Human Rights and Equal Opportunity Commission Website: Human Rights

DISCRIMINATION IN EMPLOYMENT ON THE
BASIS OF CRIMINAL RECORD

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Submission No. 34 - Westpac Banking Corporation

Introduction

HREOC has sought submissions from employers in relation to discrimination in employment on the basis of criminal record. As a financial institution, it is critical for Westpac to have employees who will behave honestly at all times. Westpac accordingly conducts criminal record checks in relation to many positions. However, Westpac agrees with comments made in HREOC's discussion paper which suggest that the whole issue of criminal record can give rise to misunderstandings and consequently discrimination on the basis of irrelevant or spent criminal records. Westpac would therefore support measures, in the form of either legislation or guidelines, which would assist employers in determining whether a criminal record is relevant or otherwise to the role and how employers should assess an employee's or job applicant's criminal record.

Westpac's Policy in relation to criminal record checks

Westpac conducts criminal record checks as part of its recruitment process for most, but not all, of its roles. There are two drivers for this policy:

Because Westpac is a financial institution, respecting the law and acting in accordance with it and honesty and integrity are key values which form part of its Code of Conduct and must be held by its employees; and
The Financial Services Reform Act 2000 (Cth) ("FSRA") requires employees holding particular roles to be of "good fame and character" or otherwise competent for providing financial services.

Code of Conduct

Acting with Honesty and Integrity

Westpac's Code of Conduct provides that:

"We are constantly judged by how we act. Our reputation will earn the respect it deserves if we act with honesty and integrity in all our dealings and do what we think is right at all times, within the legitimate role of the business.

Examples of the way we achieve honesty and integrity in our actions include:

We do not tolerate dishonest behaviour by our colleagues or customers.
We give accurate, honest and complete information to and (when appropriate) about our customers and other parties.
We do not use funds, information or property of the Westpac Group or its customers for our own benefit, nor do we assist others in such behaviour."

Westpac considers a high standard of honesty and integrity in all its employees is an inherent requirement of working for Westpac. Westpac employees have regular access to cash and process financial transactions every day. They are exposed to our customers' confidential financial and other information. To ensure our business is successful, our customers must have complete confidence in the integrity and honesty of Westpac, its processes and its employees. If an employee has a criminal record which indicates a lack of honesty and integrity (for example convictions for theft, fraud or violence) this suggests that the requirement of honesty and integrity may not be met.

The requirement of acting with honesty and integrity also becomes relevant in situations where employees have withheld relevant information from Westpac about their criminal record and the information has subsequently come to light from a criminal record check or by other means. In these cases may not be the criminal record itself but the fact that the employee has not been honest which has led to a decision to terminate the employee's employment or not to recruit the applicant.

Respecting the Law and Acting Accordingly

The Code of Conduct also provides that all Westpac employees must respect the law and act accordingly:

"It is essential that we comply with the laws and regulations in all countries in which we operate. Violations of laws and regulations can have serious consequences for the Westpac Group and the individual concerned (including criminal, civil and administrative sanctions). We comply with laws and regulations, not simply because they are law but because it is right to do so.

Examples of the way we achieve this principle include:

We comply with the Westpac Group's internal standards, which help us meet our ethical, legal and regulatory obligations and minimise risk to ourselves and the Westpac Group.
We respect the customs and business practices of the countries in which we operate, but do not compromise the principles embodied in this Code.
We discharge our authority (if any) to sign documents on behalf of the Westpac Group responsibly and our signature indicates that we have received and understood the nature of the document being signed and that it has been properly authorised.
We do not act outside our authority.
We do not make services or products available if we know that they will be used in relation to illegal activities.
We notify our manager or team leader of any breach of the law by a colleague in the course of their employment."

We consider that respecting the law and acting accordingly is an inherent requirement of working for Westpac or any financial institution. A criminal record indicates that in the past a potential employee has not met this requirement and raises a question about their suitability for employment with us.

