Background checks: protecting the innocent

Last month’s jailing of unqualified gynaecologist Dr Henry Akpata and the forced resignation of NHS Trust chief executive Neil Taylor in December for awarding himself a non-existent degree, were the latest in a string of revelations concerning employees claiming to be something they are not.

Neither case is as chilling as that of double child murderer Ian Huntley, who was given his job as school caretaker despite police awareness of prior convictions, but they nevertheless underline the importance of employers carrying out detailed pre-employment checks on candidates.

Widely-publicised employee security breaches, the events of September 11 and concerns over illegal working have added to the pressure on employers to put in place adequate screening procedures.

Some 34 per cent of job applications contain outright lies about experience, education and abilities and 2 per cent of CVs are almost totally fictitious, according to employee background checkers RWC.

Public sector screening

Companies are increasingly raking through potential employees’ backgrounds, both nationally and internationally, with employers such as those in the public, financial, IT, pharmaceutical, media and oil and gas sectors particularly likely to screen.

“The public sector is particularly sensitive and conscious of criticism about unsavoury details which should have come to light following the Harold Shipman and Huntley scandals. Banks are also very keen to demonstrate they are beyond reproach,” says Chris Garatt, associate at law firm Allen & Overy.

Debbie Williamson, managing consultant at background screening firm Hill & Associates, which recently joined forces with RWC under the global brand, says global screening is very much on the rise. “Global screening is becoming a big thing, although it is extremely difficult to put into place a global screening policy. Companies are screening more thoroughly, in part as a knee-jerk reaction to September 11.”

But pre-employment screening is a legal minefield unless employers are clear what they can and cannot do. Data protection legislation is increasingly commonplace globally, with the rest of the world catching up with the US and UK in controlling the gathering, processing and storing of data on individuals. Uruguay has just introduced a data protection law, India is in the throes of bringing in EU-style data protection laws and countries such as Dubai, Qatar and Taiwan are stepping up their data protection frameworks.

Employers are also now dealing with applicants who are very aware of their rights. “Employees are increasingly savvy about their data protection rights. Some clients say that when they ask for certain information, applicants or employees ask them whether they really need to know this, such as information on financial history, county court judgements, bankruptcies. It all comes back to the question of relevance,” says Khurram Shamsee, associate with Baker & McKenzie.

The UK still lags behind the US in terms of screening. According to RWC, in the year ending October 2004, 75 per cent of US companies screened candidates for “jobs that need to be checked”, compared to 9 per cent of UK companies.

“US parent companies and multinationals are pushing for everyone to be checked to the same standards, as all employees have access to the corporate network,” says Steve Bailey, managing director at RWC.

Privacy laws

For some employers, such as those in the financial sector or with employees coming into contact with vulnerable individuals, background screening is a legal requirement in the UK. The Financial Services and Market Act 2000, for example, requires individuals working in controlled functions such as senior customer-facing roles to be “fit and proper”, meeting honesty, competence and financial soundness criteria.

Both Hong Kong and Singapore have tight restrictions in the privacy arena, with access to information rather more restricted in the latter, according to Williamson of Hill & Associates. In other countries such as Malaysia and Indonesia, privacy laws are not yet in place but access to information about candidates is hard to obtain, as is the case in South America, Thailand and China.

While the legal restrictions of the country into which the employer is hiring are paramount, employers should also consider those laws governing the country from which candidates are being hired, says Fraser Younson, head of employment at law firm McDermott Will & Emery.

“You need to take into account law in both countries. If, for example, there are data protection laws in the country the person is coming from, the employer must be careful not to be seen to be inducing a third party to break these laws,” says Younson.

Williamson says: “It normally goes back to the laws of the company’s country of origin, which will tend to be the US or UK in most of our cases, but we would not disregard local laws and in the case of non-UK/US companies, obviously the local laws apply.”

Robert Mecreate-Butcher, partner at Pinsent Masons says: ‘If an employer is looking at carrying out checks beyond UK jurisdictions, it is safe to assume they can expect similar legislation to Europe bearing in mind some of the rights enshrined in the Human Rights Act. If a UK employer applies a less stringent approach, it is potential race discrimination. There have been some race discrimination cases where some people with foreign qualifications have been treated less favourably.”

In Europe, the Council of Europe’s Convention for the Protection of Human Rights and Fundamental Freedoms gives an individual the right to respect for their private and family life, their home and correspondence. In UK law, this right is enshrined in Article 8 of the Human Rights Act 1988, which came into force in October 2000.

In the UK, the Data Protection Act 1998 does not prevent employers carrying out pre-employment checks, but there are a number of procedures employers should follow. Part one of the Employment Practices Data Protection Code on recruitment and selection sets out a number of recommendations.

“There are three main benchmarks in the code for employers to consider: they need to give information to applicants as early as possible in the process so they know what is intended; they need to make sure actual checks can be justified by reference to the position, with checks conducted on a van driver different to those for a board director, for example, and they should give the individual a chance to make representation on any adverse finding,” says Shamsee of Baker & McKenzie.

