Query
Hi Everyone, I am framing a policy document on Conflict of Interest due to personal relationships at work. For that purpose we have defined personal relationships to include blood relatives and Spouse. The policy would state that two individuals having a personal relationship cannot work in the same dept/BU especially if one of them has the ability to influence a business decision impacting the other in terms of appraisal, promotion, incentives, etc.

I want to know if there is any legislation in India regarding this and would appreciate all inputs regarding the same.

Regards,
S.A.
Anonymous

8th November 2017 From India, Pune

PARTICIPATING IN DISCUSSION:
Dinesh Divekar
Business Mentor, Consultant And Trainer
Saswatabanerjee
Partner - Risk Management
Rujul
Sr.officer At J K Lakshmi Cement Ltd
Venkatraghavanm
Ir, Er, Payroll, Recruitment,
+1 Other

Dear S. A.

Thanks for bringing forth a good topic for discussion. I do not know whether you have done some Googling on the subject, however, if not done then you may click the following link of Wikipedia to improve your general understanding of Conflict of Interest:

https://en.wikipedia.org/wiki/Conflict_of_interest

To make Policy on Conflict of Interest, following two links could be useful:

https://www.acnc.gov.au/ACNC/Publica...COIguide8.aspx

and

http://www.ccic.ca/_files/en/what_we...icy_long_e.pdf

Which relationship is covered under conflict of interest is difficult to define. Nevertheless, instead of using the phrases like "blood relationship" or "spousal relationship", you may use phrases such as "kith and kin", "heirs" or :assignee". The challenges to this policy will come what may be the situation. In India, we value family relationship. Therefore, how to cover extended relationship like nephew, niece, uncle etc? How to cover live-in relationship or how to cover relationship with girlfriend or boyfriend?

Conflict of Interest need not be limited to just kith and kin working in the same company. What if purchase manager from your company wishes to buy a material from a supplier where his kith and kin is owner of that company? What if HR Manager avails of services of a recruitment company whose owner is his blood relative? Can purchase manager buy material or services from a supplier whose owner is not related to a purchase manager anyway but sales manager is? You need to cover these challenges in your policy as well.

While we may define what conflict of interest in detail, the challenges will remain. During my HR days in the hospitality industry, I found the Hotel Chef took great initiative in filling the vacancies as and when these arose. We later discovered that he was pushing his friends or acquaintances from a church to which he was affiliated to! Can this instance be covered under conflict of interest?

Declaration by the Manager: - While designing the policy, you may create a declaration form where manager gives declaration stating that his actions and decision will be within the remit of the policy on conflict of interest. If he/she perceives conflict of interest, then he/she is liable for the declaration to this effect and management reserves the right to accept services in such a case. For any act of omission and commission, he/she is liable for the disciplinary action.

Lastly, your question is on legislation on conflict of interest. I doubt whether there is legislation of this kind. Most of the time, conflict of interest is covered under the code of conduct that is specific to bureaucrats, people's representatives or those who hold office of profit but paid by the government. As such India is a strange country. We carry an invisible sack of relationship on our head and which relationship can pop out when that cannot be estimated!

Thanks,

Dinesh Divekar
8th November 2017 From India, Bangalore
There is no legislation on this.
The company is free to make its own rules as long as they are justified.

There are some rules under the central government employees terms of service, service rules, etc that apply to the government employees. Nothing directly applies to the private sector
8th November 2017 From India, Mumbai
Conflict of interest should be only with regard to the business, culture, motto, performance of the organisation. Any thing prejudicial to the interests of the organisation shall be considered as conflict of interest and not the relationship. An employee doing the same kind of business as that of his of organisation is conflict of interest.
9th November 2017 From India, Selam
in our company we seen that kith and kin working together in same unit/office in different department. but many of the business units not allowed the same. even tow person working in the same office married during their current role then one has to resign.
9th November 2017 From India, Gurgaon
Completely accepting the inputs given by learned friend Mr.Dinesh Divekar.

Any employer has this problem of kith & kin,friends like same family members working (may be in the same department or the unit), friends and colleagues being roped in by existing employees/Managers to support their cause.


Needless to mention companies having a policy of Buddy referrals for recruitment,which is allowed there.
We have in fact faced the same problem in a Food Industry in previous experience of majority employees/contract workmen being relatives/kith & kin,spouse etc.

Companies generally lose out on confidentiality,attendance,efficiencies,time loss by these kind of personnel.

This is cannot be avoided outright. But we can ensure that future recruitment and sourcing of employees/vendors is devoid of favoritism/relatives/friends etc with a firm policy and background check before recruiting.
9th November 2017 From India, Hyderabad
I don't think there may be any problem, if the employees work within their specified area, whether they are relatives or not. In my earlier company HoU offered jobs for the workers' children, who completed BE/CA/MBA just to motivate the workers to educate their children. There was no problem or interference from any corner, because HoU was so strict as much as he was kind.
10th November 2017 From India, Ajmer
Dear SA,
This is a welcome idea for bringing forth this topic for discussion. One would or should know why "Conflict of Interest" is required and what way the said regulation going to help the organisation. It is required to understand by owner of the business house rather not you & me.
Can this regulation be operational in our country, where the nature is quite complex. How can "Conflict of Interest" would help where 90% of business houses are run by the family and mostly business dealings is carried out within the circles of relatives.

The"Conflict of Interest" can not help in long run. Don't we use influence to get our work done? The action you are going to take is a matter of praise. But we can not say that the "Conflict of Interest" is not existing, it is very much existing in many organisation. The incumbats are asked to furnised information regarding his personal connection/relation/keen are existing or not in the business house. As per my information there is hardly any legislation in India.

Regards,
10th November 2017 From India, Mumbai
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