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Episode 110 - What responsibility should an agency accept for background checking?
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Episode 110
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Transcript
Bullhorn's AI solutions at TalentX
00:00:08
Speaker
Bullhorn is a TalentX partner again this year. Make sure you visit their stand and ask about the special offers, even if you are not a customer. Grab one of their trademark squeezy bulls and check out Bullhorn's AI Everywhere solutions for recruitment agencies.
00:00:23
Speaker
See you at TalentX this Thursday, the 22nd of May at the ICC in Sydney.
Australia's job growth and unemployment
00:00:30
Speaker
And this is the news for the 20th of May, 2025. Adele Last.
00:00:35
Speaker
Australia's unemployment rate held steady in April as total employment grew by 89,000, a much stronger jobs growth than had been forecast, and nearly two and a half times the average monthly growth rate for the past 12 months.
00:00:47
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The unemployment rate remained at 4.1% in seasonally adjusted terms, and the participation rate jumped 0.3 points to 67.1%, according to the April labour market update released by the ABS last Thursday.
00:01:02
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Full-time employment increased by $59,500 to million and part-time employment increased by $29,500 to $4.6 million. Growth in female employment was 2.7 times greater than the growth in employment for men.
00:01:17
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The ABS data shows employment has grown by 390,000 2.7% over the past months. Trimble ahanz economists aaron luck and adelaide trimble said the resilient job market, along with last week's stronger wage data, will impact discussions about whether to cut or hold the cash rate next week.
Scandal at Slater & Gordon
00:01:37
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It's been revealed that the former payroll manager at law firm Slater & Gordon, allegedly the sender of an all-staff email that contained staff salaries and performance ratings of over 900 staff members, was previously jailed for fraud offences.
00:01:53
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Bridget Maddox, then known as Bridget Jones, served two years in prison for stealing more than $300,000 from former employers in 2017. She was also convicted of defrauding a law firm in 2007, and in 2014 she received a suspended sentence for misusing four corporate credit cards while employed as an administration assistant.
00:02:15
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The judge at her 2017 trial said Jones showed an entrenched pattern of dishonesty and believed she was entitled to steal because she had had a tough life. The court heard Jones had a personality disorder and reported a history of depression, drug and alcohol use and prescription drug abuse.
00:02:33
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The court also heard Jones' record of duping her employers dated back to 2006 when she was placed on a good behaviour bond for fraudulently using credit cards while working at a call centre.
00:02:46
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Fallout from the scandal has continued with former Slater & Gordon Chief HR Executive Mari Ruiz Matheson last week filing the Victorian Supreme Court against her former employer. Ruiz Matheson is claiming she was unfairly left as the public face of the scandal, alleging the firm was aware the former payroll manager had a criminal mind and failed to take protective steps in light of this risk.
00:03:09
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Ruiz Matheson was previously responsible for overseeing an investigation into Maddox, Nii Jones, who was dismissed over the improper handling of a $200 gift voucher in November last year.
00:03:20
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Ruiz Matheson alleges she received a text message from Maddox, Lee Jones, days after the explosive email breach, which stated, "'It brings me an amount of glee to see you being accused of something you most likely didn't do, given what you did to me.
00:03:35
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i suggest, no, actually, I warn you, keep my name out of your mouth.'" Maddox had previously denied involvement in the email scandal and said the real story was corruption at the law firm and the covering up of a historical underpayment.
00:03:53
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It's unknown whether a recruitment agency was used by Slater & Gordon to hire Maddox. The extent of background checking undertaken by Slater & Gordon at the time of Maddox's hiring is also not known.
Merger of Risk Collective and Ready Set Recruit Legal
00:04:05
Speaker
After years of informal collaboration, Risk Collective and Ready Set Recruit Legal are merging. Risk Collective's Director Amy Towers and RSRL's Director Martin Richardson officially announced the merger on LinkedIn last week.
00:04:20
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Risk Collective, based in Brisbane, was established in late 2014 and specialises in workforce compliance and workplace culture consulting, covering industrial relations, work health and safety and work cover and injury management.
00:04:33
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Melbourne-based ah RSRL has been operating for six years and specialises in legal advice for employment contracts and terms of business. Persol, the Japanese owner of local brands ProGrant and Persol Kelly, reported revenue increase 9.4% for the full year ended 31 2025 to billion when compared the same period 2024.
00:04:51
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to nine point nine billion u s dollars and compared to the same period in twenty twenty four Operating profit was up 10.3%, adjusted was up and adjusted profit was up million.
