Circular 2007/3: Post Separation Employment: Policy Guidelines
Note: This circular has been updated to incorporate changes from Circular 2008/4
Note: Chapter 12 of the publication APS Values and Code of Conduct on this site has been updated to incorporate this circular
The purpose of this circular is to explain and enhance APS-wide policy on the management of possible conflicts of interest and other probity issues when employees leave the APS to take up employment in fields that are aligned to their APS responsibilities.
These guidelines replace the advice contained in Chapter 12 of the APSC publication APS Values and Code of Conduct in Practice. They do not involve any major changes in policy direction. Rather they aim at amplifying and clarifying elements of current policies to make them more helpful to agencies. Their main aim is to:
- ensure a better understanding of the purposes of the policies;
- ensure a better understanding of legal rights and limitations in relation to restrictions on post separation employment;
- clarify the proper post employment use of APS information.
The new guidelines reflect research on policies and practices in other Australian and overseas jurisdictions as well as consultation with agencies on current issues and concerns they have in managing the issues. The revised guidelines have also been endorsed by Portfolio Secretaries.
Further information on the matters raised in this circular is available by contacting the Commission. It may be appropriate for more complex or sensitive queries to be dealt with in writing.
13 July 2007
Attachment: Post Separation Employment: UPDATED Policy Guidelines
The purpose of these guidelines is to update the advice on the management of actual and perceived conflicts of interest and other probity issues when employees leave the APS to take up employment in fields that are aligned to their APS responsibilities.
The updates reflect Government policies restricting public servants from post separation employment as a lobbyist, either individually or as an employee of a lobbying organisation.
Background and issues
One of the key changes in the nature of public sector employment is that it is no longer a “closed, entry level to retirement” career. People are moving in and out of the APS, and this, together with the widespread use of outsourcing arrangements, have made post separation employment a growing issue for many APS agencies.
Ethical concerns arise when APS employees leave to take up employment in private sector areas that are closely aligned to their responsibilities in the APS. These guidelines provide the basis for the policies and procedures that agencies need to put in place to manage these issues.
The increasing integration between public and private employment can have important benefits for both sectors:
- it can help improve the efficiency and effectiveness of Australian industry by facilitating the transfer of skills and experience between the sectors;
- it can help the private sector to better understand the policy and organisational culture within which the APS operates and to be more responsive and cooperative in providing services;
- it can help the APS attract staff that might otherwise be reluctant to join if they thought that at some later stage their options for careers in other sectors might be restricted.
There are also common law principles that prohibit “restraint of trade” in employment unless it can be shown that such restraint is reasonable, as well as possible legislative restrictions under the Trade Practices Act 1974.
For these reasons, the APS needs to think carefully about the circumstances in which controls over employees or ex employees who have obtained employment in outside industry need to be applied. The primary purpose of this policy is not to restrict the flow of skills, experience and information between the APS and other sectors but to manage conflicts of interest when APS employees, including those about to take up appointments with the private sector, deal with outside organisations and individuals.
What are the risks
There are three key risks involved when an APS employee accepts employment in a field that is aligned to his or her APS responsibilities:
- that the employee, while still employed in the APS, would use their position to influence decisions and advice in favour of the prospective new employer;
- that the employee would reveal confidential or sensitive Commonwealth information to their new employer or provide other information that would give the new employer an advantage in dealing with the APS and/or a competitive advantage in the market generally;
- that the former employee would use their knowledge of and contacts within the APS, in other areas of the Commonwealth public sector and with the Government to lobby or otherwise seek advantage for their new employer in dealing with the Commonwealth.
Agencies are best able to control conflict of interest at the stages when an APS employee who intends to take up a private sector appointment is still employed by the Commonwealth.
APS employees are covered by the APS Code of Conduct, which requires them to:
- disclose, and take reasonable steps to avoid, any conflict of interest (real or apparent) in connection with APS employment;
- not make improper use of:
- inside information, or;
- the employee's duties, status, power or authority;
in order to gain, or seek to gain, a benefit or advantage for the employee or for any other person.
