Why Every Organisation Needs a Conflict of Interest Policy in 2026
Conflicts of interest are still one of the biggest risks to good management and honesty for Australian organisations in 2026. Many people still think a conflict only happens when someone is dishonest or gets something they shouldn’t. Conflicts happen every day, often involving honest employees who don’t realise how their personal interests, relationships, or financial situations might affect, or seem to affect, their professional decisions.
Regulators, integrity agencies, and industrial tribunals now examine governance failures more carefully than before. Employees question decisions they think are unfair. Social media spreads accusations quickly, usually before the facts are known. Councils, government agencies, nonprofits, and private businesses must now have a strong conflict of interest policy. It is an essential rule for managing and controlling.
Organisations that handle conflicts effectively improve decision-making, protect their reputation, lower legal risks, and keep public trust. People who fail often find that the consequences—such as investigations, lawsuits, and damage to their reputation—are much more expensive than preventing the problem.
Understanding Conflicts of Interest
The Australian Public Service Commission (APSC) describes a conflict of interest as:
“a situation where a public official’s private interests could conflict with their official duties.”
Source: Australian Public Service Commission, APS Values and Code of Conduct in Practice – Conflict of Interest Guidance.
This definition forms the basis for most Commonwealth and state government systems. It means that conflicts happen when personal interests—money, relationships, or other things—could affect, or seem to affect, professional decisions. By 2026, regulators and integrity agencies expect organisations to use this definition and apply it consistently in procurement, hiring, second jobs, and workplace decisions.
Conflicts often happen because of:
- family or personal relationships
- friendships or romantic relationships
- financial interests
- gifts and hospitality
- outside employment
- business associations
- investments and property ownership
- future employment opportunities
A conflict does not always mean corrupt behaviour. All employees, managers, councillors, and directors will face situations where their personal and work interests come together. The problem is not that a conflict exists, but whether the conflict is recognised, shared, and handled.
Actual, Perceived and Potential Conflicts
Actual Conflicts
A real conflict happens when personal interests directly clash with official duties—for example:
- taking part in recruitment involving a relative
- approving invoices for a family‑owned business
- awarding contracts to a company in which the employee holds shares
These conflicts need to be dealt with right away.
Perceived Conflicts
A possible conflict arises when a reasonable person thinks personal interests might affect someone’s decision. No bad behaviour is needed.
The High Court’s decision in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 is still the main authority on this. The Court said that the question is whether a reasonable and fair minded person might think that the decision maker could be biased. Although Ebner dealt with judges, the same principle also applies to how organisations are governed.
Potential Conflicts
A possible conflict may arise in the future if certain situations arise—for example:
- discussing future employment with a contractor
- purchasing shares in a supplier
- entering a relationship within a reporting line
Possible conflicts must be reported and watched closely.
Why Disclosure Matters More Than the Conflict
Organisations can usually handle conflicts they share. They cannot handle conflicts that remain hidden.
After being shared, organisations can put controls in place such as:
- removing the employee from decision-making
- appointing an independent reviewer
- reallocating duties
- increasing oversight
- documenting a management plan
When employees hide important interests, it becomes a problem of trust, not just management. Many disciplinary cases focus on not revealing the conflict rather than the conflict itself.
Most conflicts can be managed. Concealment rarely can.
What the Courts and Industrial Tribunals Have Said
Australian tribunals regularly emphasise the importance of being open and honest within organisations.
B, C and D v Australian Postal Corporation T/A Australia Post [2013] FWC 6191
The Fair Work Commission confirmed that employers may enforce conflict‑of‑interest policies designed to protect integrity and public confidence.
Lawler v Department of Corrective Services [2021] WAIRC 00864
The WA Industrial Relations Commission agreed that it was fair to fire a prison officer who did not reveal the real nature of their relationship with a prisoner. The Commission found that the secret relationship caused a serious conflict and made people doubt the officer’s ability to do his job.
Across jurisdictions, three principles remain consistent:
- Employers have a genuine reason to keep their organisation honest and trustworthy.
- Conflict of interest policies are legal and fair.
- Failure to disclose can justify disciplinary action, including dismissal.
Procurement, Recruitment, and Workplace Relationships
Procurement
Buying goods and services is still one of the riskiest management activities. The Australian National Audit Office (ANAO) keeps finding that poor handling of conflicts is a common problem in managing procurement and grants.
Common risks are:
- prior relationships with suppliers
- gifts and hospitality
- financial interests
- former business associations
- future employment discussions
Being clear and writing things down are very important.
Recruitment and Promotion
Knowing an applicant does not automatically cause a conflict. However, hidden relationships can make people doubt the fairness of the process. Sharing information protects both the organisation and the panel members.
Workplace Relationships
Personal relationships between people in a supervisor-subordinate relationship create clear risks. Most organisations now ask people to share information about relationships—not to ban them, but to make sure decisions are fair and unbiased.
Lessons from Recent Integrity Investigations
ICAC—Operation Hector (2024)
The NSW Independent Commission Against Corruption found that secret relationships between decision-makers and contractors affected how Inner West Council and Transport for NSW bought services.
ICAC—Tim Crakanthorp Investigation (2024)
The ICAC found that the former NSW Minister did not properly reveal conflicts as required by ministerial rules. Even though no corruption was found, the situation showed how badly handling conflicts can damage a reputation.
IBAC—Victorian Public Sector Guidance
The Victorian Independent Broad based Anti corruption Commission keeps finding that badly handled conflicts are a common cause of corruption. IBAC emphasises that sharing information early, keeping good records, and supervising closely are the best ways to prevent problems.
Most conflicts can be handled if caught early. The biggest dangers happen when conflicts are kept secret.
The Growing Risk of Secondary Employment
Working from home and more online businesses have led to more people having second jobs in Australia. Although not always a problem, outside work can sometimes cause risks such as:
- confidential information
- intellectual property
- competing loyalties
- client relationships
- workplace fatigue
- competition with the employer
The Australian Public Service Commission understands that a second job can cause real or possible conflicts. The question is not whether an employee has a second job, but whether that job interferes with their primary responsibilities.
A clear policy helps employees know when they need to share information and lets organisations identify risks early.
Building an Effective Conflict of Interest Framework
An obvious conflict of interest policy should cover:
- Who must reveal: employees, contractors, consultants, executives, directors, councillors, and volunteers
- What must be disclosed: any interest that could influence, or appear to influence, official duties
- When disclosure must occur: when the individual learns of the conflict
- Who assesses the conflict: an independent manager, governance officer, or committee
- How conflicts are managed: recusal, reassignment, independent review, increased supervision
- How decisions are recorded: conflict registers and written management plans
Policies by themselves are not enough. Regular practice and hands-on examples are very important.
The Cost of Getting It Wrong
Poor conflict management exposes organisations to:
- workplace investigations
- dismissal disputes
- procurement challenges
- audit findings
- corruption allegations
- regulatory scrutiny
- litigation
- reputational damage
- reduced employee trust
- loss of public confidence
Damage to reputation is often worse than any money lost. People may forgive mistakes, but they rarely forgive hiding the truth.
Conclusion
Conflicts of interest cannot be avoided. It is impossible to get rid of them. It is important to manage them.
The consistent message from courts, tribunals, auditors, and integrity agencies is clear:
Most conflicts can be managed when disclosed. The greatest risks arise when conflicts remain hidden.
In 2026, organisations that create strong rules to manage conflicts of interest can better protect honesty, improve their culture, and keep the public’s trust.
A clear conflict of interest policy is one of the best ways to achieve this.
