Writing a reference (or giving a oral reference) for an ex-employee can land you in legal hot water, but you don't want to prejudice your employee. This factsheet is to help you understand your rights and obligations when providing references, so you stay safe, but fair
First, make sure you know whether the reference you are giving is on behalf of your business, or a personal reference from you as an individual. If given on behalf of the business, then the business is responsible for what is in it. If given using the business' notepaper, or via your work email account, it is likely to be treated as a business reference if there is a dispute. Consider introducing a policy that identifies who can give references, and whether they need to be 'signed off' by anyone else first.
If you give a written or oral reference, you have a duty to take reasonable care to ensure it is true, accurate and fair and that it is not misleading - a duty that is owed to both the employee and to the new employer.
So if you provide a bad reference that you can't substantiate, you run the risk of your employee suing you for damages if they didn't get the job, or suffered some other financial loss, because of it. In a worst case scenario, they could even bring an action against you for defamation or discrimination.
Care should also be taken if you agree what can be said in a reference with an employee as part of a settlement agreement. An employee recently won her case at the Employment Tribunal when a job offer was withdrawn following a telephone reference given by her old employer. The employee had agreed 'bland' wording for any reference her old employer was asked to provide. When a potential new employer telephoned asking for more information, the employee's job offer was withdrawn as a result of what her old employer had said. The employee successfully claimed disability discrimination against both her old and potential new employer. [Case ref: Pnaiser v NHS England & Anor UKEAT/0137/15/LA]
The new employer could also claim damages against you if you give a glowing reference for an employee who has not in fact been satisfactory, and that person goes on to perform badly in their new job.
One option is to refuse, as a matter of policy, to give references for any employee - you are not under any obligation to do so unless your employee's contract of employment explicitly states that you will. But this is unusual, and inconvenient for your employees and ex-employees. Failure to give a reference, without any explanation, can also imply that you have had problems with the employee. This could give rise to claims that you have discriminated against them - on grounds of sex, age, race, disability, sexual orientation or religious belief, for example. They could also argue that you have broken the term of mutual trust and confidence that is implied in every employee's contract of employment. So, if you have a policy of not giving references, respond to each request for a reference with a specific statement that it is not your policy to give them, to avoid misunderstandings.
Many employers provide only bare facts - the position(s) held by the employee, salary and other benefits, sickness record and commencement and termination dates. State that this is your policy on the reference you give, so that the new employer does not read anything into the fact that you have not provided fuller details. You may also agree that you will only provide bare facts as part of a settlement agreement where an employee has been made redundant or has been dismissed.
Most full references include the bare facts, plus key responsibilities, an assessment of the employee's performance, views on their personal qualities relevant to the positions held, eg honesty, integrity, drive, etc, their timekeeping, and reasons for leaving.
The duty to take care to be true, accurate and fair, and not to be misleading, means you should avoid:
If an employee's performance has been poor or they were dismissed for serious misconduct, refer specifically to the problems experienced with the employee (as well as any positive points, in the interest of balance). It is dangerous to leave them out if they are material. A bad reference is permissible, provided that it is not malicious and that you took reasonable care to ensure that the information is true - for example, by investigating any matter giving rise to the bad reference.
If an employee has been dismissed, ensure that the statements made in the reference tally with the reasons given for the dismissal.
If the employee is senior enough, agreeing the wording of their reference with them may be part of a compromise agreement in settlement of their claims, leading to them 'going quietly'.
Avoid inconsistency - giving a reference in one case and not another, or giving only a factual reference to one employee and a full reference to another - as this could give rise to a claim of discrimination by a disgruntled employee. It is best to establish a policy that states whether you will give references or not and, if you do, who may give them and what they should contain.
If your ex-employee asks to see the reference, you do not have to disclose it. However, the new employer has to if:
Take advice before giving any reference if it is important to you that your employee should not see it, or parts of it that you consider confidential - at the very least you should make it clear to the new employer that you do not consent to disclosure of the reference, or the confidential parts of it, to the employee.
If the new employer is obliged to disclose the reference, generally they should take care not to disclose any part of it that relates to another person ie anyone other than the employee.
Disclaimers excluding liability for the accuracy of the reference are of limited effect - they will protect you only if they are reasonable. Attempts to exclude liability for a statement that can reasonably be expected to be something an employer should know, is likely to fail. That said, you may wish to include a disclaimer in your references as a 'belt and braces' measure.
All references should be marked 'private and confidential', to make it clear that they are intended only for the person to whom the reference is given (the new employer for example), and must not be disclosed to, or relied on by, any third party - whether by your staff giving the reference, the new employer or, if they obtain sight of a copy, the employee to whom it relates. Some employers include a specific statement in the reference that no third party is to rely on it.
The Information Commissioner has issued a 'Data Protection Good Practice Note: Subject access and employment references' which provides the following good practice guidance to new employers faced with a request for a copy of the reference given by their ex-employer:
"In most circumstances you should provide the information in a reference, or at least a substantial part of it, to the person it is about if they ask for it. Even if the referee refuses consent, this will not necessarily justify withholding the information, particularly where this has had a significant impact on the individual, such as preventing them from taking up a provisional job offer. However, there may be circumstances where it would not be appropriate for you to release a reference, such as where there is a realistic threat of violence or intimidation by the individual towards the referee.
You should consider whether it is possible to conceal the identity of the referee, although often an individual will have a good idea of who has written the reference. If it is not reasonable in all the circumstances to provide the information without the referee's consent, you should consider whether you can respond helpfully anyway (for example, by providing a summary of the content of the reference). This may protect the identity of the referee, while providing the individual with an overview of what the reference says about them."
Always take legal advice if in doubt.