In recent years, we have heard the term “Conflict of interest” used frequently in businesses, at seminars, training programs for human resource management, and even in labor dispute cases resolved by the Court. This demonstrates the impact of this issue on the normal operation of an enterprise; the level of influence of the conflict of interest is frequently proportional to the employee’s position. What exactly is a conflict of interest? What are the behaviors that are considered conflict of interest? The following article will assist the enterprise and employee in better understanding this issue.

1. What is “Conflict of interest”?

The conflict of interest that we are referring to here is the one that arises in the labor field, between employee and business. While the issue of conflict of interest in enterprises is not a new phenomenon, it is still present and occurs quite frequently in all types of enterprises, from Vietnamese to foreign-invested ones. However, the term “conflict of interest” is not explicitly mentioned in labor law, despite its prevalence in the workplace.

“Conflict of interest” is not an unfamiliar issue in Vietnam. They are explicitly stated in Vietnamese legal documents, but only concerning officials, public employees, and individuals in managerial positions in the enterprise and organization. The term “Conflict of interest” is defined by the Anti-Corruption Law as “a situation in which the interests of a person holding a position or authority, or those of their relatives, improperly affect or will affect the performance of their duties and public responsibilities”.

In fact, enterprises have adopted this definition to manage their workforce. Accordingly, a Conflict of interest is defined as a situation in which the interests of employee, their relatives, or friends oppose, diminish, or compromise the interests of the enterprise. Such a situation can negatively affect the interests of the enterprise and impact employee compliance with the enterprise’s regulations.

2. What behaviors are considered as a “Conflict of interest”?

In other words, it is important to understand which behaviors may be considered as a conflict with the enterprise and which situations are likely to result in conflict of interest within the enterprise. Depending on the size and type of business, the following behaviors may be considered as a conflict of interest:

• Employee receives money, property, or other benefits from agency, organization, or individual related to the work he/she handles or are under his/her management;
• Employee establishes or participates in the management and administration of the enterprise with lines of business similar to the current industry of the enterprise in which he/she working;
• Participating as an employee, consultant, advisor, or in any other capacity at the enterprise and organizations that have business activities similar to those in which the individual is employed or is a member/shareholder;
• Using information and documents obtained through his/her working position to benefit other organizations or individuals;
• Arranging for his/her spouse, father, mother, child, brother, sister, or brother to hold positions such as organization manager, personnel manager, accountant, treasurer, or storekeeper in the agency, organization, or unit, or transaction, purchase, selling goods and services, and signing contracts for agency, organization, or unit where the employee holds the position of the head or deputy’s head;
• Contributing capital to the enterprise operating within the lines of business that the employee directly performs state management or letting their spouses, parents, and children conduct their business with the lines of business directly performed by the employee’s  management;
• Entering into a contract with the enterprise owned by his/her spouse, father, mother, child, brother, sister, or younger brother, or allowing such business to participate in bidding packages of their agencies, organizations, or units when the employee performs transaction, purchase or selling goods and services, and signing contracts for those agencies, organizations, or units;
• Having a spouse, father, mother, child, brother, sister, or younger brother with direct rights and interests related to the performance of their duties and public obligations;
• Interfering with or improperly influencing the activities of competent agency, organization, and individual for self-seeking purposes.

Despite reviewing the entire Labor law, we have discovered that there are no provisions for acts of conflict of interest. However, many enterprises have documented these behaviors in separate documents attached to labor contracts or internal regulations. Besides, certain acts that are grounds for disciplinary action under labor regulations, some other acts are recorded in other documents to inform employee of the existence of internal regulations so that he/she can understand and comply with them. In case of a violation, the appropriate handling method shall be determined based on whether the violation is related to an employment relationship or a civil agreement.

Individuals in management positions (those who hold important enterprise data) have the authority to take certain actions without consulting or being supervised by any department or individual. Therefore, enterprises often have separate regulations on preventing conflict of interest to specify the responsibilities of management positions. We will discuss this matter in more detail in the following articles.

Time of writing: 06/04/2023

The article contains general information which is of reference value, in case you want to receive legal opinion on issues you need clarification on, please contact our Lawyer at info@cdlaf.vn.