Charging a recruiter for a reference: Is it lawful? Would it be unsatisfactory professional conduct?

Some of you might have recently come across recruitment firms that charge other recruitment firms a fee for providing a reference about a previous consultant or agency worker.

I’m not talking about those cases where the firm that is asking to be paid for providing a reference is providing an outsourced service for you. You’d expect to pay a fee in that situation. No, I’m talking about a previous employer that is charging you to respond to your reference checking enquiries.

Of course, it’s not limited to Recruiter-to-Recruiter dealings. In fact, any employer might decide that providing references on former employees could be a bit of a money spinner.

They might also think it’s a clever way to stop people bothering them for references; or, more cynically, that it creates a bit of an impediment to their former employee’s search for new work.

So, is it lawful? And would it be unsatisfactory professional conduct? After all, aren’t we all professional colleagues and shouldn’t we commit to helping each other out. Well, without giving legal advice, I’m inclined to think it might be OK in most cases. I also believe that we might see more of it.

There are a few scenarios I can think of where it might be a problem. So, unless: the charge is not allowed under applicable privacy measures dealing with the imposition of access charges; or the charging agency is under a rare obligation to provide a reference – e.g. as part of an industry scheme or under the terms of a contract, award, or enterprise agreement; or the charge can be said to unfairly or unlawfully to prevent a Workseeker from seeking work from other sources (e.g. contrary to the RCSA Code); or the cost is somehow passed on as a charge to the candidate - I don’t see that there would be anything that could be said to be patently unlawful or unethical about charging a recruitment firm for providing a reference.

And, Yes - helping each other out might be neighbourly and good for the profession. But against that, is the fact that giving a reference is fraught with risk these days and with increasing cost – especially as turnover and job change rates rise. So, perhaps it is a development we will see more of.

As I said, you shouldn’t take this as legal advice. If you need legal advice, you should check it out with lawyers who are familiar with the recruitment & staffing profession and with the laws in the jurisdiction in which you operate.

1 Andrew C. Wood is a mediator and workforce consultant with WorkAccord, an independent workforce and employment relations practice at Southbank in Melbourne, Victoria. Specialising in regulatory issues arising in the fields of work, public & corporate governance, and the recruitment & staffing industry, Andrew works with clients, helping them take control of their workforce and employment relations challenges so that they can reach confident, productive and sustainable outcomes.

If the matter ever came to RCSA under a professional conduct grievance intervention request, RCSA would review the grievance to see if the circumstances warranted intervention and if so, it would make a decision about what the best pathway to a satisfactory professional outcome might be. That wouldn’t necessarily mean that it would launch a formal investigation and Ethics Committee hearing.

Under its new Professional Conduct Grievance Guidelines, it would be more likely to try to work out what the professional thing to do would be and then take steps to encourage its Member to do it.

It’s a more effective and kinder way to support Members who are working to improve

standards of professional conduct.