Gardner Leader

Redundancies are becoming commonplace in today’s uncertain economic climate, and with this, so are questions surrounding the provision of references. They frequently raise well-founded concerns for both employers and employees alike.

For the employee, a reference can mean the difference between employment success and an uncertain future claiming benefit. For the employer, there are legal ramifications to consider. Some employers worry that by giving a negative reference they will make themselves vulnerable to a claim of negligence or defamation from that employee. On the other hand, if they fail to mention serious concerns about an employee's performance and conduct, they could face a claim from the employee's future employer. A seemingly catch 22 situation.

Gardner Leader Employment Lawyer Julie Taylor examines this thorny and confusing subject and answers some of the most commonly asked questions.

Does an employer have to provide a reference?

There is no legal obligation to provide a reference, unless the contract of employment of the particular employee states otherwise, or if they are employed in a regulated industry, such as financial services.

However, the company's policy on providing references should be consistent or a refusal could lead to an allegation of discrimination or, if the employee is still employed, the refusal could possibly entitle the employee to resign and claim constructive dismissal.

Because of the legal implications of ‘getting it wrong’, often employers have a policy to confirm only the employee's dates of employment and their job title. As long as this policy is consistently applied, this should not cause any legal difficulties for the employer. It is usually recommended that a statement is included in the reference itself to confirm that it is company policy to provide only this information.

What information should be given in the reference?

Many companies will provide more details but, if they do, any information given must be accurate and care must be taken to ensure that the prospective new employer who has asked for the reference is not misled.

Information provided must also be fair. For example, if an employee was found to be innocent after a disciplinary investigation, the employer cannot mention the disciplinary proceedings without mentioning the outcome.

What are the potential consequences of providing an inaccurate or unfair reference? 

When an employer gives a reference they owe a duty of care to both the employee concerned and the recipient of the reference.  If the reference contains an untrue statement that disparages the reputation of the employee, the employee may be able to claim damages for libel or slander. If the employer gave a deliberately bad reference and knew the contents were false, the employee may have a claim for malicious falsehood.

If the employer gives an overly positive reference and the new employer relies on the information to recruit the employee, the new employer may have a claim for negligent misstatement, or for deceit if the inaccurate information was provided deliberately.

Who should give a reference and how should they be given?

Many employees think they will obtain a more accurate and detailed reference by asking for a personal reference from their direct manager.  Any reference however, which appears to be given on a company's behalf, could lead to that company being liable for its contents. Companies should therefore have a clear policy on who is permitted to give references and what they should contain.  Remember also that providing a reference is not limited to a written reference. Oral information given over the phone and information given by e-mail are all caught by the same rules.