The government is to seek leave to appeal against a court ruling that job applicants in England and Wales do not have to disclose all criminal records.
The Court of Appeal has ruled the law which requires people to disclose all previous convictions to certain employers is a breach of human rights.
The case at the heart of the row is a 21-year-old man - identified only as T.
He had to disclose in a job application that he had warnings from police over two stolen bicycles when he was 11.
Delivering the ruling, the Master of the Rolls, Lord Dyson, said the disclosure of old convictions and cautions was designed to protect children and vulnerable adults.
Today's judgement will affect parents and children, employers and employees. The Court of Appeal has ruled that the current system which requires the blanket disclosure of criminal convictions, cautions and warnings, is disproportionate and incompatible with the right to a private and family life.
That raises the issue of when crimes committed by children should be expunged from their records. The court has said, firmly, that it will now be a matter for parliament to decide what amendments to make to the current system.
However, the potential implications of the judgement go beyond children. All criminal records checks are carried out under a system which is exempt from the Rehabilitation of Offenders Act.
Today's ruling could apply to all of those checks, effectively throwing the entire system of criminal records checks into confusion.
However, he said, "requiring the disclosure of all convictions and cautions relating to recordable offences is disproportionate to that legitimate aim".
'Disappointed'But a government spokesman said: "The protection of children and vulnerable groups must not be compromised. We are disappointed by this judgement and are seeking leave to appeal to the Supreme Court."
Liberty said the law had been incompatible with Article 8 of the Human Rights Act, the right to a private and family life.
Liberty's legal officer, Corinna Ferguson, said: "This sensible judgment requires the Government to introduce a more nuanced system for disclosing this type of sensitive personal data to employers. For too long irrelevant and unreliable information provided under the blanket CRB system has blighted people's lives.
"We hope that long overdue reforms - properly balancing the aim of public protection with privacy rights - will now be forthcoming."
Criminal records checks are the responsibility of the Disclosure and Barring Service (DBS) which took over the role when the Criminal Records Bureau and Independent Safeguarding Authority were merged last month.
Lord Dyson said a system of "filtering" was required, to allow for irrelevant criminal records to be removed, but he added: "It will be for Parliament to devise a proportionate scheme."
In allowing the appeal he rejected the argument of the Home Office's lawyer who said the judges should leave it to Parliament. He aid: "This is not a case where we can be confident that Parliament will move swiftly to find a solution."
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