Glossary

Company code of conduct

Apr 5, 2024

What is a Company code of conduct?

A company code of conduct is a set of rules governing employees' behavior. The code is usually published in a document and outlines expectations for employee behavior. Codes are generally used by large companies, but smaller companies can still benefit from having one. A company's code of conduct serves many purposes, including setting expectations for employee behaviour, providing a framework for resolving disputes and handling complaints, and providing an overall understanding of what the employer expects from each employee.

Businesses code of conduct is not a contract. A contract is an agreement between two parties outlining certain rights and responsibilities. A code of conduct outlines what employees can expect from their employers, but it's not binding like a contract would be — it doesn't require either party to uphold its terms or provide any recourse if either party fails to do so.

Why do companies need a code of conduct?

While the reasons for having a code of conduct for employers and employees may vary from company to company, in general, the purpose of a code of conduct is:

  • To set expectations for employee behavior;
  • To ensure consistency of behavior across all employees;
  • To protect the company from legal risks; 
  • To protect the company from reputational risks; and
  • To protect the company from financial risks.

What is the difference between a code of conduct and other policies?

A code of conduct in company is a formal set of rules and expectations, while other policies are more specific and tangible.

The difference between having a code of conduct in a business and having a formal policy is that the latter has legal authority behind it. This means that people who violate the terms of your formal policy could face consequences such as financial penalties or even jail time if their actions are deemed serious enough.

A code of conduct, on the other hand, does not have any legal force behind it and cannot be enforced by law. It is simply a set of rules that apply in certain situations but do not have any repercussions for breaking them (unless you’re in the military).

The benefits of a code of conduct for your employees

  • Increased productivity;
  • Higher levels of employee satisfaction;
  • Reduced turnover rates;
  • Increased employee loyalty;
  • Increased employee engagement, which will lead to improved customer service;
  • Better employee retention and more job security for you as an employer.

Violation of a code of conduct

If you think that a code of conduct violation has occurred, you can report it by contacting the appropriate representative of your organization. If a significant breach is reported and investigated, the following steps are taken:

  • The author or authors of any relevant documents are contacted.
  • The names and contact information for any witnesses to or victims of the violation are collected.
  • All relevant documents and statements from these individuals are compiled into evidence.

This evidence will be used to determine whether there has been a violation of company policy, and if so, how severe it was.

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