00:05:08
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aacc revenue was up fifteen point three per percent to three point two billion us dollars ASX-listed Hime reported revenue of $7.2 million dollars for the third quarter ended 31 March 2025, down 5.6% from the corresponding period in the previous year.
00:05:27
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Revenue declined as a result of delayed projects at key clients. Jaime's Q3 revenue declined 3.7% quarter-on-quarter due to a slowdown in global projects.
00:05:39
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Gross profit of $630,000 for the quarter was 5.8% lower than the previous corresponding period.
Bias in AI recruitment tools
00:05:47
Speaker
Job candidates being interviewed by AI recruiters risk being discriminated against if they speak with accents or are living with a disability, a new study has warned.
00:05:57
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The use of ai video recruitment has grown in recent years. Higher View reported in February that among 4,000 employers surveyed worldwide, AI use had risen from 58% in 2024 to 72% in 2025.
00:06:12
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Australian Research published this month estimates the use is significantly lower, about 30% in Australian organisations, but expected to grow in the next five years. However, the paper by Dr Natalie Sheard, a University of Melbourne law school researcher,
00:06:27
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warns the use of ai hiring systems to screen and shortlist candidates risks discriminating against applicants due to biases introduced by the limited data sets that AI models were trained on.
00:06:38
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Data sets based on limited information that often favours American data over international data presents a risk of bias in those AI systems, Sheard said. One AI systems company featured in Sheard's research, for example, has said that only 6% of its job applicant training data came from Australia or New Zealand,
00:06:56
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and 36% of the job applicants in the training data were white. Sheard said there was little to no transparency about the AI interview systems used for potential recruits, the employer or the recruiter.
00:07:09
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Research participants told Sheard that non-native English speakers or those with a disability affecting their speech could find their words not being transcribed correctly and would then not be rated highly by the recruitment algorithm.
00:07:21
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No case of AI discrimination has yet reached the courts in Australia, Sheard said. with any instances of discrimination needing to go first to the Australian Human Rights Commission. After two months of decline, SEEK reported job ad volumes rebounded in April, rising 1.8% month-on-month, with the annual rate of decline at its lowest point since December 2022.
00:07:43
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By state and territory, Queensland experienced the strongest month-on-month growth, up 7.6%.
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Hospitality and tourism led job ad growth with a 9.8% rise month-on-month, likely bolstered by seasonal hiring patterns. Healthcare and medical grew 3.8% month-on-month, reversing its significant drop from the previous month.
00:08:06
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Applications per job ad rose for a second consecutive month, up 2.6% a 16.2% higher year-on-year. and a sixteen point two percent higher year on-year The SEEK April results were supported by the Jobs and Skills Australia Internet Vacancy Index April update, which reported national job ads increased by 4.5% in April to stand at 216,400.
00:08:28
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Last Tuesday, tech giant Microsoft announced it was laying off nearly 3% of its global workforce, but the number of jobs in the ANZ region impacted was not publicly announced. The tech giant didn't disclose the total amount of jobs lost, but it's estimated to be about 6,000 people.
00:08:45
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Microsoft employs 228,000 full-time workers as of last June. About 55% of those workers were in the U.S. In Microsoft's home state of Washington, software engineering was by far the single largest job category to receive layoff notices, making up more than 40% of the roughly 2,000 positions cut in the state, according to documents review reviewed by Bloomberg.
00:09:09
Speaker
Relatively few customer-facing roles such as sales or marketing are understood to be impacted, although Microsoft declined to comment. The cuts come after CEO Satya Nadella said last month that up to 30% of the company's code was now written by ai The latest layoffs come just weeks after Microsoft reported strong sales and profits that beat Wall Street expectations for the January-March quarter, the fourth consecutive quarter in which Microsoft has exceeded earnings estimates.
New Zealand migration trends
00:09:38
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Tough economic times in New Zealand are hurting the country's population growth, with Statistics NZ last week announcing the country's net migrant numbers dropped by nearly three quarters year on year.
00:09:48
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The latest data released from Statistics NZ last Wednesday reveals that the net migration gain for the year to March 2025 dropped to 26,400 down the previous year and it represents an drop from net migrants in the year to march twenty twenty three just over seventy thousand new zealand citizens permanently left the country during year to march twenty twenty five with only 25,000 returning for a net loss of around 45,000 citizens.
00:10:22
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StatsNZ said around three in every five citizens leaving were relocating to Australia, primarily due to the strong job market and higher wages. 39% of all departing New Zealanders were between the ages of 18 and 30. I've got some late breaking news for you, Ross.
