What You Need to Know about Employee Background Checks

In the recruitment process, companies often conduct background checks before offering a candidate the job and formally hiring them.

This is not about doubting the candidate but rather about protecting the company from potential risks. Background checks are especially thorough for roles involving sensitive responsibilities, such as handling finances or working with children and the elderly.

In this article, you will learn about the importance of background checks, what information is typically reviewed, how they are conducted, and the legal guidelines for performing them in Malaysia. Happy reading!

What are Background Checks?

Background checks are an activity done by a company to investigate a candidate’s history, confirm the information they provide is accurate, and uncover any issues that might not be immediately obvious.

These checks can cover several aspects of a candidate’s life, including their work experience, education, criminal history, and more.

Why are Background Checks Important for Employers in Malaysia?

Hiring the wrong person can lead to serious problems, from poor job performance to workplace conflicts and even legal or financial issues. Background checks help employers make better hiring decisions. Here is why they are important:

Helps verify candidate information

Employers rely solely on what candidates present without background checks, which may not always be accurate.

By verifying education, employment history, and other credentials, employers can ensure candidates are qualified.

Mitigates risk by identifying potential red flags

Hiring an unqualified or dishonest individual can lead to poor performance, workplace misconduct, or even financial and reputational harm.

For example, hiring someone with a criminal history of fraud for a finance role could result in significant losses.

Protects the company’s reputation and ensures safety

Background checks help identify candidates with a history of unsafe behavior and protect employees and customers. Usually, this is done by checking criminal records. This is critical for roles involving vulnerable groups, such as children or the elderly.

Hiring individuals with a clean track record also safeguards the company’s image and builds trust among clients and stakeholders. 

Types of Background Checks

Depending on the job role, employers can choose from several types of background checks:

1. Employment History Verification

The verification confirms the candidate’s previous jobs, including:

• Job titles

• Responsibilities

• Dates of employment

• Performance and reasons for leaving

Employers can contact past employers or colleagues to gather this information.

2. Education Verification

This checks whether the candidate’s academic qualifications are genuine and ensures candidates have the credentials that they claim.

For example, an employer might contact a university to confirm a candidate’s degree or certification.

3. Criminal Background Check

A criminal background check reveals any past criminal activities. It is especially important for roles involving children, finances, or sensitive information.

In Malaysia, criminal background checks are often done through third-party agencies that work with the Royal Malaysia Police.

4. Credit History Check

Employers will check a candidate’s financial behavior, such as unpaid debts or bankruptcies. This background check element is important for roles involving money handling or financial decision-making.

5. Reference Checks

Employers will reach out to a candidate’s references (e.g., former managers or colleagues) to learn more about their work ethic, character, and performance. The references contacts are provided by the candidate.

6. Social Media and Online Presence Check

Checking a candidate’s public social media accounts can reveal their behavior and values. However, employers should focus on professional concerns, not personal opinions or preferences.

7. Identity Verification

The identity verification ensures that the candidate is who they claim to be. Employers can verify identification documents such as ICs or passports. Data that need to be verified often are name, date of birth, and nationality.

8. Drug Testing

For safety-sensitive roles, drug testing ensures candidates do not have substance abuse issues that could affect their job performance.

How to Conduct Effective Background Checks

Conducting background checks requires careful planning and adherence to legal standards. So, how employers in Malaysia can perform them effectively?

1. Obtain Candidate Consent

Before starting any background checks, you need to inform the candidate and get their written consent. This is required under Malaysia’s Personal Data Protection Act (PDPA). 

Explain clearly what kind of checks you will be doing, why they are necessary, and how the information will be used.

For example, let them know if you are checking their criminal records, education, or employment history because the candidate has applied for a financial position.

Make sure they sign a form giving you permission to proceed. Being transparent helps build trust and ensures you follow the law.

2. Use Trusted Third-Party Services

For complex checks, like verifying criminal records or credit histories, it is a good idea to work with a trusted background check agency. These agencies are experienced in handling such tasks and can access official databases. They ensure accurate results while following legal and privacy rules. 

Choose an agency that understands Malaysian regulations, protects personal data, and offers the specific services you need. Working with professionals saves time and ensures nothing important is missed.

3. Comply with Legal Regulations

As mentioned in the first step, you must follow the Personal Data Protection Act (PDPA) when conducting background checks.

This means you should only collect information that is directly related to the job. For example, a criminal background check may be needed for a financial role but not for a junior administrative position. 

You also need to make sure the checks are fair and do not discriminate against the candidate based on age, gender, race, or religion. Ignoring these rules can lead to legal trouble or damage your company’s reputation.

4. Verify Information Thoroughly

Once you have gathered information, verify it from reliable sources.

For example, contact the candidate’s previous employers to confirm their job title, performance, and the length of time they worked there. 

You can also reach out to universities or colleges to make sure the candidate’s degree or certification is valid. Cross-check details from different sources to ensure everything matches. If something does not add up, discuss it with the candidate to get clarity.

5. Ensure Confidentiality

Background checks involve personal information, so it is important to handle it carefully. Only people involved in the hiring process should have access to the information. Store the data securely, and do not share it with anyone who does not need to know. 

If there are findings that raise concerns, discuss them privately with the candidate. Respecting confidentiality shows professionalism and helps build trust.

Legal and Ethical Considerations for Background Checks in Malaysia

When conducting background checks in Malaysia, follow both legal requirements and ethical practices. This ensures that the process is fair, respectful, and compliant with the law. 

Complying with the Personal Data Protection Act (PDPA) in Malaysia

Malaysia’s Personal Data Protection Act (PDPA) 2010 outlines how personal information should be collected, stored, and used.

Employers must follow these rules when conducting background checks to protect candidates' privacy. Here is how you can comply:

• Inform candidates: Clearly explain to candidates what types of data you will collect (e.g., employment history, criminal records) and why you need it.

• Explain the process: Let candidates know how their information will be used, processed, and stored. For example, assure them that their data will only be used for hiring purposes and kept confidential.

• Use trusted third-party agencies: If you hire a screening agency, ensure they also follow PDPA rules. This includes protecting the data they handle and only using it for the agreed purposes.

By being transparent and following these steps, you build trust with candidates and ensure that your practices comply with the law

Ensuring non-discriminatory practices when evaluating background check results

Background checks must be used to evaluate whether a candidate is suitable for a job, not to unfairly judge them based on irrelevant factors.

Employers must avoid discrimination based on race, religion, gender, age, or other personal traits. For example:

• If a credit check shows financial issues, consider whether those issues are directly relevant to the job. For a role in finance, this might be important, but for other roles, it may not matter.

• Criminal records should only disqualify a candidate if they directly relate to the responsibilities of the position.

Always focus on the candidate’s ability to perform the job and avoid letting unrelated issues influence your decision.

Importance of transparency in the process

Transparency is key to maintaining a fair and ethical hiring process. Always communicate openly with candidates about the background checks you will conduct. This includes:

• Explain why each check is necessary (e.g., criminal checks for trust-sensitive roles).

• Provide a clear process for addressing any discrepancies or concerns that arise during the checks.

• Allow candidates to explain or clarify findings if something unusual comes up in the results.

When candidates understand the process and feel they are being treated fairly, it creates a more positive experience and ensures they view your company as professional and trustworthy.

FAQ

How long do background checks take in Malaysia?

Usually, it takes 3–10 working days, depending on the complexity of the checks.

Are background checks mandatory for all positions?

No, but they are highly recommended for roles involving trust, finances, or safety.

What should employers do if a candidate fails a background check?

Employers should review the findings with the candidate. If the issue is critical (e.g., falsified qualifications), they may decide not to hire the person.

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