Code of conduct: Definition, tips and common mistakes to avoid

A well-defined code of conduct is a cornerstone of a healthy and productive workplace. It sets clear expectations for employee behaviour, ensuring a professional and respectful environment. Without one, employers risk inconsistent standards, legal challenges and a negative company culture. A clear code of conduct protects both the company and its employees by providing a framework for ethical decision-making and professional interaction.

What is a code of conduct?

A code of conduct is a formal document that outlines the rules, principles and ethical standards all employees must follow within an organization. It provides a framework for professional behaviour and ensures that everyone operates in a manner consistent with the company’s values and legal obligations.

Code of conduct vs code of ethics

While often used interchangeably, a code of conduct and a code of ethics serve different but complementary purposes within an organization.

	Code of conduct	Code of ethics
Focus	Specific behavioural rules and actions.	Broad guiding principles and values.
Purpose	To ensure compliance with rules.	To guide employees in making the right decision
Tone	Formal and detailed.	Philosophical and values-based.

Why is a code of conduct important for employers?

A code of conduct is more than just a policy document; it’s a strategic tool for building a strong company culture and protecting your business. It sets clear, positive expectations for employee behaviour, creating a foundation of trust and respect. This helps to cultivate a healthier workplace where team members feel psychologically safe and are more likely to thrive. 

By outlining the acceptable standards for professional conduct, a code of conduct also serves as a crucial line of defence against legal risks and reputational damage. It demonstrates a company’s commitment to ethical practices and provides a clear framework for addressing issues fairly and consistently, which is essential for ensuring accountability and maintaining a professional environment.

Key elements to include in your code of conduct

A comprehensive code of conduct should be tailored to your organization and cover the following essential areas.

Company values and mission

This section should clearly state the core values and mission of your company, providing a foundation for all other policies. It helps employees understand the purpose behind the rules.

Standards of behaviour and workplace conduct

This is the core of your code of conduct. It should define acceptable and unacceptable behaviour, covering topics such as anti-harassment, discrimination, respect and communication. It sets the tone for a positive and inclusive work environment.

Compliance and legal obligations

Outline the company’s commitment to following all relevant laws, regulations and industry standards. This section can include details about data privacy, workplace safety and financial reporting.

Conflicts of interest

Explain what constitutes a conflict of interest and the process for disclosing one. This protects both the employee and the company from potential reputational or legal damage.

Use of company resources

This section clarifies the proper use of company assets, including technology, the internet and social media. It helps prevent misuse and ensures company resources are used for business purposes.

Reporting mechanisms

A code of conduct is only effective if employees feel safe reporting violations. This section should clearly explain the process for reporting misconduct and assure employees that they will be protected from retaliation.

Disciplinary actions and consequences

Clearly outline the consequences for violating the code of conduct. This ensures fairness and consistency, and reinforces the seriousness of the policy. Consequences can range from a verbal warning to termination of employment, depending on the severity of the violation.

Acknowledgment and training requirements

Include a section that requires employees to acknowledge they have read and understood the code. This is often done through a signed document. Also specify any training requirements related to the code of conduct.

Code of conduct downloadable template

Here’s a preview of the letter template you can download and customize based on your requirements:

Common mistakes employers should avoid

Even with the best intentions, employers can make common errors when developing and implementing a code of conduct. Avoiding these mistakes is critical to crafting a document that is both effective and legally sound.

• Copying a generic template without customization: A code of conduct should reflect your unique company culture values and legal requirements. Avoid using a generic template without tailoring it.
• Using overly complex legal jargon: The document should be easy for all employees to understand. Use simple, clear language.
• Failing to enforce consistently: Inconsistent enforcement can lead to employee distrust and potential legal issues. Ensure the code is applied fairly to everyone regardless of their position.
• Not training staff on the code: A code of conduct is useless if employees aren’t aware of its contents. Regular training and refreshers are essential.
• Letting the document go stale: Your code of conduct should be a living document that is reviewed and updated regularly to reflect changes in laws or company practices.

How to enforce your code of conduct

A well-written code of conduct is only the first step; effective enforcement is what gives it power. Employers must commit to a clear and consistent process that makes the code a living document, not just a set of rules.

Training and onboarding integration

The enforcement of your code of conduct begins on day one. During onboarding, we don’t just want to hand new employees the document. Instead, aim to dedicate a specific session to walk them through its key principles and discuss what they mean in practical terms. Require every employee to read and formally sign an acknowledgement form, confirming they’ve received, read and understood the policy. This signature serves as both a legal and an educational tool.

Regular refreshers and reminders

A code of conduct can quickly become an afterthought if it’s not reinforced regularly. To prevent this, schedule mandatory annual training sessions that all staff must attend. These sessions are an opportunity to discuss real-world scenarios, address new challenges and answer questions. In between these sessions, use internal communications like company newsletters, announcements or team meetings for regular reminders. This keeps the code top of mind and reinforces its relevance in daily work life.

Clear reporting and investigation process

The best way to encourage employees to uphold the code is to ensure they feel safe reporting violations. A company must have a clear, accessible and confidential reporting mechanism. This could be a dedicated hotline, an anonymous online portal or a designated HR representative. Crucially, every report must be taken seriously and investigated with fairness, impartiality and speed. The investigation process should be clearly documented and communicated to all parties involved, ensuring that the company acts on all complaints.

Consistent application of consequences

To be credible, a code of conduct must be applied consistently and without favouritism. When a violation occurs, follow through with the disciplinary actions outlined in the policy. The consequences should be proportional to the violation but applied consistently to every employee, from new hires to senior management. Inconsistent enforcement can quickly erode trust, create a perception of unfairness and undermine the entire purpose of the code.

Download our code of conduct template and get started

A well-crafted and consistently enforced code of conduct is essential for any modern workplace. It defines your company’s values, sets clear expectations for employee behaviour and creates a professional and ethical environment for everyone. By creating a clear code of conduct and committing to its enforcement, you can build a stronger, more resilient company. Download our code of conduct template to get started on drafting a customized policy for your workplace.

The information in this template is current as at 1 August 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The content is general information only, is provided in good faith to assist employers and their employees, and should not be relied on as professional advice. Some information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this template. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this template.