Out-Law / Your Daily Need-To-Know

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.

Offering a job subject to references

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 their 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".

Giving a reference

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 the reciprocal duty of trust and confidence.

In October 2019 the government announced its intention to consult upon a new proposal to require employers to provide basic references for former employees. This is intended to prevent employers using references to secure non-disclosure agreements (NDAs) which cover up wrongdoing. This proposal is part of the government’s plan to bring forward draft legislation regulating the use of NDAs. Both the consultation on references and draft legislation are awaited.

There are five exceptions where an employee may be able to establish a legal right 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 settlement agreement. Finally, there may be a regulatory requirement on the employer to provide a reference and this may require specific information.

Basic rules for writing a reference

The employer must use all reasonable skill and care to make sure the facts contained in the reference are true and accurate and that the opinions expressed in the reference are fair and reasonable.

Even if the reference is factually accurate, the employer must avoid creating an unfair impression of the employee concerned, for example by focussing on negative facts and omitting to include more positive facts about the employee.

If an employee has been the subject of disciplinary action, the employer should only refer to this if:

  • it genuinely believes in the truth of the facts which are being referred to; and
  • it has reasonable grounds for believing that the facts are true; and
  • it has carried out as much investigation into the matters referred to in the statement as is reasonable under the circumstances.

Generally speaking (except, for example, where industry rules or practice require a full and frank reference) references do not have to be full and comprehensive. The employer's obligation is merely to provide a true, accurate and fair reference that does not give a misleading impression. The chapter-and-verse reference is unnecessary and increasingly uncommon. Many, if not most, employers now limit their references to the bare facts of the employer's employment, such as the dates of the employment and the position they held.

Employers are entitled to set parameters within which the reference is given, such as stressing their limited knowledge of an individual employee.

Care should be taken to comply with data protection requirements because personal and sensitive data will be involved.

Mark the reference "Private and Confidential: for the addressee only".

The risks of getting it wrong

Employers who give misleading or inaccurate references could find themselves facing claims from either the employee or from another organisation which has relied on the reference to its detriment. An employee may be entitled to see their reference as part of disclosure in an employment tribunal claim. 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:

  • the information contained in the reference was misleading;
  • because of the misleading information, the reference was likely to have a material effect upon the mind of a reasonable recipient of the reference to the detriment of the employee;
  • the employee suffered loss as a result (for example the withdrawal of a job offer); and
  • the employer was negligent in providing such a reference.

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 they had to leave was because of 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 avoid contravening the Employment Relations Act 1999 (Blacklists) Regulations 2010 which prevent compiling lists of trade union members and activists in order to discriminate against workers on grounds of trade union membership or trade union activities. 

Clear policies

Employers should have clear policies in place about who can provide references in what circumstances and what they can include.

Unsatisfactory references

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.

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