diff --git a/addons/hr_recruitment/hr_recruitment.py b/addons/hr_recruitment/hr_recruitment.py
index 729b995e385..43e9b571629 100644
--- a/addons/hr_recruitment/hr_recruitment.py
+++ b/addons/hr_recruitment/hr_recruitment.py
@@ -92,12 +92,56 @@ class hr_recruitment_degree(osv.osv):
         ('name_uniq', 'unique (name)', 'The name of the Degree of Recruitment must be unique!')
     ]
 
-class hr_applicant(crm.crm_case, osv.osv):
+class hr_applicant(crm.crm_case, osv.Model):
     _name = "hr.applicant"
     _description = "Applicant"
     _order = "id desc"
     _inherit = ['ir.needaction_mixin', 'mail.thread']
 
+    def _get_default_department_id(self, cr, uid, context=None):
+        """ Gives default department by checking if present in the context """
+        return self._resolve_department_id_from_context(cr, uid, context=context)
+
+    def _get_default_stage_id(self, cr, uid, context=None):
+        """ Gives default stage_id """
+        department_id = self._get_default_department_id(cr, uid, context=context)
+        return self.stage_find(cr, uid, [], department_id, [('state', '=', 'draft')], context=context)
+
+    def _resolve_department_id_from_context(self, cr, uid, context=None):
+        """ Returns ID of department based on the value of 'default_department_id'
+            context key, or None if it cannot be resolved to a single
+            department.
+        """
+        if context is None:
+            context = {}
+        if type(context.get('default_department_id')) in (int, long):
+            return context.get('default_department_id')
+        if isinstance(context.get('default_department_id'), basestring):
+            department_name = context['default_department_id']
+            department_ids = self.pool.get('hr.department').name_search(cr, uid, name=department_name, context=context)
+            if len(department_ids) == 1:
+                return int(department_ids[0][0])
+        return None
+
+    def _read_group_stage_ids(self, cr, uid, ids, domain, read_group_order=None, access_rights_uid=None, context=None):
+        access_rights_uid = access_rights_uid or uid
+        stage_obj = self.pool.get('hr.recruitment.stage')
+        order = stage_obj._order
+        # lame hack to allow reverting search, should just work in the trivial case
+        if read_group_order == 'stage_id desc':
+            order = "%s desc" % order
+        # get department_id from context
+        department_id = self._resolve_department_id_from_context(cr, uid, context=context)
+        search_domain = []
+        if department_id:
+            search_domain += ['|', '&', ('department_id', '=', department_id), ('fold', '=', False)]
+        search_domain += ['|', ('id', 'in', ids), '&', ('department_id', '=', False), ('fold', '=', False)]
+        stage_ids = stage_obj._search(cr, uid, search_domain, order=order, access_rights_uid=access_rights_uid, context=context)
+        result = stage_obj.name_get(cr, access_rights_uid, stage_ids, context=context)
+        # restore order of the search
+        result.sort(lambda x,y: cmp(stage_ids.index(x[0]), stage_ids.index(y[0])))
+        return result
+
     def _compute_day(self, cr, uid, ids, fields, args, context=None):
         """
         @param cr: the current row, from the database cursor,
@@ -143,7 +187,8 @@ class hr_applicant(crm.crm_case, osv.osv):
         'partner_id': fields.many2one('res.partner', 'Partner'),
         'create_date': fields.datetime('Creation Date', readonly=True, select=True),
         'write_date': fields.datetime('Update Date', readonly=True),
-        'stage_id': fields.many2one ('hr.recruitment.stage', 'Stage'),
+        'stage_id': fields.many2one ('hr.recruitment.stage', 'Stage',
+                        domain="['|', ('department_id', '=', department_id), ('department_id', '=', False)]"),
         'state': fields.related('stage_id', 'state', type="selection", store=True,
                 selection=AVAILABLE_STATES, string="State", readonly=True,
                 help='The state is set to \'Draft\', when a case is created.\
@@ -186,28 +231,15 @@ class hr_applicant(crm.crm_case, osv.osv):
 
     _defaults = {
         'active': lambda *a: 1,
-        'user_id':  lambda self, cr, uid, context: uid,
-        'email_from': crm.crm_case. _get_default_email,
-        'state': 'draft',
+        'user_id':  lambda s, cr, uid, c: uid,
+        'email_from': lambda s, cr, uid, c: s._get_default_email(cr, uid, c),
+        'stage_id': lambda s, cr, uid, c: s._get_default_stage_id(cr, uid, c),
+        'department_id': lambda s, cr, uid, c: s._get_default_department_id(cr, uid, c),
         'priority': lambda *a: '',
         'company_id': lambda s, cr, uid, c: s.pool.get('res.company')._company_default_get(cr, uid, 'crm.helpdesk', context=c),
         'color': 0,
     }
 