Adele's collaboration with Roy AI
00:10:41
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Okay, and what's that, Adele? It's news of a personal nature. i wanted to announce that I will be working with an organisation called Roy AI. Right.
00:10:53
Speaker
And who's Roy AI and what do they do? So Roy AI has been around for a few years. Some people would know about them. They are a platform that does data automation and marketing support, a really interesting piece of tech that I have been very interested in watching has been exclusively available to job-added customers and is now going to be available across the market. So I'm excited to help them grow that part of their business.
00:11:21
Speaker
Okay, but are you leaving me? No, no, i will definitely be still doing the ah RNA podcast. You haven't got rid of me just yet. Oh, good. So ah RNA with Ross and Adele remains ah RNA with Ross and Adele. That's very good news.
00:11:37
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Thanks. Excellent. Well, stay tuned for question of the week.
00:11:54
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Question of
Agency responsibility in background checks
00:11:55
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the week. What responsibility should an agency accept for background checking? And this one's come about from a recent news article we just reported about Slater and Gordon and their former payroll manager,
00:12:08
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who has a history of convictions or history of um issues with fraud related to her employer, but an actual conviction which saw her spend two years in jail for stealing $300,000 from a former employer.
00:12:24
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What are your thoughts, Ross? It's a lot more common than people think. And these high-profile cases are more the exception than the rule. in terms of it grabbing people's attention, but it does happen.
00:12:37
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And the more senior somebody is, the evidence shows or the research shows, the more likely they are to attempt to get away with representing themselves in a fraudulent way. So,
00:12:51
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um For example, a former CEO of Parramatta City Council was stood down and ultimately sacked because an independent investigation into the claims he'd made about his employment and education were proven to be ah incorrect.
00:13:08
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Incorrect to such a degree that represent a false represented a falsification all of his ah background and therefore he was sacked. And there are many of these sorts of examples.
00:13:22
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And unfortunately, it points to what I would regard as generally pretty poor culture across Australian organisations when it comes to background checking and reference checking.
00:13:37
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So is the responsibility all on the client? Is that what you're saying? It's not all on the client. As recruiters, we should accept responsibility and the degree to which will depend upon the role and the conversation that we've had with a client. But certainly, the absolute minimum that we should do is to reference checks on a candidate.
00:14:07
Speaker
But there are many other types of checks. Perhaps I'll just read out the types of checks that could be done. Firstly, academic transcript or academic record, ah someone's qualifications or memberships of professional bodies, electoral role, birth certificate, criminal history, a police check, bankruptcy,
00:14:30
Speaker
driver's license or driving record check, Supreme Court or civil litigation check. You could check with ah do a reference check with a current or previous manager, do employment verification with HR, a credit check, work eligibility check to make sure that the person has an appropriate visa if they're not a citizen, and an ASIC search of banned and disqualified persons.
00:14:54
Speaker
Well, that's a pretty extensive list. And like you said, perhaps it needs to be relevant to the type of role that the person is being hired for. But, you know, I would hazard a guess that many recruitment agencies aren't doing anywhere near the extent of that kind of list. They're not checking all of those things for most roles that they're placing. So is there a bit of ah a cultural issue in our own sector that, you know, we just do reference checks, it's all on the client, then if they hire the person and it's a bad hire, ultimately we don't we don't wear that responsibility. Should we beware here?
00:15:27
Speaker
Well, there's certainly a culture, I think, broadly about don't ask and therefore I'm not going to receive a responsibility to do more work than I really want to do to make this placement.
00:15:40
Speaker
I suspect there is a bit of that and certainly by no means am I suggesting that all of those checks should be done. That would be crazy. But as a recruiter of accountants, I always reference checks.
00:15:52
Speaker
with the person's previous manager or current manager, at least two, certainly always check their professional qualifications. If they asserted that they had CPA or CA qualifications, always check those.
00:16:06
Speaker
And ah work, the right to work, if they were not an Australian citizen or asserted, or it was obvious from their background they weren't an Australian citizen, then I needed to verify that they had work rights for Australia.
00:16:21
Speaker
Occasionally, i would do a police check, but I would not do that of my own volition. I would do that based on the request of the client. Although when I think about that, I think I only did one of those um once. And I think there were other occasions where the client did the police check themselves. But that that was That was pretty much it. I didn't do other checks.
00:16:46
Speaker
And I know, for example, if you're recruiting in the federal government, then certain departments, for example, the Department of Defense, have very strict security clearance ah levels that you need to pass to gain any sort of employment there.
