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| Financial Services
June 4 2018

Care to be taken when employers supply references

Former or current empoyees may ask the employer for references, but should they give them?

There is usually no legal obligation on an employer to provide a reference for former or current employees, except in limited circumstances. Employers are generally advised to have a policy in place regarding the provision of references, which should be followed consistently when asked to provide them. The policy should be clear as to whether or not to give a reference and, if so, what should be included. If references are given, they should be consistent with the policy to avoid allegations of discrimination and other potential claims including victimisation.

If an employer does provide a reference, they are under a duty to exercise reasonable care to ensure the information provided is factually accurate and that it does not give a misleading impression of the employee. Companies need not provide much detail in a reference but they should try and provide a balanced view of the employee. Although this does not need to be comprehensive, the reference should not mislead or unfairly show the employee in a negative light, or the employer may face a claim for negligent misstatement.

It may be difficult for an employer to balance duties owed to its employee (both current and former) and the recipient of the reference, especially in relation to information regarding disciplinary issues that may well be relevant to the reference but which the employee may prefer not to be disclosed. Generally, where the company can show that the reference is true, fair and not misleading, it has been held by the courts that they can provide information in the reference relating to disciplinary proceedings and the employee’s performance. This is the case even where no action was actually taken by the employer in relation to this, or if the matter remains unresolved. 

The recent High Court case of Hincks v Sense Network Ltd confirms this. In this case, a reference was provided by the employer’s compliance department, which included negative statements of opinion about the former employee. These opinions had been formed on the basis of a previous investigation. The employee argued that if the negative opinions had come from the investigation, then the referee should have ensured that the investigation in question was reasonable and fair. This argument was dismissed by the court and it was held that it would be extremely difficult for a referee to establish whether previous investigations were fair and would impose a considerable burden on them.

This case makes it clear that, when providing a reference, the person must ensure that the facts contained in it are accurate and the reference is fair. When a reference includes an opinion, there must be a proper basis for that opinion. Where the opinion has come from an earlier investigation, the referee should take reasonable care in considering the relevant documents (including the investigatory notes/statements) so that they are able to justify the basis for forming the opinion and be satisfied that there was a proper basis for it. 

If the employer only wishes to provide a basic factual reference, they should explain that this is in accordance with their policy and should apply this policy across the board; otherwise the employer may face claims, including for discrimination and victimisation. When drafting a reference that goes beyond a factual reference, employers should ensure that they are fair and accurate and should think carefully about including comments about an ex-employee's suitability for a new job, especially if the job is different to their old role. In that case, companies should limit comments to their specific knowledge of the employee, which can be objectively justified. They should also be cautious about including comments about performance, attendance or sickness absence, particularly if there is a risk that these will give rise to disability discrimination claims.