New guidelines will list factors that must be considered before people's mental health crises are disclosed to employers in background checks.
Police will have to examine issues such as how long ago a detention under the Mental Health Act occurred, when assessing whether it is disclosed.
The advice covers Disclosure and Barring Service (formerly CRB) checks.
Home Office minister Karen Bradley said the guidelines aim to make the system fairer without lessening protection.
"It is important that checks provide employers with the information they need to protect children and vulnerable groups," she said.
"At the same time, police disclosure of information relating to mental ill health can have a significant impact on the lives of those concerned, including their employment opportunities."
'Not a crime'
The Home Office said the new guidance, which will be issued on Monday, states that:
- Detention under the Mental Health Act, which does not constitute a criminal investigation, is unlikely in itself to be sufficient to justify disclosure
- The behaviour of the person during the incident must be a "key consideration" when considering checks. This could include assessing whether the person presented a risk of harm to others or whether they were involved in multiple incidents
- The date of the mental ill health episode is an "important" factor. In cases where it took place a long time ago, officers should consider giving the applicant an opportunity to make representations about their current state of health
- If information is disclosed, the certificate should provide an explanation so the employer or voluntary organisation understands the relevance of the information to the application
Community and social care minister Alistair Burt said the changes will help prevent people being "stigmatised" as they attempt to find work or volunteering opportunities.
He said: "Having a mental illness is not a crime - your medical history wouldn't be flagged to your employer, so it's right that we make the same true for someone who's had a mental health crisis."
Paul Farmer, chief executive of mental health charity Mind, welcomed the move.
He said: "There is no reason why having a mental health problem or having been previously detained under the Mental Health Act should necessarily be a red flag when it comes to DBS checks."