How Should Companies Handle Employees with Conflicts of Interest?

Legal action against employees with conflicts of interest

Legal action against employees with conflicts of interest can vary depending on the specific situation and the company's policies. However, common actions may include disciplinary measures such as reprimands, suspensions, or even termination of employment. In serious cases where there is a breach of legal or ethical obligations, legal recourse through civil lawsuits or regulatory intervention may also be pursued.

It is essential for organizations to have clear conflict of interest policies in place and to consistently enforce them to maintain transparency and integrity in the workplace. Regular training and communication on ethical standards can help prevent conflicts of interest and mitigate the need for legal action.

Dear Varsha,

Needless to dwell much on the general definition of the term conflict of interest. In an employment context, it denotes the personal interests of an employee running counter to the interests of the organization wherein they are employed, resulting in a biased discharge of duties, thereby causing disrepute or pecuniary losses to the organization. Instances can be many, such as nepotism, sexual harassment, divulgence of trade/business secrets to competitors, and the like. At times, there can even be an innocent conflict of interest too. Therefore, employers should mention the possible conflicting interests of employees in the employment guidelines. Employees should, at best, keep themselves away from situations that would create conflicts of interest or make a disclosure to their management.

Preventive action in this regard can be the creation of a non-compete policy for the organization. Punitive action is the removal of such employees from the organization.

Dear Varsha,

Would you mind providing proper background information on what exactly happened? What was the type of misconduct, what was the designation of the employee, and was the domestic inquiry conducted before awarding the information, and so on? Please provide the information in chronological sequence. In fact, this is the basic expectation from the member who raises the post. Such posts could get deleted also; nevertheless, it was courtesy of senior members like Mr. Umakanthan M who has given the reply, notwithstanding the inadequate information.

Conflict of Interest

The "Conflict of Interest" is defined as "a situation in which the concerns or aims of two different parties are incompatible" or "a situation in which a person is in a position to derive personal benefit from actions or decisions made in their official capacity." Please check whether the incident that has happened in your company fits within the definition. If not, then it is better not to continue further discussion on "conflict of interest" but rather as a matter of procedure for handling discipline.

Thanks,

Dinesh Divekar

Dear Varsha Chaudhary, you can sue in court, lodge an FIR, and initiate disciplinary action against conflicts of interest, as you deem best for the cause. At the same time, you should include a clause on Conflicting Interests in the standing order or employment policy.

An apology typically signifies seeking forgiveness for an action. If you intend to terminate an individual even after an apology, it may be viewed as contradictory. Therefore, it is advisable to call the employee in question for an explanation. Avoid jumping to conclusions based on assumptions; instead, follow the proper procedures before considering termination. Please refrain from using phrases or terms that are not defined in your company policy.

Thank you.