Employment references

When providing an employee with a reference, employers need to be aware that they are creating a document which has legal implications.  In almost all cases, a reference has a huge bearing on whether or not an employee obtains employment – a good reference can be the key to getting the job, whereas a bad reference can be hugely detrimental to an employee’s career.

Many employers are unsure of the rules regarding references, including whether they are compulsory, and how important they are in the hiring process. We look to answer some of the most common questions about this below.

Does an employer have to give a reference?

There is no legal obligation for an employer to give a reference for an employee at all. Consequently, even when an employer is asked either by an ex-employee or by a prospective employer for a reference, there is no legal duty to provide any kind of answer at all. However, if a reference is given, then the person giving the reference is under an obligation to ensure that the reference is both true and fair.

Exceptions to the General Rule

Although there is no legal obligation to give a reference, there are a number of professions and jobs where it is considered to be good practice and there therefore an implied obligation.  This is because a failure to provide a reference would mean that the former employee could struggle to obtain new employment due to the nature of their profession. 

Good examples were references are crucial are education, medicine and legal and financial services. The leading case on references involves the financial services industry.  In this case a deliberately bad reference was given by an employer, which led to the employee being unable to get a job within the industry.  The employee was victim of a malicious reference and was awarded over half a million pounds in damages to reflect the loss he had suffered as a result of the bad reference.

Agreed References

Depending on the circumstances surrounding the end of an employment relationship, an employee can sometimes negotiate an agreed reference with the employer.  This is often the case where the employee is entering into what is a Settlement Agreement, which is a contract signed by both parties to end the employment relationship by consent.

It is important to ensure that the wording of an agreed reference is considered carefully and that the employer uses that working when giving future references.  Usually there is clause in the Settlement Agreement which ensures the employer must use the agreed wording and that any oral reference is consistent with that wording.

Problems with Questionnaires

A more recent trend is for prospective employers to send out standard questionnaires to former employers. These surveys often ask questions which a former employer may be reluctant to answer.  There is no legal obligation to answer such questionnaires if you do not want to.  If you have an agreed form of reference, then simply provide that.

Potential Liability

Nowadays many employers fear giving personal references due to the fear of incurring unwanted liability and facing a potential claim.  It is common practice, particularly with large employers, simply to give factual references, which can only include length of service and job title.

The concern for employers is, if a reference is given which is critical of a former employee, the employer must be able to justify it.  If they cannot justify it, and the former employee suffers a loss as a result (i.e. is unable to obtain new employment) the employee could bring a claim for providing an untrue or unfair reference.

On the other hand, if an employer gives a glowing reference for an employee which is not fair and true (i.e. the reference makes the employee sound better than they actually are) then the new employer could make a claim against the former employer if they have been overly generous, or have not disclosed something about that individual that you should have done which would have affected their decision to employ the person.

Can You Avoid Liability?

One thing that anybody giving a reference must be aware of, is that simply saying that a reference is private and confidential, or saying that a reference is made without liability, does not protect the employer from a claim.

A reference is not private and confidential and you cannot write a reference and not be responsible for what is in it. The subject of the reference is always going to be able to see what has been written about them. Consequently, you should never write a reference which you would not be prepared for the subject of that reference to read. Anything in a reference must be true and must be fair about the person whose reference it is. If you are giving a reference you need to be careful what you say; it can come back and bite you.

Contact Percy Hughes & Roberts

The Employment Team at Percy Hughes & Roberts can offer advice to businesses regarding references. Sarah Simcott our Head of Employment has experience in dealing with reference cases, and is best placed to offer support in this area.

Contact us by calling 0800 781 3894, or fill out an online enquiry form and we will get back to you at a convenient time.