Reference Checking in Australia – What’s Legal?
Many employers include reference checks as a standard part of their recruitment process, but as more cases involving data protection and privacy breaches hit the news we though it worthwhile to review what is and isn't legal when it comes to conducting reference checks in Australia.
Most companies would think that conducting a basic reference check would be acceptable, however there are areas where making a mistake could lead to you or your company encountering legal issues.
First a bit of a disclaimer - The following information applies to companies conducting reference checks in Australia. This includes prospective employers, reference check providers and recruitment agencies. It's a brief overview of what laws affect reference checks in Australia and you may wish to get more detailed information applicable to your situation just to be on the safe side.
In Australia,The Privacy Act 1988protects a person's information including what information can be collected and how it can be used and is the main piece of legislation people think of when it comes to conducting reference checks in Australia. TheAustralian Privacy Principlescontained in the Act, outline how Australian government agencies and large companies must handle, use and manage personal information. If you're a small business, the Office of the Australian Commissioner (OAIC) offers a checklist to help you figure out if the Act applies to your organisation. What's important to note, is the act also provide individuals with the right to access any information gathered.
Under the law, employee records can be made available in the course of a reference check without attracting the risk of a lawsuit. However, remarks should stick to the details of the employment relationship and not extend into information of a personal nature.
An organisation can be sued by an employee or former employee if they believe denigrating information was provided during reference checks and this directly harms their chances of future employment. Hence, some organisations have introduced a "No Reference" policy. They only confirm the most basic information such as designation and dates of employment. That's one of the reasons why professional reference checking firms exist, they tend to find ways to obtain information when another caller may not. It's also why you may get a better result with human-to-human reference checks than automated reference checks, which simply email out a list of questions.
Businesses may be liable if one of their employees provides information to a prospective employer as they can be deemed to be representing the organisation. This is not the case if the person providing the reference no longer works in that organisation. So, a reference given by a current employee could be an issue for a company, but not an ex-employee.
Provisions made under The Privacy Act permit candidates to ask to see notes provided on them during any part of a recruitment process. These can be sought from any prospective employer, recruitment agency, or reference checking company in Australia. This is binding except in cases where such notes infringe on the privacy of others or contain trade secrets.
Checking a candidate's criminal history requires their consent prior to the check being conducted. Candidates are not obliged to volunteer they have a criminal record, however failure to answer a question honestly may entitle an employer not to make an offer of employment.
Using a person's criminal record as a reason not to hire them is not condoned under theFederal Discrimination Act.An employer cannot refuse to hire someone simply because they have a criminal record. Candidates can only be turned down if their criminal record directly impacts on their ability to perform the job. Saying that someone needs to be honest or trustworthy isn't enough, hence a candidate's ability to fulfil the requirements of a job should be assessed on a case-by-case basis to avoid a claim of discrimination.
There are two key aspects to any misrepresentation that occurs during the recruitment process and reference checking.
Previous employers can be sued for losses owing to false references provided about a candidate during a recruitment process. The new employer can seek for compensation in damages owing to losses incurred due to things such as remuneration, cost of training, and severance packages.
In cases where it's the candidate who misrepresents or provides false information during the recruitment process, an employer can withhold an offer of employment on that basis. If the misrepresentation is only discovered after the candidate is hired, then the company can terminate employment. So, for example, if a candidate has a criminal record, it may not be legal for an employer to withhold an offer of employment (due to discrimination) but if the candidate lies about having not having a criminal record that would be a legitimate reason (due to misrepresentation).
The process of conducting reference checks in Australia has become more complicated and new laws come in existence. Legislation protects the rights of the candidates in ways that employers may not have considered. As a result, it means many referees are reluctant to provide information, particularly when it's in requested in writing. At the same time reference checking is an important part of the recruitment process, one which should never be skipped.
Our general advice for employers who want to conduct a reference check is to stick to questions which only relate to the candidate's employment history and don't stray into anything personal. Using a professional reference checking firm may also be a useful option as it outsources a lot of the risk. They may even be able to draw out information from a cautious referee, particularly when the check is conducted verbally.