1. Introduction
Scott Thompson was no doubt thrilled when he was appointed CEO of Yahoo in January 2012. His new position would offer him both corporate prestige as well as a correspondingly generous remuneration package. Unfortunately, less than six months later, Thompson was forced to tender a humiliating resignation – all because he had lied on his CV.
Many employees are tempted to embellish the facts when they submit a job application, but few go as far as Thompson and claim to hold an entirely fictitious university degree. As remarkable as his case may seem, Thompson certainly isn’t alone when it comes to high-profile ‘CV fraud’ – just consider these other recent examples:
- A Senior Director at the US Department of Homeland Security was forced to resign when investigators discovered her three university degrees were purchased from a fake institution
- A British celebrity chef lost his lucrative television contract following the discovery that his claims of cooking for Princess Diana were less than accurate
- A former Bausch & Lomb CEO lost his $1.1m bonus when the company concluded his MBA from New York University was remarkable for all the wrong reasons: the CEO had never graduated
While it may be tempting to conclude that these are isolated incidences, surveys conducted by major recruitment organisations consistently find that between 25% and 30% of all CVs submitted to potential employers contain at least one lie.
It’s hardly surprising then that more and more employers are conducting comprehensive background checks prior to extending final offers to prospective candidates. However, conducting these checks can itself expose employers to unexpected risks and potential legal action. It’s therefore important to understand the types of background checks that are most readily available in Australia and the most common – and expensive – mistakes that should be avoided.
2. Background Checks in Australia
Australian employers have access to a broad range of background checks, most of which can be outsourced to experienced third party providers. The following table summarises the most readily available background checks in the Australian labour market:
|
Name of Check |
Details |
|
Prior Employment Check |
The most common form of background check – involves contact with previous employers to confirm the accuracy of the applicant’s declared employment history including dates of engagement, job title and key responsibilities |
|
Bankruptcy Check |
Routinely undertaken where the relevant vacancy involves the provision of financial or related services, or where there is an elevated risk of corruption or bribery |
|
Criminal Records Check |
Most often undertaken where the vacancy arises within a law enforcement or other similarly sensitive industry |
|
Working with Children Check |
This check is a mandatory requirement in most states and territories where the vacancy will involve interaction with children, such as teaching, youth services and some charitable work |
|
Visa Check |
A simple check to confirm an applicant has the legal right to work in Australia |
|
Health Check |
Generally performed to verify an applicant is able to fulfil the ‘inherent requirements’ of a particular role |
|
Electoral Roll Check |
Involves a simple review of relevant electoral information to ensure the accuracy of information supplied by the prospective employee |
|
Previous Employment Check |
This is a relatively routine check performed to verify that the applicant’s supplied employment history corresponds with the records held by previous employers. It may be limited to a simple confirmation of dates and roles or may extend to the employee’s success/performance in those roles |
|
Qualifications and Memberships Check |
A straightforward investigation to confirm the accuracy of the applicant’s claimed academic and professional qualifications and memberships |
|
ASIC and ABN Check |
This is perhaps the easiest check to undertake and simply involves a review of online ASIC and ABN registers to confirm the legitimacy and viability of an applicant’s own enterprise |
Where the required check involves a level of specialist knowledge or access to restricted information, Australian employers may appoint a third party provider to perform the check on their behalf. These specialist providers – which in many cases are akin to private investigators – will charge the employer a standard professional fee for their services. A large number of such providers currently operate across Australia.
3. Common Mistakes
Employers undertaking background checks must do so very carefully. There are three inherent risks associated with such checks
- The methods used to obtain information are unlawful and/or unethical
- Mandatory checks are not undertaken, and
- Information collected during the check is used in an unlawful improper manner
It’s important to consider each of these risks in further detail to ensure common mistakes are avoided:
3.1 Unlawful and unethical collection of information
Strict Australian laws apply to the collection and use of personal information and these generally extend to the collection of information via pre-employment checks. For example, an employer must not present him or herself as an employee of a law enforcement agency in order to obtain personal information. Similarly, it may also be unlawful to access sensitive personal information about a prospective employee other than via approved – and properly regulated – channels, such as via state and federal police agencies and court and tribunal database searches (eg fwc.gov.au, Lexis Nexis and AustLii).
This prohibition against unlawful collection necessarily extends to collection via an appointed third-party provider. An employer should not assume that third party agencies will only obtain information via legal channels and they should carefully review the credentials of all providers before appointing them to act on their behalf. It would be commercially savvy to also require the third party provider to provide some form of written assurance that all methods used to obtain information on behalf of the client will be lawful. Employers may also wish to err on the side of caution by engaging better known agencies such as Peoplecheck (www.peoplecheck.com.au) or Verify (www.verifycv.com.au).
