How to Write a “Code of Conduct”

Recently I’ve been working with a client on a project that involves codes of conduct, and I’ve reviewed a number of such codes within a specific industry. A “code of conduct” is a set of rules or proper practices that regulates behaviour within an organization. Many large businesses and organizations have codes of conduct, as do armies, street gangs, criminal conspiracies, and groups of professionals. Even pirate ships, often a byword for lawlessness, had codes of conduct to regulate discipline, division of spoils and compensation for the injured.

Here are some of the things I have found about crafting an effective code of conduct, no matter what kind of behaviour or organization is to be regulated:

Purpose: It is worth spending some time thinking about why you need a code of conduct before starting to write. What kinds of activities need to be regulated and why? What values do you want to promote? What kinds of practices do you want to discourage?

Content: The most effective codes I have seen contain both abstract language about values and some clear, concrete guidelines. It is fine to say something along the lines of: “Members of the organization will be honest and scrupulous in financial dealings.” But you might also want to say, “Employees will neither accept nor offer bribes.”

Scope: Don’t try to be exhaustive. The idea is not to regulate every aspect of an individual’s life, or even every aspect of working life. Focus on what you believe is most important.

Consult: Talk to the people who will be using the code. What kinds of ethical challenges do they face? Which work-related situations do they find most troubling? If the code is to be effective it has to be relevant to the experiences of those who are expected to abide by it.

Length: If you want the code to be a document that people refer to and consult on a regular basis, it should not be too long or complex. A good length to aim for is one page, maximum.

Style: I’ve seen several codes of conduct that were all too obviously written by lawyers. While it is a good idea to have a code vetted by a lawyer, it should not require a law degree to understand it.

Keep it current: As your organization develops and grows, members will face new challenges. And technological advances bring their own ethical challenges. Ten years ago, no one needed a company policy about employees’ Twitter activity. Today, it might be quite relevant. Be sure to review and update your code of conduct periodically.

Cohabitation Agreements

In my previous post, I mentioned a recent decision by the Supreme Court of Canada that is likely to change the way that the courts deal with support and property conflicts between unmarried partners. There’s speculation among lawyers that the decision will lead to an increase in cohabitation agreements. So I thought it would be useful to say something about them here.

A “cohabitation agreement” is a contract between unmarried partners who live together, and it can be signed before the couple move in together or after. It usually specifies things like the rights and obligations of each party during the cohabitation, and what will happen if the relationship ends. For example, who will own property acquired during the relationship? Will one partner be obliged to support the other, and for how long? Who will move out of the shared residence, and how soon after the relationship ends should that person be expected to find a new home? For a cohabitation agreement to be legally binding the parties must sign it in front of a witness (who also signs); each must make a full and frank financial disclosure; and the parties must sign voluntarily.

There are good reasons for couples to work out a cohabitation agreement before moving in together. Working together on a cohabitation agreement can give each person some idea of how the other deals with conflict, and if they are able to have together what mediators like to call “difficult conversations.” For example, many couples avoid talking about money and realize only too late that they have different values around it and different spending habits. Having an open and honest discussion about each other’s financial situation and financial goals early in the relationship can help avoid conflict and misunderstanding later on. Another good reason to have a cohabitation agreement is that, if the relationship does break down, a legally binding agreement can provide some predictability about property rights, and it can help protect against unnecessary cost and litigation.

But do you really need a cohabitation agreement? A lawyer who specializes in family law can advise you about your particular situation. Likely, the answer depends on how much property you own, and how complicated your life is. If the only discussions you and your partner need to have are over who unloads the dishwasher and who pays the extra cable charges, probably a formal agreement isn’t necessary. But if one or the other owns a home or other substantial assets, or has children, a cohabitation agreement might be a good idea. Another factor to consider is whether the shared living arrangement is meant to be temporary or long-term. If the arrangement is meant to be long-term and indeed to take the place of a marriage, then having a formal agreement is probably advisable. I should also note that, ordinarily, a cohabitation agreement remains valid if the couple marries.

If you do decide that you and your partner would benefit from having a cohabitation agreement, then do it properly. Meet with a mediator if you find it difficult to discuss money or other sensitive subjects. Most importantly, each person signing the agreement needs independent legal advice. That means that both you and your partner should go over the agreement with your own lawyer. It is better to spend the money at the outset to make sure that you have a durable agreement, than to find out later (and at much greater expense) that your agreement won’t hold up in court.

Marriage, Cohabitation, and the Law

When a couple moves in together, along with good wishes, they are likely to receive misinformed advice. Contrary to what many seem to believe, there are important legal differences between living together and being married. Just what these differences amount to depends on where the couple lives. (I will avoid using the term “common law marriage.” Not all jurisdictions recognize common law marriage, so using the term where it may not be appropriate is misleading.)

Below I’ve outlined some of the main differences between married and cohabitating couples in Ontario. The key difference is that married couples are treated as an economic unit, while cohabitating couples are not.

