References – everything you need to know

References are a potential minefield for employers. Employment expert and partner Mike Delaney walks you through everything you need to know to stay on the right side of the law – and out of the tribunal…

An employer is under no legal obligation to provide a reference for an ex-employee. However, an employer should be mindful to maintain a consistent approach in relation to the provision of references or they could be faced with claims for discrimination if employers make exceptions as to which employees are provided with a reference. This point was considered in the case of Rhys-Harper v Relaxaion Group Plc [2003] IRLR 484 where it was held that  a former female employee had the expectation of being given a reference at a later stage, and that other male ex-employees would, in the same circumstances, have been given one. Should this be the case, the employer may be found to have discriminated against the ex-employee by not providing them with a reference.

To avoid facing such claims, an employer should have a clear policy regarding the provision of references making clear who can provide references, in what circumstances they can be provided and what information they should include. This policy should be set out in the company’s staff handbook or alternatively readily made available to all employees.

Equally if an employer provides a reference which is untrue it could face a claim for defamation from the former employee.  Similarly a prospective employer may allege that the reference given was negligent due to its inaccuracy or omission of material information and bring a claim for any losses arising which could be considerable especially if the new employer incurred a recruitment  fee from an employment agency.

Who can provide references?
References can be provided in either a personal or a corporate capacity. Personal references are not given on behalf of the employer and the employer cannot be liable for its content. Where personal references are given by employees of the company the employer should ensure that they are not written on company headed notepaper or the reference may be construed as being given on behalf of the company which could make the employer liable for any inaccurate or misleading content. An employer is legally responsible for a corporate reference and should therefore be careful as to its content.

What information should be included?
An employer owes a duty to both the ex-employee as well as the recipient of the reference, to provide a reference that is true, accurate and fair. The best way to ensure that this is achieved is for the reference to state the relevant dates pertaining to the ex-employee’s employment with the company and the roles that they carried out. When adopting such a position, an employer should state in the reference that it is company policy to only provide a reference in this limited format in order to avoid being construed as providing a negative reference.

Alternatively, an employer may decide to provide more specific details relating to the former employees period of employment such as performance in the job; disciplinary record; honesty; absence record; time-keeping; reason for leaving; and any other relevant personal matters. In doing so the employer must always take care that they comply with the Data Protection Act 1998 as the reference is likely to contain personal data. The employer would be wise to obtain the ex-employee’s consent before providing any information of a personal nature. An employer should limit all comments to their specific knowledge of the ex-employee and if asked to comment on whether or not the ex-employee would be suitable to the new role he or she is applying for, a prudent employer should decline to speculate and  limit their comments to the role that has already been fulfilled.

Some employers often provide more specific details and accompany them with a disclaimer stating that no responsibility is accepted on behalf of the company for any errors, omissions or inaccuracies in the information or for any loss or damage suffered as a result of the recipient relying upon it. It would be wise to avoid taking this course of action as the employer would need to ensure that the disclaimer is reasonable for it to be effective. This may be very difficult for an employer to determine without taking legal advice.  A court may not look so sympathetically on an employer trying to hide behind a disclaimer when the information being provided is inaccurate or omits material information which should all be within the employer’s knowledge. Furthermore, a disclaimer will only limit the employer’s liability against the recipient of the reference.

Employer’s liability to the subject of the reference
An employer must ensure that the reference cannot be seen to be discriminatory. Whilst it may be easy to ensure that a reference is not discriminatory on the grounds of race, sex, sexual orientation or religion an employer may fall into the trap of discriminating on the grounds of disability if comments are made about attendance or sickness absence where these have been related to a disability.

Any statement made in a reference which is untrue is likely to bring with it a claim for defamation. A cautious employer needs to ensure that any comment made in a reference  can be justified and supported.  Therefore employers would be well advised to state facts as opposed to offering opinions.

As well as a claim for defamation, an employer may also be sued for negligence if any information provided in a reference turns out to be inaccurate. In the case of Spring v Guardian Assurance Plc [1994] ICR 596 it was held that an employer owed a duty of care to the ex-employee in respect of the preparation of the reference. The employer was successfully sued for negligence after providing a reference that was so unfavourable that all of the ex-employee’s attempts to get work were doomed to failure by reason of the inaccurate reference. The employer was held to be liable for the  losses suffered as a result of the negligent preparation of the reference. An employer is also likely to be sued for negligence if a reference alludes to an employee’s misconduct where the employer had no reasonable grounds on which to base the belief that misconduct had taken place, and an investigation had not been carried out.

An employer may also find themselves facing a breach of contract claim for preparing an inaccurate reference as it is now considered that in some circumstances a duty will be implied into the contract of employment that the employer shall take all reasonable care when preparing a reference. In order to prevent any such claim from being brought, an employer would again be wise to state facts only within their own knowledge.

Liability to the recipient
Not only may an employer face a claim from the former employee for failure to provide an accurate reference, but it may also be pursued by the recipient of the reference. A prospective employer will ask for a reference as the former employer is best placed to provide specialist knowledge about the former employee. If the former employer agrees to provide a reference,  a common law duty arises on the part of the former employer to provide an accurate account of all information contained in the reference. Should the prospective employer rely on this information and it ultimately turns out to be inaccurate, the former employer could once again find themselves being sued for negligent misstatement.

One final claim an employer could face is for any losses arising out of “deceit” should it be found that the employer has knowingly included false information in the reference.

Some Dos and Don’ts
Dos
• Have in place a policy setting out who can provide references, in what circumstances they may be given and what they should include
• Mark all references as  “Private and Confidential” and “For the addressee only”
• State brief factual details concerning the former employees employment dates and roles which were fulfilled and state that it is the company’s policy to provide references in this form
• Limit comments to the referee’s specific knowledge of the ex-employee
• Make sure the reference is consistent with the real reason for dismissal

Don’ts
• Give a personal reference on headed notepaper
• Give a verbal reference without taking a contemporaneous note of everything that is said
• Fail to give a reference if it is the company policy to give one or it has become common practice to give one
• Provide a reference which could be seen as discriminatory

One final thought
Employers need to be careful when divulging information about an employee’s conduct.  In the case of TSB Bank Plc v Harris [2000] IRLR 157 investigations were made into an employee’s alleged misconduct without her knowledge. The employee applied for another job whilst still in employment and made the prospective employer aware of the alleged misconduct. When asked by the prospective employer for a reference, the current employer mentioned the various complaints that had been made against the employee without her knowledge.  In the circumstances it was held that the provision of the reference breached the term of trust and confidence which is implied into all contracts of employment as a result the employee was able to resign and bring a claim for constructive dismissal against her employer.

Advice for Recipients of References
Prospective employers should always make any job offer and or provide a contract of employment subject to receipt of a satisfactory reference.  Upon receipt of a unsatisfactory reference the employer may in such circumstances terminate the employment and should be protected.  If no such conditions are made in the offer of employment, the new employer will have to give notice to terminate the employment and will be liable for notice monies due under the contract of employment.