The importance of a Conflicts of Interests Policy in employment

On the 24 February 2023, the Industrial Tribunal confirmed that the Malta Gaming Authority (“MGA”) had not acted unlawfully when terminating the employment of the Head of Enforcement.

BRIEF OVERVIEW

The MGA engaged a Head of Enforcement on an indefinite basis. The MGA was aware that the individual had interests in a private security firm, as this information was disclosed to the MGA’s former CEO. However, it was later discovered that the private security firm in which the employee had an interest was also providing services to clients who were licensed by the MGA. Due to this conflict of interest, the Head of Enforcement was asked to tender his resignation voluntarily, or else face dismissal.  The Head of Enforcement opted to resign instead of facing dismissal.

KEY TAKEAWAYS

1. The importance of Conflict of Interest Policy

The case highlights the importance of having a robust conflict of interest policy in place within an organisation. 

A well-drafted conflict of interest policy will establish a clear definition of what constitutes a conflict of interest within the organization, which helps to ensure that all parties are aware of the policy’s requirements and expectations. By providing clear guidance on the types of interests that are likely to create a conflict, the policy can help employees to recognize potential conflicts early and take the necessary steps to manage or disclose them appropriately. 

This policy will also outline the procedure for disclosing potential conflicts and establishes a clear framework for managing them.

Overall, a robust conflict of interest policy can help to safeguard the reputation of the organization and ensure that it operates with the highest standards of integrity and transparency.

2. Effective Policy Management: Ensuring Policies Remain Relevant and Effective Over Time

While a well-drafted conflict of interest policy will require employees to disclose any potential conflicts of interest that may arise during the employment relationship, employers should proactively seek regular updates from their employees to ensure that the policy is being followed and to identify any potential conflicts early on.

Regular updates can be sought through various means, such as employee self-disclosure forms or regular employee assessments, which can help to identify any changes in an employee’s circumstances that may give rise to a conflict of interest. Employers may also want to consider providing training and guidance to employees on how to recognize and manage conflicts of interest, as well as establishing clear procedures for reporting and addressing potential conflicts.

While voluntary disclosure is an important aspect of managing conflicts of interest, it is not always sufficient, particularly in situations where employees may be reluctant to disclose potential conflicts for fear of reprisals or other negative consequences. 

3. Establishing Clear Guidelines and Approval Processes for Making Concessions during the Hiring Process

In an employees’ market, where there is a shortage of skilled workers and high demand for talent, it is not uncommon for employers in Malta to make certain concessions during the hiring process in order to attract and retain employees.   It is however important for employers to be aware of the potential risks and pitfalls that can arise from doing so.

In order to ensure that concessions made during the hiring process are in line with the organization’s policies and values, employers in Malta may want to establish clear guidelines and approval processes for making such concessions. This could involve setting limits on the types of concessions that are allowed, establishing criteria for when concessions may be made, and requiring that certain concessions be approved by a designated body, such as the board of directors or a committee that has been duly appointed for this purpose.

4. The letter of resignation is a vital component in a constructive dismissal case

In cases of constructive dismissal, the contents of the resignation letter can play a crucial role in determining the outcome of the case. When an employee resigns voluntarily, it is not uncommon for them to express gratitude and appreciation towards their employer. However, such language may be misconstrued as an indication that there were no circumstances leading to a constructive dismissal. Therefore, employees should be cautious when including such statements in their resignation letters if they intend to pursue a constructive dismissal claim.

It is important to note that resignation letters can also be used as evidence by employers to defend against a constructive dismissal claim. For instance, if the letter includes language suggesting that the employee left their position voluntarily without any grievances or concerns, it may be used to support the employer’s argument that there was no breach of contract or duty of care.

In order to ensure that the resignation letter accurately reflects the employee’s intentions and the circumstances leading to their resignation, it is advisable to seek legal advice. Additionally, it is crucial for employers to maintain accurate records of all communications and events leading up to an employee’s resignation in order to defend against any potential legal claims.