The requirement to be aware of and to avoid or manage real and perceived conflicts of interest in APS employment applies to all APS employees. Agencies should have general procedures in place that:
- help all employees to understand the importance of avoiding real and apparent conflicts of interest in their work;
- require all employees to notify managers about private interests, both financial and personal, where they could present a real or apparent conflict with their official duties;
- provide guidance to managers and employees on strategies and good practice in avoiding or managing conflicts of interest.
Agencies may also consider including provisions in collective agreements or performance agreements that highlight the sensitivities in relation to employees' contacts with private sector organisations and the need to act ethically and avoid any conflict of interest.
Where an APS employee intends to accept a private sector appointment, an actual or apparent conflict of interest could arise if their work involves, for example:
- Commonwealth purchasing functions;
- the preliminary stages of procurement-identification and definition of a requirement—especially when the capability of suppliers is closely connected with a specification;
- anticipated or actual contractual relationships between the Commonwealth and the proposed employer;
- the exercise of discretion in conferring some advantage on the proposed employer—examples include issuing licences or concessions or regulating subsidies or tariffs;
- knowledge of confidential procedures and criteria used within an agency which could allow anticipation or manipulation of agency decisions;
- knowledge of government intentions that could confer direct financial advantage on those able to participate.
An outside appointment could also raise an immediate real or apparent conflict if it is with an organisation:
- that is in, or is anticipating, contractual relationships with the Commonwealth in which the Commonwealth is a shareholder;
- that is in receipt of Commonwealth loans, guarantees or other forms of capital assistance;
- with which the APS employee's agency is otherwise in a special or close working relationship, for instance in regard to regulation, policy formulation or decision making;
- whose primary purpose is to lobby Ministers, Members of Parliament, or agencies.
Agencies should have specific policies and procedures in place to deal with real or perceived conflicts of interest in these situations. These could include a specific requirement for APS employees to inform their agency head as soon as they are offered employment where a conflict of interest could arise, outlining any relationship between the job offered and his or her official duties and describe any possible conflict of interest the offer raises.
The agency head should then consider:
- the importance and sensitivity of the position held by the APS employee;
- the nature of the APS employee’s new appointment and its relationship to the APS employee's work;
- the relationship of the proposed employer and the Commonwealth—for example, if the proposed employer is a regular supplier of services or equipment to the Commonwealth or could benefit from knowledge of government policy intentions;
- the period during which information gained or contacts made would continue to be of value to the APS employee and his or her new employer.
The agency head should discuss with the employee what immediate steps should be taken to avoid any conflict of interest. The steps may include:
- re-allocation of the employee's duties;
- temporary movement to a different work area;
- taking leave until the new appointment commences.
Depending on the size of the agency and the nature of its role and responsibilities, agency heads may also wish to consider:
- particular notification requirements and arrangements for SES employees, in light of their broad agency leadership and decision-making roles. This could include requiring all SES employees and their equivalents to notify outside job offers, irrespective of whether they impact directly on the employee’s responsibilities;
- whether the notification arrangements should apply to employees considering employment in an area that may involve an actual or potential conflict of interest, as well as those who have received an offer of employment;
- whether, in large agencies, the responsible person for the purposes of notification and for managing any issues should reside with senior SES level staff, for example a Deputy Secretary, the Head of Corporate Services or an Area or State Manager.
Information and knowledge
The risk here involves two types of information and knowledge:
- official information that is protected by security, is received in confidence or is subject to other similar caveats;
- the information, knowledge and experience about subject matter and about how the APS operates and makes decisions that employees pick up through their responsibilities.
The APS Code of Conduct prohibiting the misuse of “inside information” applies to employees who have been offered outside employment.
There are clear provisions under law that protect the disclosure and use of official information after an employee has left the APS.
Section 70(2) of the Crimes Act makes it an offence for a person who has left the APS to publish or communicate without authority any fact or document which they became aware of or obtained while employed by the Commonwealth. An offence may attract a two-year maximum prison term.
Section 142.2 of the Criminal Code (abuse of public office) makes it an offence for a person who has left the APS to use official information obtained while employed, dishonestly to obtain a benefit for themselves or another person or to cause detriment to another. An offence may attract a five-year maximum prison term.