Westpac's Obligations under the Financial Services Reform Act ("FSRA")

Responsible Officers

Section 913B of the Corporations Act ("the Act") (as amended by the FSRA) requires ASIC to be satisfied before it grants an Australian Financial Services Licence ("AFS Licence") to a corporate AFS Licence applicant, that there is no reason to believe that any of the applicant's responsible officers are not of good fame and character.

An AFS Licensee's responsible officers are specific individuals within the organisation that are responsible for significant day to day business decisions that relate to holding an AFS Licence. Westpac has nominated 10 responsible officers who must, together, demonstrate Westpac's organisational competency.

In considering whether there is reason to believe that a person is not of good fame or character, ASIC must have regard to various matters set out in section 913B(4) of the Act. These include any conviction of the person, within the last 10 years, for serious fraud and any other matter ASIC considers relevant.

Responsible officer in relation to a corporation that applies for an AFS Licence means an officer of the body who would perform duties in connection with the holding of the licence.

An officer of a corporation means:

a) a director or secretary of the corporation; or

b) a person:

who makes, or participates in making decisions that affect the whole or substantial part of the business of the corporation;

who has the capacity to affect significantly the corporation's financial standing;

in accordance with those instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors or the corporation); or

c) a receiver, or receiver and manager of the property of the corporation; or

d)an administrator of the corporation; or

e)an administrator of a deed of company arrangement executed by the corporation; or

f)a liquidator of the corporation; or

g)a trustee or other person administering a compromise or arrangement made between the corporation or someone else.

In preparing to lodge its AFS licence, Westpac conducted a series of background checks to ensure the responsible officers it nominated were of good fame and character. We note that the HREOC paper contains some useful discussion on the case law regarding "good fame and character."

Westpac Representatives Other Than Responsible Officers

A broader obligation that applies to Westpac as an AFS Licensee is the obligation to ensure that its representatives who provide financial services are adequately trained and competent to provide those financial services. Relevantly, "financial services" are providing financial product advice, dealing in a financial product, making a market for a financial product or providing custodial/depository services.

Neither the Corporations Act, nor ASIC policy (except in relation to the provision of financial product advice) specifies how a representative can demonstrate competence. However, one way of determining whether a representative is competent is to be satisfied that they have not previously engaged in misconduct.

In the AFS Licence application, applicants are asked the following question:

"Do you have a process to ensure that those people who are providing retail financial product advice or directly handling client monies under your AFS licence have not engaged in misconduct previously?"

Conducting criminal record checks of applicants for certain types of employment is one of the ways in which we provide this assurance.

Current Process

Our current policy in relation to criminal history checks is attached and can be summarised as follows:

Volume Recruitment Segment

Westpac's "volume" recruitment segment is all roles with a salary of less than $50,000, which are predominantly sales and service focused roles in call centres and branches. Therefore, criminal record checks are conducted for all roles in this recruitment segment.

When a candidate applies through our "volume" recruitment supplier for employment with Westpac, one of the questions on the application form is the following:

"Have you had any criminal conviction for, or pleaded guilty to, a crime involving dishonesty or violence which is not lapsed or spent?"

We are in the process of adding an additional question:

"Do you have any charges pending for an offence involving dishonesty or violence?"

When a candidate has been successful in our selection process, an offer of employment is made subject to a satisfactory criminal record check. If the criminal record check is unsatisfactory (in that it discloses a relevant criminal conviction) or the employee has been dishonest about its contents during the recruitment process, generally Westpac will withdraw the offer of employment and/or, if the employee has already commenced employment, terminate the employment.

Panel Recruitment Segment

This segment is for all roles over a salary of $50,000. In this segment, when an employee is recruited for a role which is not that of Responsible Officer or providing retail financial product advice or directly handling client monies, a criminal record check is not conducted as a matter of course but is at the discretion of the hiring manager.

