How many times have you heard people say that their employer can’t give them a bad reference? For me, it is one of those phrases that I would like to have a pound for, for each time I’ve heard it. So what can an employer say and what shouldn’t they say?
There is no general legal obligation on an employer to provide a reference but it is expected that in the majority of cases, a reference will be provided. What that reference looks like will differ from business to business and from industry to industry. Employers that are regulated by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority for example, have a duty to provide a reference for those individuals whose new role involves the performance of a controlled function as the information provided will be relevant when considering whether an individual is fit and proper to be appointed to the role they have applied for.
Employers will also be obliged to provide a reference if they have already agreed to provide one. This situation often arises as part of the negotiated exit of an employee when a Settlement Agreement is signed by the employee and the employer, with one of the terms being the provision of a reference. In this situation, the employee has the comfort of knowing exactly what will be included in a reference and can if appropriate negotiate the contents, a valuable tool in a disputed exit.
The decision in relation to supplying a reference and if so what information should be included is an important one that should be exercised fairly in order to avoid an allegation of discrimination. Introducing a policy in relation to the provision of references ensures control over the process and a consistent approach across the board.
Any reference for an employee must be “true, fair and accurate” but what does that mean in reality? Unfortunately for some employees, it means that if they were dismissed for gross misconduct then there is every possibility that their former employer will confirm this when responding to a reference request as it is factually correct.
If a reference is not fair and accurate and an employee thinks they have been given a bad reference that is inaccurate or misleading, then it may be possible for the disgruntled employee to claim damages in court, particularly if they can show that they have suffered a loss as a result of the reference, for example if a job offer is withdrawn.
However, the days of detailed references that comment on an employee’s skills, experience and overall abilities have now all but passed as the vast majority of employers will limit any reference to a basic factual reference that simply confirms job title and dates of employment. The reason for this shift to restricted information is to limit the former employer’s exposure to a claim from either the former employee or the prospective employer that relied on the information that has been provided, especially if the information turns out to be less that accurate. A reference should also always be sent marked “confidential” and for the attention of the addressee only.
Many employers will also to try to limit liability for references by including a standard disclaimer such as “While the information provided is, to the best of our knowledge, completely accurate, we cannot accept any liability for decisions based on it”. Whether the disclaimer is effective will depend on the circumstances and the information provided so it is always advisable to ensure that the contents of any reference is true, fair and accurate.
The provision of a reference will not escape the new data protection laws (General Data Protection Regulations (GDPR)) that come into force on 25th May 2018 as it will generally involve the processing of personal data. It is therefore more important than ever for employers to have a clear policy in place in relation to references that makes it clear who can provide a reference on behalf of an organisation, how the reference will be kept secure (including how long it will be retained for) and most importantly, how the data protection principles have been complied with.
Julie Edmonds is Senior Associate and Employment Specialist at JPC Law.
Please contact her for more information.
E: jedmonds@jpclaw.co.uk
T: 020 7644 7290
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