00:17:02
Speaker
But in a private organisation, really, they could potentially employ all of their staff with no reference checks or any sort of check. So it varies greatly. And I think that's probably, if we go back to the original question of what is our responsibility, I think it is about being the expert advice, you know, giver to your client, the consultant to your client about what the risk involves if you don't do these checks. So ultimately for most recruiters, like you said, they'll either wait till the client asks for it in order to not do any greater work or if they don't see the need for it. But the reality should be that we should be mitigating the risk for our clients. So we should be offering perhaps that extensive list
00:17:41
Speaker
to our client and saying, this is the range of checks that can be done. ah Would you like, you know, which of these would you like us to to go ahead and do or organise for you or which will you do so that the client is really, I guess, getting that extra coverage? I think there is some responsibility on our part to make sure some background checks are being done, whether we're doing them or the client.
00:18:01
Speaker
For sure. We assert that we are recruitment and employment experts. And if we're making that assertion, and by the very nature of us being recruitment consultants and saying, please give us a vacancy to recruit, then i think the minimum responsibility that comes along with that is at least to reference checks to validate that the candidate is who they say they are.
00:18:28
Speaker
And certainly having a conversation with the client, am I doing the checks? Are you doing the checks? Is a third-party background checking company doing those checks? Because it I couldn't find the case...
00:18:40
Speaker
when I did a search online, but I certainly recall that a recruitment agency, whose name escapes me, was, ah they had findings against them when it came to the action that a client took against them with respect to, I think, the recruitment fee and maybe some form of damages when it was proven that the recruitment agency hadn't done any background checking with respect to that ah candidate. And I'm pretty sure the judge made a ruling based on the fact that that, you know, the minimum expectation would be a reference check on the candidate and that was not done. Therefore, the recruitment agency was found either liable
00:19:23
Speaker
fully or certainly to a greater degree, had a greater degree of liability because they'd failed to do any sort of background checking on the candidate that they referred that was subsequently hired.
00:19:37
Speaker
And we're talking here about a lack of checking altogether, but, you know, there are some people that will say, well, I do, you know, a reference check, you know, what more can I do? It's got to be good enough. And look, we do speak to the quality of the reference check actually in a previous podcast episode. So if you want to go back and check out episode 23 on our library, you'll find ah discussion we have about how to do a good quality reference check.
00:20:00
Speaker
So that's another thing I'll mention, not just doing the reference check, but you've got to actually make sure you are verifying the information correctly and asking fairly detailed questions. It's not a checkbox exercise.
00:20:11
Speaker
If that's what you're doing in your organisation, i think you should um review that and have another look at it because it can leave you exposed there as well. So I think there is greater responsibility than agencies would perhaps assume. And as we see these cases come to light in the media, ah there is that risk, like you're mentioning of the other case, um where an agency was considered liable. So we do need to be careful.
00:20:36
Speaker
And ultimately, it's your personal reputation as a recruiter and the agency that you work for's reputation that's at stake here. Because you can be sure that the client will either explicitly or implicitly blame you or the agency you work for as being...
00:20:57
Speaker
negligent or lacking in professionalism or probably at least not providing the minimum level of service that would be expected from a recruitment agency if things go south with a candidate who was proven ultimately to have gained the position by some sort of deception because what they were asserting about their education or employment history or the referees they offered up were in some, to some degree, fraudulent.
00:21:28
Speaker
Yeah, we definitely need to take heed of this case, the recent one with Slater and Gordon, and learn the lessons. Well, unfortunately, Adele, it only takes one. It only takes one candidate that slips through the net and you represent that person and they're hired and they're ultimately found out to have misrepresented themselves or at worst have misrepresented themselves and then gone and caused some material harm to the employer for it to be, well, catastrophic is probably too strong a word, but to have a severe impact on
00:22:03
Speaker
on your reputation as a recruiter and a recruitment agency. And a very well-known recruitment agency, whose name I won't mention, had their good name, and it was a good name, dragged through the mud because they'd failed to conduct a background check on a doctor ah that then subsequently, very sadly and unfortunately,
00:22:29
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was the ah culprit in, um shall we say, unintended deaths at a hospital quite a long time ago. i don't want to say anything more than that, but the recruitment agency suffered reputational damage for a very long time after that.
00:22:51
Speaker
So in closing, I'd say be on the front foot. Don't assume anything about background checking. Talk to your client about the background checking that they expect or the background checking that you're undertaking and ensure that there is a common understanding. And if you do that, you're going to minimize the likelihood that there's blowback on you when things go south.
00:23:15
Speaker
but so