Legal Aspect

How is the current situation with pre-employment checks in Germany, Switzerland and Austria?

In Germany, Switzerland and Austria, the legal provisions relating to personality rights, data protection law and labor law are very strict and restrictive. Presumably, there are no other countries in the world where the interpretations are as restrictive as in the DACH region.
It is therefore estimated that only around 10% of such pre-employment checks are carried out more or less systematically and in a structured manner by the top 100 companies (employers) in Germany.

Numerous data and background check scandals of the past 10 years in Germany have certainly also led to a rather hesitant handling of pre-employment checks or pre-employment screenings. It should be noted, however, that the security managers and the company management acting at that time consciously and knowingly violated the applicable law, had crossed the boundaries. It is our understanding, that this is no longer possible, with the numerous control mechanisms (keyword: compliance departments, compliance structures) and tight legal and company-internal requirements; and that’s how it should be.

In Germany, Switzerland and Austria, pre-employment checks and pre-employment screenings are primarily understood and implemented as a preventive measure to minimize or prevent the risk of corruption. The topic is therefore primarily driven by compliance. It is used to prevent economic and business crimes, as well as corruption risks.

The goal is the “avoidance of hiring unsuitable employees” and thus the risk reduction and mitigation in the selection process for new employees. This applies also for the native returnees from war zones, which have joined terrorist groups and terror organizations.

In addition, national and international efforts are also required to ensure that no people are hired, employed, contracted and / or co-operated (for example, as representatives, freelancer) that are on the International Sanctions List of the United States, the UK and the EU. The same applies to national and international companies with whom one wishes to establish a business relationship in Germany or abroad. This is also known as business partner compliance checks..

In this context, Business Partner Compliance Checks become increasingly important. This aspect is particularly dynamic if a Western company wants to move into new (opening and developing) markets. An excellent example is Iran and its great business potential for Western companies. After decades of international trade and business sanctions, the market now opens up step by step. There are enormous opportunities but also risks for Western companies. Many people and companies (including organizations and institutions) are still listed on the International Sanctions Lists of the EU, USA and UK. As a result, Western companies are not allowed to enter into a business relationship with these persons and companies. If they do so and ignore the ban, they will be subject to extensive penalties.

What is the legal basis in Germany?

According to Labor Law and the Federal Labor Court (FOPH), all employers are entitled to a so-called questionnaire, which can be seen as an admissible and legally compliant measure under pre-employment checks.

However, there are also limitations on the employer’s right to question candidates, such as pregnancies, party memberships and trade union rights, sexual orientations and others.

The worker´s council has no co-determination right in Germany when it comes to Pre-Employment Checks & Pre-Employment Screenings. The worker´s board does not need to be asked for permission or even be involved in the vetting process.

On the other hand, there are obligations for employers to review according to §130 OWiG (“Risk Factor Employee”) and according to § 91 (2) AktG (General obligation of companies to introduce a monitoring system, to identify risks and to safeguard the company’s survival capabilities.

The Federal (German) Data Protection Act (Bundesdatenschutzgesetz – BDSG) prescribe that data on applicants and candidates may only be collected, stored and further processed, if there is a necessary legal basis. This legal basis is generally considered to be given as soon as the candidate has given his / her written consent to the Pre-Employment Check and has approved it before the background check was started.

Furthermore, it is particularly important that all personal data is securely stored and transmitted. For this purpose, the use of encryption technology is extremely important for both, storing and transmitting confidential documents. A specific attention should be given to data transmission between the service provider and the customer (employer, company). It is extremely important that qualified service providers have a solution for the secure provision of highly confidential documents (candidate documents, final / verification report), for example through a secure file sharing portal.

It is also recommended that an authorized service provider completely and permanently deletes the personal data of the candidates to be checked after a period of time communicated in advance with the customer (for example after 48 or 72 hours from the time of transmission to the customer). Storage and further use at a later point in time by the Service Provider is not permitted.

In addition, extensive expertise and experience as well as the necessary ethical understanding should be available with the PES service provider or PES experts. Sometimes, in practice, this separates the “chaff of the wheat” … the low-cost providers from the more expensive real experts and professionals.

Basically, there is a tension and interest conflict between the employer (to find and choose suitable candidates for a position and to collect as much information as possible) and the candidate (personality rights and data protection).

Can post-employment checks be done in Germany, Switzerland or Austria?

A post-employment check is the examination of the personal and professional documents (CV, reference letters, certificates …) of already hired employees. In Germany, Switzerland and Austria this is not allowed by law, since it must be assumed that an employee will no longer agree voluntarily to the background check. This needs to be the case by law, in order to be able to conduct such a check.

Nevertheless, many experts argue that as a company or an employer with a legitimate interest, employees can also be legally and subsequently examined within a tightly defined framework. In this case, however, you are limited to purely open sources (also called public sources) and databases (Creditreform, Bürgel, infoscore, Boniversum, etc.). Insights which are collected and secured via protected profile areas (with password protection, privacy protection or similar) may not be collected or used according to expert assessments. This also applies to findings that have been acquired, for example, with a fake profile or account ,via a social media platform (Facebook Instagram, Google+, Pinterest, Twitter & Co.) or via a fictitious contact or friend request.