The obligations upon an employer about its right to collect, and then use, confidential information about employees is probably the least understood issue in the context of employment law.
Private sector employers are currently exempt from the Privacy Act and the National Privacy Principles in relation to records about current and former employees. This also means that currently private sector employers do not need to provide access to those records if requested by an employee. This of course will only be the case in the absence of a contractual entitlement which the employee may have.
In a wider context however, the National Privacy Principles are made under the Commonwealth Privacy Act 1988 and compliance is mandatory for businesses with an annual turnover of more than $3 million. There are very significant restraints upon what those businesses can do in relation to the collection and use of personal information, which is the test used to determine what information is covered by the Principles. The Principles are currently guides only to best practice for small businesses.
Consequently many organizations which deal with personal information in connection with employment may be covered by the Principles and not exempt from them if that organization is not the employer of the person concerned.
In a ruling by the Privacy Commissioner* it was held that an employment services company which was a professional recruiter for employees, and was paid by the employee if the employee was successful in obtaining employment, was bound by the Principles and had breached them by collecting credit card details of applicants for employment. National Privacy Principle 1.1 prohibits an organization from collecting personal information which is not necessary for its functions and activities. The recruiter contended that it had collected credit card information so that it could be paid by credit card if it earned the fee. The Privacy Commissioner ruled that this practice exceeded what was the permissible, particularly for those who did not want to pay the fee this way. The company amended its practice accordingly.
*OPC v Employment Service Company (2005) PrvCmrA 13.
This decision may have significant implications for those companies which are engaged in the process of recruiting for industries where they act as the agents for the prospective employers.