The law can protect other types of sensitive information. The doctrine of 'breach of confidence' for example restricts a person from disclosing information where an obligation of confidence is imposed. Also, the Commonwealth would generally own the intellectual property in work performed by APS employees in the course of their employment, and could protect infringements through the relevant intellectual property laws.
Agencies may nevertheless reinforce this through provisions in collective agreements or performance agreements specifically protecting this information.
Knowledge and experience
Former APS employees who obtain employment in firms that deal with the Commonwealth take with them a range of knowledge about the APS in general, as well as particular knowledge of their former agency or agencies.
This may include such things as:
- an understanding of the policy, technical and programme management issues with which an agency is dealing;
- a knowledge of the particular interests and demands of its stakeholders.
- the decision making processes in an agency;
- knowing who are the key positions and people involved in considering, advising on and approving procurement and other decisions affecting private sector interests.
Most of this knowledge will not normally be considered confidential, yet it could give these firms an advantage in dealing with the Commonwealth, and enhance their capacity to obtain decisions in their favour.
It is, however, perfectly legitimate for any business to gather the expertise that will best help it meet a client’s needs. Further, and as indicated earlier, a business that understands an agency’s interests and operational environment is likely to be more effective and responsive in meeting the Commonwealth’s needs.
The responsibility is on APS agencies to anticipate these sorts of issues and to have processes and training in place to ensure their best interests are met, that Commonwealth policy is adhered to, and that integrity in decision making is maintained. Where necessary, some restrictions might be warranted and this is discussed in more detail below.
Restrictions on post separation employment
The issue here is the desirability and practicality of limiting, for a period of time, a former employee’s ability, post employment, to seek work in areas where he or she may be able to influence Commonwealth decision making.
Legal advice indicates that it is not currently possible under Australian law to impose post separation employment restrictions on all or certain classes of APS employees and to ensure that those restrictions are enforceable.
It is however legally possible for an agency to reach an agreement with an individual employee not to work in certain areas for a certain period of time after they leave the APS. This can be done at the time employment is entered into with an agency, or at the time the employee is leaving employment.
From a practical perspective, an employee is unlikely to see it as being in his or her interest to enter such an agreement at the time of resignation, and the Commonwealth is not entitled to insist on such an agreement by, for example, withholding a redundancy entitlement.
In any event, for such a restraint to be enforceable, it would need to be “reasonable” in terms of the interests of the parties and the interests of the public. The interests of the former employee are, of course, to earn money through employment while the interest of the Commonwealth, as well as the public interest, is to preserve public confidence in the fairness and integrity of its decision making processes, particularly in the area of procurement or the allocation of public money.
Reasonableness or otherwise would ultimately be determined by a Court, taking into account all the particular circumstances. As such, it is not possible to set benchmarks of the types of restrictions (including their duration) that might or might not be reasonable.
Finally, it is possible the Trade Practices Act 1974 may further limit the capacity to enforce such agreements in circumstances where the agreement resulted in a lessening of competition. The particular circumstances would again be relevant.
Agencies may put in place broad policy guidelines which include, for example, the length of time the person should wait after leaving the APS before they work in business areas that have direct contact with their former agency. Some agencies, for example the Department of Defence, have developed common understandings of ethical behaviour with relevant industry associations to help promote the acceptance of agency guidelines. These arrangements depend, of course, on the goodwill of parties and their perceptions of mutual benefit, and may well not be enforceable.
The responsibilities of current APS employees
These concerns mean that while agencies have the flexibility to put in place arrangements that attempt to restrict the post-separation employment of former staff, the practicality and enforceability of such arrangements need to be carefully considered.
A simpler and more effective way of managing perceptions that former employees are able to obtain unfair advantages for their new employers is simply to ensure that current APS employees who have dealings with businesses that employ former APS employees are not influenced by contacts with their former colleagues.
Key decision makers in a tender process
One way of addressing this is to include provisions in contracts restricting successful tenderers from employing APS employees who managed the tender process. Restrictions may apply during and after the tender process.
