We are looking to appoint a non-executive director to help us through the economic crisis and now have a shortlist of three. Which background checks should we carry out and how would we go about it?
Enhanced profiling is not an exercise you would be wise to carry out yourself, so ask a corporate intelligence specialist for assistance.
The first step is to tell the candidates that you want to carry out personal due diligence – it should not be a covert operation. If they refuse to disclose any information, consider this a “red flag”.
Your adviser would ask all candidates to fill in a simple questionnaire and would carry out a series of checks to ensure details, such as professional qualifications and employment history, are accurate. They should also look at criminal records, credit ratings and litigation history.
If the basic level of checks throws up anomalies, you should ask for further investigations. These could include interviews with former colleagues as well as research into the candidate’s lifestyle.
Only ask for information that is genuinely relevant for the position and remember: there is usually no smoke without fire.
Mike Wright is managing partner at BTG Intelligence, which is part of the Begbies Traynor Group, an insolvency practitioner
Forced to reveal pay to CSA
I have recently been contacted by the Child Support Agency which has requested the salary details of one of our employees. Am I obliged to give this information?
The Data Protection Act 1998 (DPA) governs the processing of personal data relating to ‘data subjects’ by ‘data controllers’.
As an employer, you are the data controller of personal data relating to your employees and you have a duty to ensure that you comply with the eight principles of data processing under the DPA. Disclosing your employees’ data to a third party without consent would normally constitute a breach of the DPA.
However, there are exceptions and you do not have to obtain an employee’s consent to disclose their data in certain circumstances, including if you are required to do so in order to comply with a legal obligation.
So, does a request from the CSA qualify as a legal obligation? The Information Commissioner has published specific guidance on this matter. The Child Support (Information, Evidence and Disclosure) Regulations 1992 gives the CSA significant statutory powers, including the right to require certain information from employers.
Not only are you legally required to provide this information to the CSA, but the Information Commissioner has confirmed that you will not be subject to repercussions under the DPA by doing so.
Pam Loch is the founder of Loch Associates, a specialist employment law firm
Good practice on salary freeze
I want to impose a freeze on all salaries for the next 18 months. Will I need to formally announce it to staff and are there any legal or contractual issues in doing so?
If there are guaranteed pay rises in your staff contracts, then you are legally bound to pay them. The only risk-free way to address this would be for the staff to agree freely to a contractual variation removing the guaranteed pay rise.
However, guaranteed pay rises are unusual. It is more likely that your contracts are either silent on pay rises or refer to salary reviews, which do not automatically mean a pay rise will be granted. In that case, an 18-month salary freeze would not be a breach of contract.
However, for employees who are paid the minimum wage, you will be obliged to comply with any increases in the minimum wage irrespective of the salary freeze.
There is no legal requirement to announce the freeze to staff but it would be good practice to do so.
David Brown is an associate at Simpson Millar, a law firm
Jail threat over injury at work
I am on the board of a construction company employing 150 people. I have heard that, under new legislation, I may face criminal charges if one of my employees is injured at work following a breach of health and safety regulations and I could go to jail if convicted. Is this true?
In short, yes. Under the Health and Safety at Work Act 1974, a director or senior manager can be liable for failing to take reasonably practicable measures to ensure the safety and welfare of employees at work. It must, however, be shown that you consented, connived or were guilty of neglect in allowing an offence to be committed by your company.
Legislation that came into force in January significantly increased the penalties for breaches of health and safety offences, including duties to third parties such as contractors and members of the public. Offences that previously only attracted fines are now punishable by imprisonment of up to two years. Also, the level of fines in the magistrates’ court for breach of the regulations has been raised from £5,000 to £20,000 per offence.
The Health and Safety Executive has emphasised that these powers will be used “sensibly and proportionately”, and it seems that only the most serious and persistent breaches of health and safety law will result in imprisonment. Nonetheless, the new act sends a clear message that businesses will suffer harsher consequences for failure to implement proper systems than in the past.
Now might be a good time to review policies and update training to ensure everyone is aware of their health and safety duties.
Kerry Gwyther is a partner and head of the corporate defence team at TLT, a law firm
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