including a mediator within your resolution may help you come to an agreement with your employee about the next steps. Hence, this allows smooth conflict resolution without major disruption to your business. 


A conflict of interest can have harmful impacts on workplace culture, decision making and company loyalty. Providing your business with the tools to identify conflicts of interest, how to prevent and resolve them is essential. Hence, a Conflict of Interest Policy is the first step to ensuring your employees understand the expectations of your business.

Find the perfect lawyer to help your business today!

Get a fixed-fee quote from Australia's largest lawyer marketplace.

Most Popular Articles
You may also like
Recent Articles

Get the latest news

By clicking on 'Sign up to our newsletter' you are agreeing to the Lawpath Terms & Conditions


Register for our free live webinar today!

Funding and Legal Checklist for Your Business

12:00pm AEDT
Tuesday 25th June 2024

By clicking on 'Register for webinar' you are agreeing to the Lawpath Terms & Conditions

You may also like

Want to open a pet shop but not sure how? This article teaches
Want to know how to start a podcast? This article delves into all the steps you need to take to start a podcast.

Thank you!

Your registration is confirmed. Keep an eye on your inbox for an email with details on how to watch the webinar.