Last reviewed 3 October 2018
Here Stuart Chamberlain, senior employment consultant at Croner-i, answers your questions on the contentious issues surrounding the provision of references. He incorporates the guidance from Acas and gives tips on how you can avoid legal liability problems when giving references.
A reference is used to provide important information to a prospective employer to assist it in deciding whether a job applicant is suitable for a post. References may be given orally or in written form and they may form part of a settlement agreement. A job offer may be conditional on a satisfactory reference.
Acas has recently published guidance to employers on providing references. The guidance stresses that all organisations should have a policy on handling references, telling managers what information they can and should provide.
Q: Is there a legal obligation on employers to provide a reference?
A: No. There is no legal obligation on an employer to provide a reference for a departing employee, except in the following cases.
Where there is a written agreement to do so.
Where the employer and employee work in a regulated industry — such as financial services — which is regulated by the Financial Conduct Authority (FCA).
It appears to be relatively rare for an employer to refuse to supply a reference. The Acas guidance suggests that where a reference is not provided by a former employer or one suggests that the employee is unsuitable, it may be worth discussing any concerns with the job applicant before reaching any conclusions.
Q: What sort of information should a reference contain?
A: There is no duty to provide a full and comprehensive reference. The employer may choose how much or how little information is included in the reference. In the modern workplace an employer may choose just to provide the basic facts of employment, that is:
dates of employment
job title and responsibilities
If the employer does wish only to supply the standard factual reference, this must be applied in all cases.
A reference could also include the following.
A description of the candidate’s skills and abilities.
Their strengths and weaknesses.
Answers to specific questions posed by the prospective employer.
The reference should not contain irrelevant personal information. The days of “purple prose” from the referee have long gone; the referee should stick to the facts.
Q: Can an employer just give an oral reference?
A: This is not recommended and is not best practice. References can be supplied orally but should be confirmed in writing. It is also unwise to comment on the phone about an employee’s conduct and performance.
Remember that employers in certain industries, notably education and those regulated by the FCA, require written references. These references must contain “all relevant information” that is relevant to an assessment of an individual’s fitness and propriety, and must be based on the previous six years.
Q: Can an employer supply a “bad” reference?
A: Yes, and this might show that the job applicant is not suitable for the post for which they are applying or that they lack the necessary experience. But the reference must be true, accurate and fair and should not include any misleading or inaccurate information. Above all, the employer should avoid subjective opinion and comments unsupported by evidence.
The risks of expressing opinions in a reference were recently highlighted in the High Court’s judgment in Hincks v Sense Network Ltd. The High Court dismissed a claim brought by a former employee for negligent misstatement following the receipt of a negative reference by the employer. In his judgment, the High Court judge held that references can include frank and honest views where the writer of the reference has taken reasonable care as to the factual content and any opinions expressed within it. This requires an objective and rigorous appraisal of facts and opinions and that reasonable care is taken to ensure that the facts are accurate and true and that, where an opinion is expressed, there is a proper and legitimate basis for it.
Indeed, in the light of the potential liability in a reference for claims of discrimination, negligent misstatement and defamation (see below), and the duties set out by the High Court in Hincks, it is not surprising that employers may simply wish to provide a reference containing only the basic facts — that is, dates of employment, job title and responsibilities, and salary.
Q: What are the potential legal pitfalls in providing a reference?
A: These pitfalls may be summarised as follows.
Breach of the duty of care
An employer who provides a reference for a current or former employee owes a duty of care: a duty to take reasonable care in composing the reference. Failure to take reasonable care, for example, could lead to an award of damages, particularly if the employee subsequently finds the job offer is withdrawn. In such claims the employee would have to show that:
the information in the reference was misleading
that this misleading information had a negative effect on their employment prospects
the employer was negligent in supplying the reference.
A new employer may also have a claim against the former employer for inaccurate information if the reference paints a false and misleading picture of the applicant’s potential and abilities when reality subsequently proves otherwise.
