The interim report from the Scottish Affairs Select Committee strongly criticises 43 construction companies for failing to take responsibility for 'morally indefensible' blacklists of union officials, which were being used after they were made illegal in 2010. Firms still using blacklists to hire staff are also likely to be breaching data protection laws and risking fines of up to £500,000.
Since the high profile revelation in 2009 that major construction companies hired a consultancy operating a blacklist of known union members, HR managers have been deeply concerned about both legal and ethical questions arising from the practice. This interim report highlights the often invidious position an HR Manager is put in when it comes to corporate practices around vetting new recruits and existing employees.
The next steps for the committee will see MPs examining evidence in four main areas. They will look at whether blacklisting is still taking place - and across which sectors? The committee will look at compensation and who would qualify e.g. anyone whose name has appeared on a blacklist or anyone who can prove they were adversely affected by blacklisting. MPs will also tackle the issue of who pays for the compensation.
The third area addresses the issue of penalties - not just for firms, but for individuals who engaged in blacklisting. MPs will look at who benefited financially from the process and if it is appropriate to introduce a degree of retrospection. They will consider whether it is appropriate to bar firms involved in blacklisting from tendering for public sector contracts or if they should be allowed to tender only if they pay compensation to people who have been blacklisted.
Finally, MPs will consider whether existing legislation against blacklisting is sufficient if laws are properly enforced, or whether changes to the law are needed to eradicate the blacklisting practice.
Without changes to existing laws or new legislation, HR managers can already find themselves named as individuals in cases brought under blacklisting and discrimination legislation laws.
HR professionals also need to be aware that the creation, supply or use of a blacklist is likely to amount to a breach of the Data Protection Act. When the government decided to legislate on blacklisting, the maximum fine for a data protection offence was just £5,000. In 2010 the Information Commissioner was given new powers to impose fines of up to £500,000 for serious breaches. Fines can be imposed not just on the person or company creating an illegal blacklist, but on any employer or agency using it for employment vetting.
Illegal blacklists, adverse publicity surrounding discrimination cases or breaches of data laws, can all have a negative impact on staff morale. Employees may feel threatened and intimidated if they are working in what seems to them to be a hostile and aggressive environment.
So how do HR managers who believe they have a duty to maintain the highest professional standards and values in their companies ensure that staff morale is maintained and laws are not breached? Back in 2009, before blacklisting became illegal, the HR profession's own body, the CIPD, acknowledged it takes courage and judgement to challenge established practices you believe are fundamentally wrong.
There are some practical steps HR professionals can and should be taking to ensure that their recruitment and people management practices are legal and ethical.
· Have robust recruitment and people management systems in place - assess them regularly and ensure that all managers involved in the recruitment process follow the same system
· Be prepared to challenge internally if you spot bad practice or breaches in laws - and be a champion of best practice
· Ensure you are up to speed with the law and make sure you brief colleagues on changes and the implications of new legislation
· Work with internal procurement teams to look at improving checks on your suppliers and sub-contractors
What are your views to ensure that HR professionals remain the standard bearers of best recruitment practice?
Joan Pettingill (pictured) is a partner and employment lawyer at hlw Keeble Hawson