APS agencies may include similar provisions in requests for tender, which preclude the solicitation, enticement or engagement of particular employees during the process.
For further information about this issue, refer to the publication Outsourcing Human Resource Management Issues (2002) available from the APS Commission's website. The guidance is applicable to all purchasing arrangements, not just outsourcing. Typically, where restrictions are included in contracts concerning the employment of key decision makers, the period of exclusion is six months.
Agency policies and procedures for managing conflicts of interest
On a broader level, agencies should consider including specific references, in their overall policies and guidelines on managing actual and potential conflicts of interest, for the need for employees to be particularly aware of the potential for conflict of interest in contacts they may have with ex-employees now working in areas aligned with their APS responsibilities and to report and to takes steps to manage any real or perceived conflicts of interest arising from such contacts.
Post separation employment as a professional lobbyist
There are specific employment restrictions on former APS employees who take up work as professional lobbyists, defined as any person, company or organisation that represents, or whose employees represent, the interests of a third party. Public servants who separate from the APS at SES Band 1 level and above after 1 July 2008 must not engage in lobbying activities for a 12 month period on any matters on which they have had official dealings as public servants over the last 12 months. This applies to contacts with Ministers, Parliamentary Secretaries, staff employed under the Members of Parliament (Staff) Act 1984 (MOPS Act), APS employees, consultants and contractors engaged by an APS agency and members of the Australian Defence Force (ADF).
Similar restrictions will apply to former members of the ADF at the level of Colonel and above.
Details of restrictions on post-separation employment as a professional lobbyist are set out in Commission Circular 2008/4, Requirements relating to the Lobbying Code of Conduct and Post Separation Contact with Government of 14 May 2008. The Circular recommends that agencies put systems in place requiring staff to seek assurances from the lobbyists who approach them that they are not subject to these restrictions. Lobbyist who gave false or misleading information in response to this request could be in breach of the Government’s Code for Contacts with Lobbyists.
As Circular 2008/4 makes clear, these specific restrictions on post separation employment as professional lobbyists do not apply to former public servants who are directly employed by outside companies or organisations and who may undertake representational work on their behalf. Nor do they apply to the other types of contacts with and cooperation between APS agencies and former APS employees discussed in this Circular.
Strategies to deal with conflict of interest in market testing and outsourcing
APS employees managing outsourcing or undertaking market testing are at greater risk of actual or perceived conflicts of interest. For example, where an employee is required to outsource the function they normally perform, they may experience a conflict between the need to secure future employment and the need to work diligently to expedite the process.
Agencies should develop guidelines to assist employees working in these areas to deal with any actual or perceived conflicts and employees should seek advice from managers about any situation that may create an actual or perceived conflict of interest.
The following covers a number of issues relevant to employees managing outsourcing or undertaking market testing, who seek or are offered private sector employment. The list is not exhaustive. Employees should also familiarise themselves with any agency-specific directions or instructions:
- while it is not inappropriate for an APS employee to approach a successful tenderer about future employment, they must ensure they do not disclose commercially sensitive information. Information provided to the tenderer should be limited to the APS employee's skills, competencies, training and personal attributes. Current working arrangements should not be discussed;
- for probity, it is best that APS employees who occupy positions that will be outsourced be excluded from the decision making process. Where the specialist knowledge and experience of these APS employees is required to evaluate tenders, their role should be limited to areas where their involvement is essential on a specific issue. A colleague or manager should review the employee's input. APS employees involved in the decision making process should not seek to negotiate employment until the decision making process is finalised;
- an APS employee managing outsourcing or undertaking market testing who is offered employment should inform their agency in writing;
- an APS employee should not solicit the employment of other APS employees on behalf of a tenderer or contractor;
- external independent probity auditors may be needed to assess the evaluation and decision making process;
- APS employees must not solicit gifts, favours, or other benefits from tenderers or contractors;
- an APS employee should not favour former APS employees who work for tenderers or contractors;
- only APS employees involved in the tender process should provide tenderers with information or records, such as reports, technical manuals or instructions. Requests made to other employees should be referred to the APS employee coordinating the outsourcing project.
Australian Public Service Commission