We are currently reviewing our policies and procedures around criminal record checks, including the issue of temporary employees and employees who are not always recruited through our recruitment suppliers.

Westpac's experiences of people with a criminal record regarding discrimination in employment

Two recent examples involving job applicants are:

An applicant for a position in a Westpac branch said that she did not have any convictions within the last ten years. When the Federal police check was returned, it indicated, however, that there was a State criminal record. When questioned about this, the applicant subsequently withdrew her application and never provided any further information about her criminal record as requested. She then claimed discrimination on the basis of criminal record. Westpac's position was that it was unable to progress her application on the basis that she appeared to have been dishonest in the statements she had made about her criminal record, and was not prepared to provide information to disprove this.

During the recruitment process, an applicant advised our external recruitment provider that he had no convictions or criminal charges pending within the last ten years and consented to a criminal record check. He was offered employment subject to the criminal record check and commenced employment before the results of the criminal record check were obtained. The criminal record check indicated that the employee had a criminal record. When asked about the criminal record, the employee admitted that he had charges pending for assault. The employee was dismissed for failing to disclose this matter during the recruitment process. Again, this was a matter where Westpac considered that the employee had not acted with honesty and integrity during the recruitment process and in our view this made him ineligible to work in a financial institution.

Current strategies used by Westpac to prevent discrimination on the ground of criminal record

Westpac's policy states that only criminal records which relate to the inherent requirements of the job should be considered when making decisions about employment and that spent convictions cannot be considered in the process.

The policy is currently under review and it is anticipated that a new policy will be in place by July 2005. In reviewing the policy we are likely to clarify and expand the existing policy to make it easier for managers to make decisions and to ensure as far as possible that unlawful discrimination does not occur. The review of the policy will also address more specifically Westpac's FSRA obligations.

Responses to specific questions in HREOC discussion paper

Do we and our applicants understand the categories of information which might be provided with a criminal record check?

When an applicant fills out the consent form for the police check, it is clear that results will be received for any criminal/traffic charges, convictions or pecuniary penalties. We have the Federal Police conduct our criminal record checks and as acknowledged in the HREOC paper, it is not possible to obtain information about specific offences such as only those relevant to the inherent requirements of the role.

What difficulties have we encountered in obtaining criminal record checks?

Police checks often take several weeks to complete. This means that we need to offer employment conditional on the police check and sometimes have had to terminate employment after commencement.

Have there been instances where a criminal record check has been completed without an applicant's consent?

Not that we are aware of. To the best of our knowledge, consent is always sought, and our policy clearly prescribes consent.

What would assist us in understanding our responsibilities and in what form would the information be most useful?

It would be useful for us to have guidelines on what constitutes a "criminal record". In recruiting employees, we would be interested in any charges, convictions or guilty pleas for crimes involving dishonesty, theft, fraud or violence and any charges pending for these types of offences. However, the definition of "criminal record" in current legislation is not clear. It would be useful for it to be defined.

Similarly, we would find guidelines on determining whether a criminal record is relevant to the role very helpful.

Have we had many examples of where dishonesty has resulted in dismissal even where the criminal record is not relevant to the job?

We have had a number of examples where employees have been dishonest about the existence or nature of their criminal record, and the fact that they have not been truthful has been the key issue rather than the nature of the criminal record itself.

Conclusion

As a financial institution, Westpac needs to have employees who act honestly at all times. We are therefore comfortable that our current requirements for criminal record checks are appropriate. However, Westpac also acknowledges that discrimination in employment on the basis of irrelevant criminal record is not desirable and could be addressed through a better understanding of the issues by employers and job applicants. Westpac would therefore support measures, in the form of either legislation or guidelines, which would assist employers in determining whether a criminal record is relevant or otherwise to the role and how employers should assess an employee's or job applicant's criminal record. We would be happy to provide input on any proposed guidelines.

DISCRIMINATION IN EMPLOYMENT ON THE BASIS OF CRIMINAL RECORD