Shamsee warns employers not to make assumptions: “CV inconsistencies and discrepancies such as job title or salary might be a mistake on HR’s part or an employee taking into account annual bonuses. Employers should always give applicants a chance to set the record straight.”

Employers should make sure they comply with data protection laws affecting the storage of personal data. The UK’s Data Protection Act, for example, only allows employers to keep information obtained by a vetting exercise for six months.

Data protection

Where screening involves transferring data between countries, employers should comply with privacy protection standards such as the European Commission’s Directive on Data Protection. This prohibits the transfer of personal data to non-European Union nationals who do not satisfy the European “adequacy” standard for privacy protection. Because of the different approaches to privacy in the UK and the US, the US Department of Commerce and the European Commission have developed a “Safe Harbour” framework. US companies who certify they are Safe Harbour compliant offer adequate privacy protection as defined by the Directive.

More companies are turning to vetting agencies, particularly when detailed checking is required, such as for senior management roles, posts involving handling large sums of money or where security is a high priority.

Carrying out extensive checks, which can often be performed in more depth by agencies, can mean employers escape being hauled through the courts by troublemaking employees. Bailey recalls a recent case of a man who had five employers in an eight-year period. RWC discovered he had filed for constructive dismissal upon leaving every employer, receiving a large payout in one case.

Employers need to make sure any third party they use to screen candidates complies with the law. They should make sure applicants are shown the final report, giving them a chance to refute information and that the depth and range of checks are in keeping with the nature of the job. Agencies typically carry out credit reference checks if a role involves handling cash or dealing with accounts. This type of check could be viewed by the law as too heavy-handed for secretarial posts, for example.

Some vetting agencies carry out criminal record checks but they do need to be registered as an umbrella company with the Criminal Records Bureau, as are NFD, Kroll and Zephon agencies.

Agency reference checks

In the UK, the Conduct on Employment Agencies and Employment Business Regulations, which came into force last April require agencies to screen candidates adequately, giving employers information on why they might be unsuitable. Agencies should also pass on any information they later obtain showing that the person might after all be unsuitable, for up to three months.

Another reason why employers are carrying out more behind-the-scenes checks and turning to agencies is the changing role of references. Traditionally checking references has played a central role in selection but this is changing.

“There is a lot of case law covering the potential liability of the party providing the reference so there is a reluctance to provide anything beyond something bland. Effectively if an employer makes any comment about performance, it has to be warts and all, otherwise they can be sued for leaving things out. Therefore references are likely to be much less useful, giving employers more reason to use agencies to add to verification of candidates,” says Mecreate-Butcher of Pinsent Masons.

In the case of Spring v Guardian Royal Exchange Assurance, the employer was held to have breached its duty of care to a former employee by preparing an inaccurate reference which damaged Spring’s employment prospects. In the case of Cox v Sun Alliance, the Court of Appeal found Sun Alliance liable in providing a negligent reference. Cases such as Bartholomew v London Borough of Hackney have made it clear that employers have a legal obligation to provide references which are fair, true and accurate, although they do not have to be comprehensive and full.

Carrying out extensive screening will help employers meet the requirements of Section 8 of the Asylum and Immigration Act 1996, which makes it unlawful for employers to employ anyone without permission to work in the UK. Doing so could mean facing fines of up to £5,000 per illegal employee.

But employers need to make sure they do not fall foul of the Race Relations Act 1976 by failing to consider applicants just because they sound or look foreign.

Whichever vetting approach employers choose, it is important to make sure they know what to do in the case of adverse findings. “Far too many companies fall down by starting up a screening policy but not putting anything in place for when they find something unusual or wrong. Screening is a matter of teamwork and not just relying on a report from an agency,” says Williamson.

Source: Data Protection Act, Employment Practices DP Code Part 1: Recruitment and Selection

Tip box

  • Only vet candidates where there are significant risks to the employer or others, and where there is no less intrusive and reasonably practicable alternative

  • Only vet successful applicants comprehensively

  • Provide information about any possible vetting on all recruitment material, explaining the nature, extent and range of sources used

  • Eliminate any verification that consists of general intelligence gathering, focusing screening on furthering particular objectives

  • Make sure the recruitment decision is not based solely on information which may be unreliable

  • Ensure staff involved in screening know what to do if discrepancies are revealed and build this into policy

  • Notify the applicant if information received jeopardises their chance of being appointed and allow the applicant to respond

  • Brief those involved in vetting to avoid them discovering information about a third party unnecessarily

  • If you need to release documents or information from a third party, secure a signed consent form from the applicant

  • Make sure information is only sourced where it is likely that relevant information will be revealed

  • Make sure an applicant’s family or close associates are only approached if this is justified as an exceptional case

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    i need form for backgeound protectino