Employers are often asked to provide reference checks for current or former employees. Its common practice, but what obligations do employers have when they receive these types of phone calls?
The Privacy Act 1988 deals with how personal information about an individual can be collected, used and disclosed, and also sets out the Australian Privacy Principles. The APPs apply to Australian organisations and prevent the disclosure of personal information without consent. Personal information includes things such as an individual's name and address, which employers usually need to collect, and extends to sensitive personal information such as race, age, gender and religion.
However, when it comes to employee records, an exception exists under the law with regards to information that relates directly to the employment relationship between an employer and employee. This means is that if an employer is contacted by a person conducting a reference check, it will not be a breach of Australian privacy laws to provide that person with information relating directly to a past or present employee.
This is not to say that employers can disclose whatever they want because that person is or was an employee. A wise employer would do well to steer clear of discussing anything of a personal nature with the reference checker. Remarks should be kept to the employment relationship, which includes such things as the length of the employee’s service, the skills of the employee and their conduct at work. Disclosing a former employee’s home address, their religion or sexuality is unlikely to be covered by the ‘employment relationship’ exception.
By keeping any comments focused on the employment relationship, employers can confidently avoid any privacy breaches and also prevent the possibility of any other claims against them, like defamation, breach of confidentiality or misrepresentation. These types of claims may emerge if a disgruntled former employee discovers that they were unsuccessful at securing a new job because of the employer’s comments during a reference check.
Some employers have a policy precluding the provision of references altogether, and simply confirm whether or not the employee worked for their organisation. Whilst a little cold, this strategy does eliminate a lot of the risk, but be sure to tell the reference checker that it is a company-wide policy and not a reflection on their request regarding a specific employee.
Our recommendation for employers is to limit any remarks to employment matters, be clear and be honest. If in doubt, confirm the employee’s period of service and leave it at that.
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