Background checks

Dear Atty. Maan,

Due to the pandemic, some of our employees were not able to undergo background checks prior to hiring. We are now considering conducting background checks during the course of their employment to complete our due diligence process. In this regard, may we inquire if it is legally permissible to conduct background checks midway through employment?

Miguel

Dear Miguel,

An employer may conduct background checks at any time during the course of employment, as long as such is exercised in good faith and with due regard to company policies, data privacy laws etc. This is well within the scope of the employer’s management prerogative, which includes the right to ensure the integrity, reliability, and suitability of its workforce. What is important is that the process is fair, consistently applied, and non-discriminatory, and that any employment decisions arising from the results are carried out with full observance of due process.

Importantly, employment itself may be made conditional upon the satisfactory completion of background checks, whether conducted pre- or post-employment. In Peckson v. Robinsons Supermarket Corporation (G.R. No. 198534, 3 July 2013) and Chavez v. National Labor Relations Commission (G.R. No. 146530, 8 June 2004), the Supreme Court recognized that an employment contract may contain suspensive conditions, including the satisfactory outcome of background or reference checks, before an employment relationship is deemed perfected or effective.

As further reinforced in ANZ v. Cruz, the Supreme Court held that while an employment contract may already be perfected upon agreement on its terms, its effectivity and enforceability may be held in suspense pending the fulfillment of particular conditions, such as the satisfactory result of a background check. In that case, the Court ruled:

“Among those conditions for employment was the ‘satisfactory completion of any checks (e.g., background, bankruptcy, sanctions and reference checks)...’ Accordingly, petitioner’s employment with ANZ depended on the outcome of his background check, which partakes of the nature of a suspensive condition, and hence, renders the obligation of the would-be employer conditional.”

Thus, even if a contract of employment is already perfected, the employer may legally stipulate that certain rights and obligations will only arise upon fulfillment of a suspensive condition, such as a background check.

Hope this helps.

Atty. Mary Antonnette Baudi