Out-Law Guide | 27 Jun 2005 | 5:00 pm | 5 min. read
This guide is based on UK law. It was last updated in June 2011.
From time to time, organisations are asked to give references for current or former employees, or they request references from others to find out more about prospective employees.
When recruiting new employees, most employers will want to make a job offer expressly conditional upon receipt of satisfactory references. To avoid disputes, the employer must make it absolutely clear to the prospective employee in any offer letter that his employment is conditional upon receipt of a satisfactory reference. Ideally, the employer should also make it clear that it is for the employer alone to determine what is "satisfactory".
Generally speaking, employers are not under a duty to provide a reference for a current or former employee, so if they don't want to provide a reference they usually won't have to. However, employers should adopt a consistent reference policy to avoid discrimination claims or breaching trust and confidence.
There are five exceptions where employees may be legally entitled to a reference.
The first, which is uncommon, is where the employment contract has an express term stating that the employee is entitled to a reference. The second possibility arises where a term is implied in the contract, for example because the employer has traditionally given references in the past for employees of a similar level. The third is where a manager, or someone with authority, has assured the employee that a reference will be provided. The fourth is the fairly common situation where an employee leaving after an internal dispute gets a reference as part of a compromise agreement. Finally, there may be a regulatory requirement on the employer to provide a reference and this may require specific information.
There are also times when it may simply be prudent for employers to give a reference, where for example, an employee has brought or is threatening to bring discrimination proceedings against the employer. Here, if an employer refuses to give a reference, the employee could try to bring a claim for victimisation. Such claims have succeeded in the past where employees have been able to show that the reason they were not given a reference was because they had previously made a discrimination claim. Employers can sometimes defend their reluctance to give a reference in these circumstances if they can show that the real reason they did not give the reference was because they did not want to prejudice their defence in ongoing legal proceedings.
Employers who give misleading or inaccurate references could find themselves facing claims from either an employee himself, or from another organisation which has relied on the reference to its detriment. Bear in mind also that, under the Data Protection Act, an employee may be entitled to see his or her reference by making a subject access request. If the reference contains something which the employee regards as unfair, this could lead to conflict and even litigation. An employee who has been the subject of an inaccurate reference can sue the employer for negligence or breach of contract. This is because the employer had a duty to take reasonable care in the preparation of a reference.
To succeed in such a claim the employee must be able to show that:
Employers should be particularly wary not to fall into the trap of giving "off the record" references, perhaps over the telephone. If the employee can prove that a reference was given (for example, by asking for the employer's phone records during the course of litigation) and contained misleading or inaccurate information, the employee might be able to bring a claim against the employer.
Similarly, a third party employer that relies upon a misleading or inaccurate reference to its detriment might be able to sue the party that gave the reference for the loss which it suffers as a result. Again, this is because the duty was on the person providing the reference to make sure it was fair and not misleading.
Employers should always bear in mind that it is possible that a departing employee for whom they are writing a reference might bring an Employment Tribunal claim. The contents of a reference should be consistent with the real reason for dismissal and any written reasons provided. For example, if the real reason the employee was dismissed or felt he had to leave was because of his poor performance, but the reference is favourable and does not mention poor performance, an employer may find it difficult to explain why it gave a good reference if it has to defend a constructive or unfair dismissal claim.
Employers should have clear policies in place about who can provide references in what circumstances and what they can include.
If a reference is received that is unsatisfactory or causes concern, the employer can terminate the employment provided the job offer or employment contract allows for this. If not, notice to terminate the contract will have to be given and the employer will be liable to the individual for notice monies due under the contract of employment.