-    def _read_group_stage_ids(self, cr, uid, ids, domain, read_group_order=None, access_rights_uid=None, context=None):
-        access_rights_uid = access_rights_uid or uid
-        stage_obj = self.pool.get('hr.recruitment.stage')
-        order = stage_obj._order
-        if read_group_order == 'stage_id desc':
-            # lame hack to allow reverting search, should just work in the trivial case
-            order = "%s desc" % order
-        stage_ids = stage_obj._search(cr, uid, ['|',('id','in',ids),('department_id','=',False)], order=order,
-                                      access_rights_uid=access_rights_uid, context=context)
-        result = stage_obj.name_get(cr, access_rights_uid, stage_ids, context=context)
-        # restore order of the search
-        result.sort(lambda x,y: cmp(stage_ids.index(x[0]), stage_ids.index(y[0])))
-        return result
-
     _group_by_full = {
         'stage_id': _read_group_stage_ids
     }
@@ -229,23 +261,26 @@ class hr_applicant(crm.crm_case, osv.osv):
         stage_id = stage_ids and stage_ids[0] or False
         return {'value': {'stage_id': stage_id}}
 
-    def stage_find(self, cr, uid, section_id, domain=[], order='sequence', context=None):
+    def stage_find(self, cr, uid, cases, section_id, domain=[], order='sequence', context=None):
+        """ Override of the base.stage method
+            Parameter of the stage search taken from the lead:
+            - department_id: if set, stages must belong to this section or
+              be a default case
+        """
+        if isinstance(cases, (int, long)):
+            cases = self.browse(cr, uid, cases, context=context)
         domain = list(domain)
+        if section_id:
+                domain += ['|', ('department_id', '=', section_id), ('department_id', '=', False)]
+        for case in cases:
+            case_section_id = case.department_id.id if case.department_id else None
+            if case_section_id:
+                domain += ['|', ('department_id', '=', case_section_id), ('department_id', '=', False)]
         stage_ids = self.pool.get('hr.recruitment.stage').search(cr, uid, domain, order=order, context=context)
         if stage_ids:
             return stage_ids[0]
         return False
 
-    def stage_set_with_state_name(self, cr, uid, cases, state_name, context=None):
-        """ TODO
-        """
-        for case in cases:
-            department_id = case.department_id.id if case.department_id else None
-            stage_id = self.stage_find(cr, uid, department_id, [('state', '=', state_name)], context=context)
-            if stage_id:
-                self.stage_set(cr, uid, [case.id], stage_id, context=context)
-        return True
-
     def stage_previous(self, cr, uid, ids, context=None):
         """ This function computes previous stage for case from its current stage
             using available stage for that case type
@@ -264,11 +299,7 @@ class hr_applicant(crm.crm_case, osv.osv):
     def stage_next(self, cr, uid, ids, context=None):
         """This function computes next stage for case from its current stage
              using available stage for that case type
-        @param self: The object pointer
-        @param cr: the current row, from the database cursor,
-        @param uid: the current user’s ID for security checks,
-        @param ids: List of case IDs
-        @param context: A standard dictionary for contextual values"""
+        """
         stage_obj = self.pool.get('hr.recruitment.stage')
         for case in self.browse(cr, uid, ids, context=context):
             department = (case.department_id.id or False)
diff --git a/addons/hr_recruitment/hr_recruitment_data.xml b/addons/hr_recruitment/hr_recruitment_data.xml
index ec46530d2a1..8cbebda5f1f 100644
--- a/addons/hr_recruitment/hr_recruitment_data.xml
+++ b/addons/hr_recruitment/hr_recruitment_data.xml
@@ -1,7 +1,9 @@
 <?xml version="1.0"?>
 <openerp>
+<!--
 <data noupdate="1">
-
+-->
+<data>
 
