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Business hiring strategies need to be watertight

The Situation
The onset of the challenging times experienced during the global financial crisis clearly had an impact on the enthusiasm for recruitment. There was, no doubt, a reduction in the number of times the “war for talent” dominated HR conversations.

However, it is perhaps even more important in such challenging times to ensure that the hiring strategy of any business is absolutely spot on, because when recruitment goes wrong, it can have a significant adverse impact on a business. This is, of course, not just limited to the cost of exiting the individual. Employee terminations or exits, even if mutually agreed, can be a very complicated and expensive business in some jurisdictions. Even in Hong Kong, agreed notice and exit terms may be onerous, and all exits take time and distract those handling the process. There is also a real cost to the business in terms of changing strategy, coupled with the cost of having the wrong person in the role for any period.

We should assume that getting the hiring strategy right is an absolute priority for any business. However, for many businesses, hiring is often approached in an unfocused manner. Offers are made without any real agreement or determination within the business regarding the criteria that will signify a successful hire.

Even where a clear strategy exists to support hiring and the right candidate has been identified, there are some important employment laws that should be taken into account.

The Key Considerations
First, it is not enough to simply identify the right candidate. It is also important to avoid discrimination claims. Therefore, the identification process is crucial and must not be based on any discriminatory principles.

Hong Kong law prohibits any discrimination on the basis of sex, marital status, pregnancy, family status, disability and race. It is important that unsuccessful job candidates are rejected on reasonable, non-discriminatory grounds.

For example, it is perfectly appropriate for a candidate to be asked whether he or she is able to travel extensively and work long hours as the job demands it. However, asking an individual whether he or she has childcare responsibilities, and presuming an individual with children cannot meet the requirements of the job, suggests discriminatory stereotyping, and is in breach of Hong Kong law.

Second, it is important to protect confidential information. During the recruitment process, particularly at the senior end, there is often substantive disclosure of confidential information on both sides. In trying to convince a candidate to join the business, it is often necessary to share sensitive information. It is surprising how often this process takes place without any consideration given to imposing at least some restrictions on the future disclosure of that information should the hiring process prove unsuccessful.

Third, getting the right contractual arrangements in place is important. Among the first formal documents a potential hire actually sees is the formal employment documentation. If these documents are shoddy and fail to match market standards, they immediately give the wrong impression. This is the opportunity to get the arrangements clearly agreed in simple language, while protecting the interests of the employer and managing the expectations of the employee.

Fourth, employers should allow time to meet legal requirements. If the hiring involves a non-local individual, it is important that enough time is taken to obtain the necessary immigration approvals. Breaches of immigration law – as well as employment law – are a criminal offence in Hong Kong, so these obligations should not be taken lightly. For all employees, local statutory obligations in respect of minimum benefits and protections must be seriously considered and implemented.

Finally, there is the consideration of potential claims by third parties. It is important to have a clear understanding about any potential exposure to the company as a result of the hire. The main issues generally arise from pre-existing obligations owed by the new hire to a former employer or business associate. It is prudent to consider the position with regard to existing non-competes or confidentiality commitments that continue to apply to the individual. How the new employer approaches these restrictions will differ from case to case.

In some instances the company might decide to leave the individual with the responsibility for meeting any pre-existing obligations owed to a former employer, no further questions asked. However, the key point is that employers ought to give some thought to the issue so that a conscious strategy may be adopted and the employer’s own business interests are protected.

While the best process in the world cannot guarantee a successful hire, it is sensible to have a watertight process. This makes it more likely that time and energy are properly invested in the candidate in assessing his or her fit with the business, rather than wasted on handling issues arising from a lack of process and forethought.

DLA Piper is a global law firm with 4,200 lawyers located in more than 30 countries throughout the Americas, Asia-Pacific, Europe and the Middle East.
Pattie Walsh is a partner and head of DLA Piper’s Asia Pacific Employment practice. She writes extensively for legal and HR publications, with a particular focus on multi-jurisdictional employment work.

The information contained in this article should not be relied on as legal advice and should not be regarded as a substitute for detailed advice in individual cases. If advice concerning individual problems or other expert assistance is required, the service of a competent professional adviser should be sought.