Conflict of Interest: Definition and Meaning in Australian Workplaces

A conflict of interest arises when a person's private interests (financial, personal, or relational) could improperly influence, or appear to influence, the performance of their official duties. Australian law recognises three categories: actual (a real conflict currently exists), perceived (a reasonable observer could perceive a conflict), and potential (circumstances could foreseeably give rise to a conflict in future).

The legal treatment of conflicts of interest differs between the private, public, and not-for-profit sectors, but the core principles are consistent across each.

Private sector (directors and officers). Under the Corporations Act 2001 (Cth), directors and officers have a statutory duty to act in good faith in the best interests of the corporation (s181) and to not improperly use their position to gain advantage (s182) or misuse information (s183). A director with a material personal interest in a matter being considered must disclose that interest to the other directors (s191) and, unless excepted, cannot be present for discussion or vote on the matter (s195). Breach attracts civil and criminal consequences, including disqualification, penalties up to AUD 1.565 million (individuals), and for corporate offences penalties up to AUD 7.825 million or three times the benefit derived.

Australian Public Service. Under the Public Service Act 1999 (Cth) s13(7), APS employees must take reasonable steps to avoid real or apparent conflicts of interest and must disclose any such interest to their agency head. The Australian Public Service Commission's conflict of interest guidance applies the three-category framework (actual, perceived, potential) and requires documented management plans for each disclosed conflict.

Listed companies. The ASX Corporate Governance Principles and Recommendations (4th edition, in force for financial years commencing on or after 1 January 2020) Recommendation 3.2 requires listed entities to have and disclose a code of conduct for directors, senior executives and employees, and to inform the board or a board committee of any material breaches.

Not-for-profit and charity sector. Directors of registered charities must comply with the ACNC Governance Standards, including Standard 5 (duty to disclose any actual or perceived material conflict of interest and not to misuse position or information).

In New Zealand, the Companies Act 1993 s131 imposes a duty on directors to act in good faith and in the best interests of the company, and s139-140 require disclosure of personal interests in transactions. The State Services Commission's standards of integrity and conduct impose parallel public-sector obligations, including mandatory disclosure and recusal processes.