Finally, an employer will breach the implied term of trust and confidence if it fails to take reasonable care in the production of a reference for a current employee.
The employee would seek to prove in court that the contents of the reference were inaccurate and defamed (libelled) the employee. An employer’s defence in such situations would be that the reference was true and an honest opinion.
An employer must not refuse to provide a reference on discriminatory grounds — that is, under the “protected characteristics” of the Equality Act 2010. Nor must the employer victimise (because that person, for instance, had previously brought a claim of sexual discrimination or harassment) the employee by such a refusal. The reason for the refusal could amount to a discriminatory act.
And remember there is no limit to the tribunal award for “injury to feelings” in such cases.
Q: What is the effect of the new data law on references?
A: The Data Protection Act 2018 and the General Data Protection Regulation (GDPR) have had a significant impact on the provision of references. The new legislation is engaged because the supply of a reference to a prospective employer will involve the disclosure — and thus the processing — of personal data. The law requires the employee’s explicit consent to the processing of this data in the reference, including health data. For example, an employee might give explicit consent to the provision of a reference but not to the disclosure of their absence record.
One way around this for the old employer is to pass the responsibility for explicit consent to the new employer. Evidence of the employee’s consent would then have to be provided by the new or prospective employer (for example, in the form of a photocopy of employee’s consent) to support the request for a reference requiring specific details of the employee.
Better news for the employer: under the new legislation it does not have to provide subject access to references it has given confidentially in relation to an employee’s employment.
All this legal complexity under the data law underlines the wisdom of merely producing a basic factual reference — as outlined earlier.
Q: Can an employee ask to see the reference before it is sent?
A: No. Under the new data protection law (see above) employees do not have the right to see a reference in advance. Both the Acas guidance and that from the regulatory bodies such as the FCA note that affording the employee the opportunity to respond to any information (particularly if it is adverse) contained within the reference goes to the heart of the question of fairness. Employers may wish to consider this.
Q: What information should be provided in a reference in a settlement agreement?
A: Employees often request a reference to accompany the settlement agreement that brings the employment to an end and settle any outstanding claims. Problems can arise where the dismissal has been for serious misconduct. Even if the employee does not agree that they are guilty of the alleged misconduct, the employer will not be able to put down a different reason for the dismissal as this would mislead potential prospective employers.
The best practice model is for the employer to set out the basic factual details and agree some general phrases with the employee that do not contradict the reason stated for the dismissal in the agreement.
8 tips when writing references
The Acas guidance recommends that employers have a written policy in place and state that the organisation will follow its general principles consistently.
Limit the number of people in the organisation authorised to provide references.
Remember the duty of care: conduct a full search of records before completing the reference.
In order to minimise potential legal liability, the written policy could state that the organisation will only provide basic factual references — that is, simple “statements of service” confined to matters (dates of employment, job title and responsibilities, and salary) that are easily verifiable. Such references do not stray into matters of opinion about the employee’s conduct or performance. Of course, these minimal references may not be so helpful to the prospective employer.
Be familiar with the data processing implications under data protection law (ie obtain an employee’s specific consent) when producing a reference.
No “special categories of data” — as defined in the Data Protection Act 2018 and the GDPR (that is, membership of a trade union or union activities or medical information about the employee) — should be included in the reference.
Avoid details of any allegations, investigations and disciplinary issues relating to the employee unless they have been thoroughly investigated and upheld.
If the employee/organisation is subject to the regulatory regime, comply with the requirements and update documents when new and relevant information comes to light.
Note that the Information Commissioner has yet to update the “Good Practice” guide to references under the new data legislation.
The recent High Court case of Hincks v Sense Network Ltd is a useful reminder to employers of the need to take real care in compiling a reference. The potential legal pitfalls outlined in this article, let alone the new demands of the data protection legislation, are sound explanations of why it has become increasingly common for employers merely to provide standard factual references, limited to the dates of an employee’s employment, job title and salary.