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Recruitment business ordered to pay compensation |
A recruitment business was ordered to pay $160,000 compensation after it recommended an manager who had been a bankrupt and a fraud. The recruiter told its client that it had checked the manager's references when it had not done so adequately. The NSW Court of Appeal said that the recruitment contract contained an implied term that the recruiter would do thorough background and reference checks on candidates for employment. |
Driver Recruitment was engaged by Wedeco to find an Asia Pacific sales manager. Ms Holt worked for Driver Recruitment. Her search located Stephen Riddell. |
Mr Riddell's CV cited employment with Tyco until mid-2003, but he left there in March 2003. Ms Holt called Tyco to get a reference. Both referees told Ms Holt that Mr Riddell no longer worked for Tyco, they could not discuss Mr Riddell's performance and that Ms Holt should speak with another Tyco manager, the candidate's supervisor. However, Driver Recruitment never contacted the supervisor. The supervisor was called to give evidence, and told the court that if he had been contacted, he would not have given a favourable reference - he had been given two warnings and the supervisor was about to recommend his dismissal. |
Ms Holt told Wedeco: "He is working for Tyco… I will check out his references…I will check with Tyco what he is like and his CV references when available." Wedeco said: "We want a good background check and the best available persons." Ms Holt said: "I will get the references from the CV checked out and follow up with the previous employers." A few weeks later Ms Holt told Wedeco: "I have now checked out Stephen's references and everything stacks up". |
The basis of liability was breach of contract, negligence and misleading or deceptive conduct under the Trade Practices Act, 1974. The damages included:
- reimbursement of the manager's salary
- the recruiter's fee
- credit card and project fraud
- travel expenses in responding to complaints about the manager
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| The lesson for recruiters is that they should ensure that they do thorough background and reference checks on all candidates and that they tell their client the result of those checks. Recruiters should ensure that their retainer sets out the parameters of their reference checking, and if an ex-employer refuses to give a reference, must let the client know the reason why. |
