Pre-employment checks – a convergence of privacy and employment issues

20 Feb 2020

Author: Anna Jackman

The Employment Relations Authority[1] and Human Rights Review Tribunal[2] have given clear guidance about the importance of ensuring that pre-employment checks are undertaken prior to certain terms being agreed between the parties (or there being notification that employment offers are contingent on those checks), and that those checks are also made in accordance with privacy laws.

The facts
Dana Gin-Cowan was employed at Katui Early Childhood Learning Centre (“Katui”) between May 2010 and February 2015.

On 4 February 2015, following meeting with a number of key people at Waatea Early Childhood Centre (operated by Te Whare Wananga O Muma Limited (“Muma”)) over 3 and 4 February 2015, she signed an Employment Agreement for a new role working with Muma. On 5 February 2015, she resigned her position at Katui. The Employment Agreement was not contingent on pre-employment checks being undertaken by Muma and contained a clause which stated that the Employment Agreement “is the complete agreement and replaces all previous written or oral agreements or understandings”.

On 8 February 2015, Ms Gin-Cowan was asked to provide a copy of her C.V. That C.V included referee details for an employee (Ms Tahere) of Katui. The telephone number that was provided was the office number for Katui. A representative from Muma called the number and asked to speak to Ms Tahere. Ms Tahere was not available, so the representative spoke to another employee, and asked whether she would provide a reference for Ms Gin-Cowan. The employee replied that she would not provide a reference and volunteered that she and Ms Gin-Cowan did not get on. When asked whether she would re-employ Ms Gin-Cowan, she said she would not. That employee then provided details of the directors of Katui for the representative of Muma to call. Although there is some dispute about what was said during that phone call, it was apparent that the comments were unfavourable.

Ms Gin-Cowan’s employment with Muma was to commence on 9 February 2015, with that being the date set out in the employment agreement and confirmed via text message to Ms Gin-Cowan.

However, when Ms Gin-Cowan arrived at work on 9 February 2015, she was advised that her references had been unsatisfactory and that her employment would not commence.

Claims in the Employment and Privacy (Human Rights) jurisdictions
Ms Gin-Cowan raised claims in both the Employment Relations Authority against Muma and with the Office of the Privacy Commissioner against Katui.

Employment Relations Authority
The issues for the Employment Relations Authority to determine were whether or not Ms Gin-Cowan:

Was in an employment relationship with Muma;
Was unjustifiably dismissed.

The Authority determined that the employment relationship commenced on 9 February 2015 and her employment was terminated the same day. The Authority also determined that the employment agreement contained a valid trial period (which meant she was unable to raise a personal grievance claim for unjustified dismissal). However, Muma did not provide notice to Ms Gin-Cowan. Accordingly, the Authority found that Ms Gin-Cowan was entitled to be paid her 4 weeks’ notice.

Privacy Complaint
The complaint to the Office of the Privacy Commissioner was lodged on 26 March 2015. The matter was investigated, and the Certificate of Investigation was released on 11 April 2016. That Certificate recorded the Commissioner’s opinion there was a breach of Information Privacy Principle 11 (related to the limits of disclosure of personal information) and an interference with Ms Gin-Cowan’s privacy. In October 2016, the Director of Human Rights Proceedings filed proceedings under the Privacy Act 1993.

Principle 11 provides that an agency that holds personal information shall not disclose the information to a person or body or agency unless the agency believes, on reasonable grounds (among other things) that the disclosure is authorised by the individual. Under s66 of the Privacy Act, the enquiry then turns to whether the action was an interference with privacy and the action that caused the interference caused the individual harm.

The issues for the Human Rights Review Tribunal to determine were:

Was the information disclosed by Katui about Ms Gin-Cowan personal information? If so:
Did Katui believe, on reasonable grounds, that the disclosure was authorised by Ms Gin-Cowan. If not:
Did the disclosure cause one of the forms of harm set out in s66, and if so, what remedy should be ordered.

The Tribunal found that the information provided by the representatives of Katui to Muma informed, instructed, told or made Muma aware of performance concerns, and it was personal information notwithstanding the fact that it contained opinion including suitability for employment/working relationships.

Given the working history between the representatives from Katui and Ms Gin-Cowan (which it was recorded had at times, been difficult), the Tribunal determined that Katui’s contention that it’s representatives believed on reasonable grounds that they were authorised to disclose information about Ms Gin-Cowan was unsustainable.

As to the harm, Ms Gin-Cowan claimed that the disclosure of her personal information caused her pecuniary loss, and resulted in significant humiliation, loss of dignity, or significant injury to her feelings. Ms Gin-Cowan sought $30,000 in compensation and an award of lost wages.

The Tribunal considered that the loss was related to Ms Gin-Cowan’s employment with Muma, and that as the employment agreement was subject to a 90-day trial period, the unlikelihood of Katui providing a written reference, that may have been fatal to her employment in any event. Given that finding, lost wages were not awarded.

The Tribunal also considered that Ms Gin-Cowan contributed to the situation by providing the office number for Katui, and not being explicit about who the representatives from Muma were authorised to speak to.

The Tribunal determined that the significant humiliation, loss of dignity and injury to feelings was largely attributable to her own, and Muma’s actions, rather than Katui’s. Accordingly, Katui was ordered to pay the sum of $3,000 as remedy.

Timing of claims
The employment claim was heard on 22 December 2015, with an oral determination being provided that day. The written determination was provided on 5 January 2016.
The Privacy complaint was first raised with the Office of the Privacy Commissioner on 26 March 2016, with proceedings being filed in the Human Rights Review Tribunal in October 2016. The hearing was held on 26 and 27 March 2019, with a written decision being provided on 19 December 2019.

Summary
These cases show how claims can be traversed in dual for a (albeit in this case against two separate employer parties), and the respective timing involved. They also confirm the importance of having clear pre-employment checks and balances in place, and ensuring the prospective employee is aware of how those may affect any conditional offer of employment.

In terms of privacy matters, employers need to ensure that they are authorised to speak to personal information about an existing or current employee prior to making statements about that employee.

The employment team at DTI Lawyers is happy to provide comprehensive advice on pre-employment checks and privacy matters.

[1] Gin-Cowan v Te Whare Wananga O Muma Limited [2016] NZERA Auckland 3
[2] Director of Human Rights Proceedings v Katui Early Childhood Learning Centre Limited [2019] NZHRRT 55

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Pre-employment checks – a convergence of privacy and employment issues

About the Author
Anna Jackman
Anna Jackman is a specialist Employment Lawyer and Associate at DTI Lawyers. You can contact Anna at anna@dtilawyers.co.nz