Primary Residence: When a married couples divorces after three years or more, both have an equal claim to live in the family home. This is regardless of whose name the property is in. Cohabitating partners do not automatically have this right.

Other Property: Unless they have previously agreed to do otherwise, married couples who divorce share the value of the property acquired during the marriage, as well as any increase in the value of the property they brought into the marriage. For example, Jim has owned a vacation cottage since before he married. If it goes up in value by $20,000 while he is married to Jane, then Jane is legally entitled to $10,000 upon divorce. If Jim and Jane were cohabitating, she would not be entitled to any increase in the value of the cottage. Similarly, cohabitating partners do not share any property that either acquires during the time of cohabitating. If Jane buys an artwork while living with Jim, she does not have to share it with him if their relationship dissolves. If they were married, Jim would be entitled to half of the value of the artwork. But note! Even if they are not married, if Jane contributes financially to the upkeep of the cottage, or Jim contributes some funds to purchase the artwork, the situation may be different.

Child Support: Children have the right to a relationship with both of their parents, and children have a right to be financially supported by their parents. This is true whether their parents are married or not. In some cases, the courts have ruled that if a cohabitating person has treated a partner’s child as his or her own, the child may be entitled to support from that partner.

Spousal Support: This is probably the trickiest area of all. Both married and cohabitating partners who break up may be entitled to support. A recent decision by the Supreme Court of Canada has set out a new framework for resolving property and support disagreements between formerly cohabitating partners. The case in question centered on a woman who moved out of the province to be with her partner and left a job to raise their children. Although the couple was not married, the court decide to treat their economic activities as a “joint family venture.” She was found to be entitled to half the increase in value of the couple’s assets, which amounted to about $1.5 million. (You can read the details of the case here.)

Inheritance: If a married person dies without a will, the surviving spouse is ordinarily entitled to part of the estate. If the couple is not married, the surviving partner does not have an automatic claim on his or her partner’s estate. If the surviving partner has helped pay for property that is in the deceased partner’s name, he or she may have to go to court to prove this before the estate can be settled.

I have taken most of this information from What You Should Know About Family Law in Ontario, a publication of the Attorney General’s Office. I am not a lawyer, and I don’t intend for this posting to be taken as legal advice! Family law is incredibly complicated. I’m told that even lawyers who work in other areas of the law find family law to be difficult. To find information relevant to your particular situation, you must consult a lawyer.

Next time: I’ll write about “cohabitation agreements” for unmarried couples.

Conflict Resolution and Business Ethics

Photograph by Mike Smail

Conflict resolution is an ethical issue because how we treat one another, including how we treat others with whom we are in conflict, involve ethical considerations. In business, conflicts and the ethical and management challenges they present can arise in a number of areas:

Between two or more organizations: Between a business and its suppliers – who absorbs the extra cost when a shipment is delayed because of an unexpected storm?
Between a business and its sub-contractors – what to do when the terms under which contracts were written no longer apply?
Between business competitors – how to resolve intellectual property disputes?

Within an organization: Between employees and management – over wages, benefits, working conditions, and everything else.
Between different divisions of an organization – what should be done when the “creatives” disagree with the “suits” or when the sales team is frustrated with the software engineers?
Between two or more employees. (See my earlier post on microwave ovens as a major cause of inter-employee strife!)

Between a business and its customers: What counts as a “fair” policy in the case of unsatisfactory products? Does caveat emptor apply across the board?

Between a business and the community: What is adequate compensation for environmental damage? (Remember the BP oil spill?)
How much should a profitable company give back to the community?

For many of these issues, the initial response might be, “Call in the lawyers. Find the extent of our legal liabilities or entitlements.” Or: “Look up the company policy. What are rules around this?” For some issues, this kind of information will be crucial. But what an organizations does with this information and the response it makes will be crucially important. For some, the default response is an adversarial, hard-nosed, “take no prisoners” approach. What are the likely consequences? One of the parties in the dispute might win big; the other might have to make concessions. It is more likely that neither of them will get everything they sought. In any case the relationship is probably finished. Each party will then have to expend time and effort building new relationships, probably at great cost.

A less adversarial approach to conflict resolution can help preserve and even strengthen relationships. A great example of this was the intellectual property dispute between Digital and Intel back in the late 1990’s. Digital filed a patent infringement suit against Intel; Intel filed a lawsuit seeking the return of crucial documents from Digital. Claims and counter-claims went back and forth and both companies saw their share prices fall. Luckily, while lawyers for both companies were preparing to bring the various matters to court, the directors of Digital and Intel kept meeting and talking. Eventually, working together, Digital’s president Robert Palmer and Intel’s COO Craig Barrett worked out a preliminary agreement that was acceptable to both companies and advantageous to both. I believe that the case is still studied in business school as an example of creative problem-solving and skillful management.

There’s a saying in business that, relationships are worth more than gold. I think that sums up why effective conflict resolution in the business context is both an ethical issue and a management issue.