The launch of the National Staff Dismissal Register at the end of this month has caused quite a stir in the business world. Kerry Waters and Emma Roe explain the legal implications of the initiative.

A National Staff Dismissal Register for retail employers is expected to go live shortly. The register is a commercial initiative championed by the Action Against Business Crime (AABC) Group. It already boasts some high profile supporters, including Harrods, Mothercare and Selfridges, who, it says, have already signed up.

The register will apparently hold data on individuals who are dismissed for prescribed ‘dishonesty’ reasons, including theft and/or damage, and on individuals who resign part way through a disciplinary process or investigation based on such reasons. The organisations that have signed up to the scheme will have access to this information and are likely to use this in their employee vetting process.

Although this is a commercial initiative and not every organisation or employer in the country will take part in the scheme, the fact that high profile companies have already apparently signed up, shows that organisations are taking this scheme seriously. But at what price?

AABC state, in a joint press release with Hicom Business Solutions, that:

“Investigation of dishonesty is time consuming and costly and will be of limited deterrence if future employers are unable to properly identify potentially dishonest staff to ensure that they are not able to obtain employment by evading internal vetting processes.”

Whilst many will agree with their commercial sentiments, the rose-tinted spectacles do not need to slip too far to see the many potential problems in this proposed ‘solution’.

Potential for abuse

So far, it seems there will be no regulatory body monitoring the listings. Since individuals can be included on the register without any trial or criminal conviction, there is a risk that it could be abused by employers.

There is a real risk that individuals could be ‘blacklisted’ from organisations that have access to the information. Yes, an employee has the protection of unfair dismissal claims and could ask for their inclusion on the register to be changed or removed but, by the time a tribunal has ruled on any such issue, the damage may well have been done.

Although AABC refer to an employee’s inclusion due to allegations of ‘dishonesty’, where does the boundary start and end? It has been suggested that, alongside dismissals for theft and fraudulent acts (even though it is not necessary for the police to have been involved), an employee can be added to the register if they have caused loss to the relevant organisation or a third party – it is not clear whether this act needs to be dishonest or whether a mere mistake causing loss could lead to an employee being included.

Further, it is not clear what information will be recorded against an employee about the ‘dishonest act’ itself and whether or not the register will differentiate between the acts the individual was dismissed for. Will all individuals registered simply fall within the general ‘dishonesty’ heading, whereby some acts could be more serious than others, or will there be a description of the allegations and the findings made?

At the moment none of this is clear. The whole concept raises a lot of questions about an employee’s rights and how this register sits with existing laws relating to employee references, for example.

Serious damage

This register has the potential to cause serious damage to an employee’s work opportunities, which would appear, from the AABC comments above, to be intentional. If an employer writes a reference that is untrue or unfair then an employee may have a cause of action. It is likely that similar arguments may be used in time in respect of any untrue or unfair inclusions on the register.

However, the real problem with this register is the scope of access that potential employers will have to this information, which clearly is far more wide reaching than a reference that has been specifically requested. Further, we do not yet know who will have authority to include information on the register. Will it only be HR personnel, a director or other senior manager, or could anyone be able to make an entry? We understand that there will be password access to this register but that does not alleviate this concern.

Whilst there are many reasons for employees to be concerned about this register, it also carries risks for employers too (some of which have been highlighted above already). One such scenario is if an individual believes they have been dismissed (and subsequently put on the register) for a discriminatory reason (sex, race, disability etc), and points this out to a prospective employer who, after noting the register inclusion, decides not to employ that individual – it is certainly possible that it, along with the original employer, could then face discrimination claims with compensation uncapped.

In addition, if an employee feels that his or her reputation has been damaged by an untrue or unfair inclusion on the register, they may feel it worthwhile to pursue a defamation claim against the employer and anyone else who published the defamatory allegation. Anyone publishing allegations which could be considered defamatory exposes themselves to a claim for damages, legal costs and risks damaging their own business reputation with the publicity such claims can attract.

The Rehabilitation of Offenders Act 1974 is also likely to be relevant, as under this act ‘spent’ convictions can be ignored. A spent conviction should not therefore be used as a ground for dismissal or for not employing a person. If an organisation makes an entry on to the register that relates to this conviction, then they could find themselves being sued for libel if the employee can prove that it was made with malice. This also raises the question as to whether the register will be kept up to date, by whom and how long entries will be kept for.

Data protection

Employees may be oblivious to the fact that they are included on this register, which raises serious data protection issues. The details on the register (that employers will be able to search) will apparently include name, address, NI number, previous employers and may even include photos. With so much information in the hands of a commercial organisation, it does raise genuine concerns over potential identity fraud.

In a society where every phone call we make to our electricity supplier or bank seems to be ‘policed’ by the data protection legislation, you might be wondering how this type of register is even possible.

As the law currently stands, and without more information on how the register will work, it is difficult to see how the disclosure of this type of information is actually legal. However, an imminent change to that legislation may provide the answer. In October this year, a significant amendment to the Data Protection Act 1998 (DPA) is expected to come into force, which could pave the way for this particular type of national commercial register.

Normally an organisation must satisfy one of the conditions in the DPA in order to process sensitive personal information lawfully (and sensitive personal data includes information about the commission or alleged commission by an individual of any offence).

It seems that the amendment to the DPA will enable an organisation to argue that since its purpose is to prevent fraud, the processing of personal information and its disclosure to other organisations, is necessary to prevent fraud. It would seem, although it is far from clear, that an ‘anti-fraud organisation’ could be just about any organisation or person with that stated purpose.

This may be the legislative change that the AABC is relying on in order to disclose and process the fraud-based acts they are referring to (although it is unlikely to cover the activities which result in a loss to the employer).

However, the extent to which this new condition can be relied upon will depend on the interpretation of ‘fraud’. In addition, processing this type of information about an ex-employee would still need to be done in a way which satisfies all the other requirements of the DPA, but a significant hurdle to the disclosure of sensitive personal data may have been jumped.

The opportunities to abuse this new scheme are potentially endless. Employers who have already signed up, and those who are tempted to do so, should consider the potential consequences. The details of this scheme are hazy at the moment, to say the least, and the details that have been advertised about the register raise more concerns and questions, than answers.

In our opinion, both employers and employees, to whom this scheme will relate, should have cause for concern. If, or when, the scheme does launch it will be interesting to see what the true consequences are.

Kerry Waters is an associate and Emma Roe is a senior associate at Clarion Solicitors LLP