In today’s highly regulated business environment, employee screening is no longer just a best practice – in some instances it is a legal obligation.
For organisations that qualify as “accountable institutions” under the Financial Intelligence Centre Act 38 of 2001 (“FICA”), robust employee screening is essential to mitigate the risks associated with money laundering, terrorist financing and fraud.
Legal foundations for employee screening
FICA, particularly through Directive 8 and Public Compliance Communication 55 (“PCC 55”), requires accountable institutions to screen prospective and current employees for ‘competence and integrity’. This may involve conducting checks on qualifications, employment history and criminal records. The level and frequency of checks should be aligned to the risk profile of each role.
Statutory duties under other legislation
Under the Immigration Act 13 of 2002, employers are obliged to verify that all employees, including foreign nationals, are legally permitted to work in South Africa. Section 38(2) requires a good faith effort to verify immigration status, while section 49(3) imposes criminal penalties on employers who knowingly employ undocumented workers.
Similarly, under the National Qualifications Framework Act 67 of 2008 (“NQF Act”), recent amendments introduced criminal sanctions for persons who misrepresent their qualifications. Once section 32A of the NQF Act comes into effect, it will become mandatory to verify employees’ qualifications against the National Learners’ Records Database.
Real world implications
The importance of thorough screening, especially for senior roles, was recently underscored in the high-profile case of Anushka Bogdanov, a former independent non-executive director at EOH Holdings. In July 2025 it was reported that the Johannesburg Stock Exchange had fined Bogdanov for misrepresenting her academic qualifications, specifically claiming a PhD in International Finance from the London Business School that she did not possess.
Data privacy considerations
The Protection of Personal Information Act 4 of 2013 (“POPIA”) applies to the processing of employees’ personal information and generally requires that consent be obtained. However, POPIA contains certain caveats that permit processing without consent when necessary for the conclusion or performance of a contract or compliance with a legal obligation, amongst others.
Practical implementation
In respect of prospective employees, screening forms an integral part of the recruitment process and should be provided for in recruitment and selection policies. Any adverse screening results must, however, be assessed in context, particularly considering whether the adverse finding materially impacts the employee’s ability to perform their duties.
Importantly, employers must ensure that their policies and screening practices align with the Employment Equity Act 55 of 1998. As recently emphasised by the Labour Court in O’Connor v LexisNexis (Pty) Ltd (2024) 45 ILJ 1287 (LC), not all adverse findings justify dismissal – employers must demonstrate that the adverse screening results relate directly to the inherent requirements of the job in line with the Code of Good Practice on the Integration of Employment Equity into Human Resource Policies and Practices.
With increased scrutiny on internal controls and ethical standards, employers must take a proactive and compliant approach to employee screening. For accountable institutions, screening is not simply a measure to mitigate risk – it is also about discharging a statutory duty. By implementing clear and legally compliant screening policies, employers can protect their operations, promote trust with stakeholders, and ensure that they remain on the right side of the law.
This issue can, however, be a minefield and if not handled correctly could expose employers to significant legal risk. As the Bogdanov case illustrates, failing to verify critical credentials, particularly for senior roles, can lead to lasting reputational damage and regulatory penalties. Employers must always, as part of their efforts to mitigate any risks, ensure that they take appropriate, specialised advice before implementing any policies or procedures which may impact upon their workplaces.
