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Navigating the reference minefields

Employers are frequently asked to provide references for employees but often know there can be risks but do not know what they should and should not mention.

There is no obligation for an employer to provide a reference, save for circumstances where specific regulatory requirements apply. In reality, most offers of employment are conditional upon receipt of acceptable references and therefore will often provide reference for departing employees on request. However, there are a number of minefields that employers must navigate when providing a reference.

In a nutshell, an employer owes a duty of care to the employee to exercise reasonable care and skill when providing the reference. A reference must therefore be truthful, accurate and fair. Failing in this duty opens up an employer to a claim by the employee. In addition, a claim can be brought by the prospective employer if the reference contains inaccurate information that ultimately leads to financial loss!  For example a glowing reference for an underperforming employee.

As a result of the risks associated with providing references, most employers will chose to provide only brief factual references, including limited information such as the employee’s job title and the dates that they were employed.

Sometimes referees will receive a specific list of questions from prospective employers, such as the reason the employment ended and information about the number of sick days taken by the employee. Employers should think very carefully before responding to such specific queries. Referring to sickness absence could be discriminatory.  Revealing the employee’s personal data may breach data protection legislation.  Information about a misconduct or capability dismissal could open up the employer to claims by the employee if the reasoning behind the dismissal is disputed.

It is likely to be prudent to avoid referring to a misconduct dismissal when the prospective employer has not specifically asked for the reason that the employee’s employment came to an end. That said, in some circumstances, omitting to include information about misconduct could be considered misleading. It is hardly surprising that most employers just stick to basic factual references!

Each case should be considered on its own facts.  However, to ensure that they take a consistent approach to references, employers should have a policy in place that deals with references to employees.  This will ensure that those tasked with providing references are clear about what they should (and shouldn’t) say. A policy would also help manage employees’ expectations in relation to what the reference might contain, which could go some way in avoiding allegations of discrimination or victimisation.

It is worth remembering that references can be used as a non-financial bargaining chip when agreeing the terms of a severance agreement or a settlement agreement. For employees departing on less than favourable terms, a neutral agreed reference could be just as valuable, if not more, than a financial award. Whilst departing from an agreed reference can be breach of contract in some circumstances, this can be addressed by ensuring that the relevant clause allows the employer to change the reference should further information come to light.

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