Quite apart from the legality of information collection, employers should also consider the ethical implications of conducting robust pre-employment checks. In this age of social media and instant sharing, it’s crucial to consider whether posts about such checks will enhance or damage a business’ reputation. The implementation and publication of a sound background checking policy may go some way to legitimising the need – and methods used – to obtain relevant background information.
3.2 Failure to complete mandatory checks
In many cases, the decision around whether to undertake certain background checks will be made on the company’s behalf as a result of positive legal duties. For example in certain industries, bankruptcy and working with children checks are mandatory and must be completed before an employee can take up their new post. A failure to undertake mandatory checks in these cases can lead to significant penalties being imposed by the relevant authorities.
Each state and territory government, as well as the Commonwealth Government, will provide advice to employers regarding mandatory pre-employment checks. Employers should always be encouraged to consult with the relevant agencies and authorities in their jurisdiction to ensure all obligations relating to background checks are being met:
|
State or Territory |
Responsible Agency |
Website |
|
NSW |
Office of Communities – Commission for Children and Young People |
|
|
Victoria |
Department of Justice |
|
|
Queensland |
Commission for Children and Young People and Child Guardian |
|
|
Western Australia |
Department for Child Protection |
|
|
South Australia |
South Australian Police |
http://www.police.sa.gov.au/sapol/services/information_requests/police_checks.jsp |
|
Tasmania |
No current legislation |
N/A |
|
Northern Territory |
SAFE NT / NT Police |
|
|
Australian Capital Territory |
Department of Justice and Community Safety |
http://www.ors.act.gov.au/community/working_with_vulnerable_people#bill |
Information current as of March 2013
It is also important that employers confirm that each of their employees has the legal right to work in Australia. Under Commonwealth legislation it is a criminal offence for an employer to hire someone who does not have the right to work and the obligation is therefore upon the employer to ensure both applicants and current employees have valid visas. This obligation extends to ensuring visas that were valid at the time of engagement remain so throughout the full period of employment. The Commonwealth Government now provides a useful online tool for visa holders and employers known as the Visa Entitlement Verification Online (VEVO) service. VEVO allows relevant parties to quickly and easily confirm a person’s right to work: http://www.immi.gov.au/e_visa/vevo.htm.
3.3 Improper use of information
Performing comprehensive background check may, of course, unearth a wide range of information about a prospective employee, but not all information can or should influence hiring decisions. For example, Australian Commonwealth and state and territory discrimination and human rights legislation prohibits discrimination based on ‘irrelevant’ prior convictions or investigations. As a result, it may be unlawful for an employer to decline to proceed with an offer of employment to, say, a prospective pilot because of a prior conviction for shoplifting. Further, where a conviction has been ‘spent’, most laws require the employee be given the opportunity for a fresh start.
It is worth noting that thorough background checks are more than likely to identify prior arrests (whether or not charges were laid) withdrawn prosecutions and verdicts of ‘not-guilty’. In all such cases prospective employers should disregard the information as no actual findings of guilt were made and the employee should, therefore, enjoy the benefit of presumed innocence.
Prior convictions relating to children are, however, extremely relevant where the applicant has applied for a position working closely with the children. Many jurisdictions require persons with relevant conviction to appear on an ‘offenders’ register’ for a set period of time, and an applicant’s current listing on such a register will almost certainly empower the prospective employer to decline an offer of employment where the vacancy would involve interaction with children.
The question of whether a prior conviction is sufficiently ‘relevant’ so as to justify discrimination is a complex one and general ‘feelings’ related to ‘overall reliability’ or ‘trust’ are likely to place the employer in a dangerous position if a discrimination-related claim is subsequently lodged by the aggrieved applicant. Employers may wish to obtain legal advice where background checks have highlighted convictions which the employer intends to rely upon in order to reject an applicant.
Finally, any information obtained via background checking – whether related to prior convictions or not – should be treated sensitively and confidentially by employers. Not only can claims arise under many different discrimination-related protections (such as those covering religion, sexual orientation and race), prospective employee may also be able to bring claims based on defamation, harassment and other grounds if sensitive information is inappropriately handled. Every effort should always be taken to carefully store, handle and destroy personal information.
4. Conclusion
It should now be clear that although background checks offer many advantages to prospective employers, they also bring with them many risks. While almost every employer wishes they knew more about those applying to work in their business, much of the information that will be uncovered via thorough checks either should not or must not be taken into consideration by the prospective employer when making their final decision. It follows that the time and costs associated with obtaining such information will only be worth the employer’s investment either when the particular check is required by law or the information that is uncovered can lawfully inform the final hiring decision.
David Bates BA(Govt) LL.B(Hons)
Managing Director
Workforce Guardian
This paper is based on legislation and case law current at May 2013
© 2013 Workforce Guardian Pty Ltd
Disclaimer: This paper is intended to provide commentary and general information only. It should not be relied upon as legal advice. Formal legal advice may be necessary in a particular transaction or on matters of interest arising from this article. Workforce Guardian Pty Ltd is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission contained within this article.
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