         <!--    HR Recruitment Source        -->
 
@@ -66,6 +68,7 @@
         <field name="name">Refused</field>
         <field name="state">cancel</field>
         <field name="sequence">6</field>
+        <field name="fold" eval="True"/>
     </record>
     <record id="survey_job_0" model="survey">
         <field name="title">Job Survey</field>
diff --git a/addons/hr_recruitment/hr_recruitment_view.xml b/addons/hr_recruitment/hr_recruitment_view.xml
index 0384c070147..ef4cb4694dd 100644
--- a/addons/hr_recruitment/hr_recruitment_view.xml
+++ b/addons/hr_recruitment/hr_recruitment_view.xml
@@ -76,14 +76,24 @@
         <field name="arch" type="xml">
             <form layout="manual">
             <div class="oe_form_topbar">
-                <button name="%(action_hr_recruitment_hired_employee)d" string="Hire" states="open,pending" type="action"/>
-                <button name="case_open" string="In Progress" states="draft,pending" type="object"/>
-                <button name="case_pending" string="Pending" states="open" type="object"/>
-                <button name="case_reset" string="Reset to New" states="done,cancel" type="object"/>
-                <button name="case_cancel" string="Refuse" states="draft,open,pending" type="object"/>
+                <button name="%(action_hr_recruitment_hired_employee)d" string="Hire" type="action"
+                        states="open,pending"/>
+                <button name="case_open" string="Open" type="object"
+                        states="draft,pending"/>
+                <button name="case_pending" string="Pending" type="object"
+                        states="open"/>
+                <button name="case_reset" string="Reset to New" type="object"
+                        states="done,cancel"/>
+                <button name="case_cancel" string="Refuse" type="object"
+                        states="draft,open,pending"/>
+                <button name="stage_previous" string="Previous" type="object"
+                        states="open" icon="gtk-go-back"/>
+                <button name="stage_next" string="Next" type="object"
+                        states="open" icon="gtk-go-forward"/>
                 <div class="oe_right">
-                    <field name="state" nolabel="1" widget="statusbar" statusbar_visible="draft,open,done" statusbar_colors='{"pending":"blue"}'/>
+                    <field name="stage_id" nolabel="1" widget="statusbar"/>
                 </div>
+                <div class="oe_clear"/>
             </div>
             <sheet string="Jobs - Recruitment Form" layout="auto">
                 <group colspan="4" col="4">
@@ -96,11 +106,7 @@
                     <field name="user_id"/>
                     <field name="job_id" on_change="onchange_job(job_id)"/>
                     <field name="department_id" widget="selection" on_change="onchange_department_id(department_id)"/>
-                    <group colspan="2" col="4">
-                        <field name="stage_id" domain="['|',('department_id','=',department_id),('department_id','=',False)]"/>
-                        <button name="stage_previous" string="" type="object" icon="gtk-go-back"/>
-                        <button icon="gtk-go-forward" string="" name="stage_next" type="object"/>
-                    </group>
+                    <field name="state" groups="base.group_no_one"/>
                     <field name="date_action"/>
                     <group colspan="2" col="8">
                         <field name="title_action"/>
diff --git a/addons/hr_recruitment/test/recruitment_process.yml b/addons/hr_recruitment/test/recruitment_process.yml
index 70c078f7b6a..56d1a0867a0 100644
--- a/addons/hr_recruitment/test/recruitment_process.yml
+++ b/addons/hr_recruitment/test/recruitment_process.yml
@@ -1,7 +1,7 @@
 -
   In Order to test process of Recruitment,
 -
-  Applicant interested in job position. so He send resume by email.
+  An applicant is interested in the job position. So he sends a resume by email.
 -
   !python {model: mail.thread}: |
     import addons
@@ -9,7 +9,7 @@
     request_message = request_file.read()
     self.message_process(cr, uid, 'hr.applicant', request_message)
 -
-  After getting the mail, I check details of new applicant.
+  After getting the mail, I check the details of the new applicant.
 -
   !python {model: hr.applicant}: |
     applicant_ids = self.search(cr, uid, [('email_from','=', 'Mr. Richard Anderson <Richard_Anderson@yahoo.com>')])
@@ -20,12 +20,20 @@
     assert applicant.state == "draft", "Applicant state should be 'draft'."
     assert len(resume_ids), "Resume does not attached."
 -
-  I refuse applicant for the Recruitment.
+  I refuse the applicant.
 -
   !python {model: hr.applicant}: |
     self.case_close(cr, uid, [ref("hr_case_programmer")])
 -
-  I open applicant for the Recruitment. 
+  I check the details of the refused applicant.
+-
+  !python {model: crm.lead}: |
+    applicant_ids = self.search(cr, uid, [('email_from','=', 'Mr. Richard Anderson <Richard_Anderson@yahoo.com>')])
+    applicant = self.browse(cr, uid, applicant_ids[0], context=context)
+    assert applicant.stage_id.id == ref('hr_recruitment.stage_job6'), "Stage should be 'Refused' and is %s." % (applicant.stage_id.name)
+    assert applicant.state == 'cancel', "Applicant is not in 'cancel' state."
+-
+  I reset and open the previously refused applicant.
 -
   !python {model: hr.applicant}: |
     self.case_reset(cr, uid, [ref("hr_case_programmer")])