Employee references – obligations and pitfalls

It is a common misconception that there is a general obligation to provide a reference. In fact, save in a few circumstances, there is no duty on an employer to provide a reference. Nor is there any general obligation to reply in a specified format (for example a list of questions) requested by the prospective employer.

An obligation can exist by virtue of regulation. For example, in the financial services sector certain employers are required to obtain and provide references, including specific information.

There may sometimes be in a contractual obligation to provide a reference. For example, if the terms of an employee's departure are compromised by way of a settlement agreement, this will often include an agreed obligation on the employer to provide a particular reference.

Employers also have to be cautious of refusing to provide a reference in circumstances which might be discriminatory. For example, refusal to give a reference because someone has a protected characteristic (such as their age, race, nationality, disability and so on) or because they had carried out a protected act, could amount to discrimination and/or victimisation (protected acts include having complained of discrimination or having pursued a claim of discrimination, for example).

Whilst, save in limited circumstances, there is no obligation to provide a reference in respect of a former employee, refusal to do so may seem churlish, particularly in respect of an employee who might have worked for an employer for quite some time, and may lead a prospective employer to wrongly conclude that the employee left under a cloud.

Assuming then that of reference is to be given, what should it say?

An employer is under a duty to be fair, truthful and accurate. A reference does not need to be full and comprehensive. However, it must not be misleading.

Employers owes a duty of care not only to the recipient of the reference (the prospective employer), but also to the former employee who is the subject of the reference.

As well as ensuring that any reference is fair, truthful and accurate, an employer should usually:

• Avoid mentioning complaints about which the employee is unaware

• Avoid mentioning unresolved disciplinary charges, without being clear that those proceedings were unresolved, and without judging what the likely outcome of the proceedings would have been had they been concluded. Advice should be taken before including such matters in a reference (or choosing to omit them)

• Take great care if mentioning sickness absence information, as this may be discriminatory.

In order to minimise the risk involved in providing a substantive reference, many employers now provide only a brief factual reference, perhaps assuming that this avoids any potential liability whatsoever. However, it cannot be said that such an approach carries no risk at all. It can still be alleged that such references have given a recipient an unfair impression of the reference subject.

To minimise such dangers employers, if choosing to provide factual only references, should have a policy that this type of reference is provided for all former employees and specify in the reference that this is their policy. They should also ensure that there is no specific duty to provide a full reference.

It is common practice to include a disclaimer in which employers state that they do not accept liability in relation to any inaccuracy or in relation to any reliance being placed upon the reference. Such disclaimers may be effective. However, in order to avoid liability to the subject of the reference, the employer would need to obtain the employee's prior agreement to the reference being given on that basis. Any disclaimer will only be effective to the extent that it is reasonable, taking into account various factors upon which employers may wish to take advice.

Finally, whilst perhaps obvious, it is also worth mentioning that employers will be liable in the event that they intentionally provide a false reference. The subject of a reference may make a claim in the civil courts for malicious falsehood if they can show that the reference was untrue and malicious. That former employee may also have a defamation claim.

This blog does not touch upon the GDPR (data protection) issues that arise in respect of providing references for former employees. There are such issues, and is it is recommended that employers take advice in this regard.

This is not legal advice; it is intended to provide information of general interest about current legal issues.