The perils of providing a reference

In the employment market a reference from a former employer can either make or break a candidate’s career.  However in an increasingly litigious society, employers must be aware  that their legal obligations may extend both to providing a reference and what should go in it.  There is a good deal of mythology surrounding what can and cannot be said in a reference.  Here are some key factors to  consider before providing a reference.

There is no general duty to provide a reference for an employee or ex-employee.  However this does not apply to those in the financial services industry who may be obligated to do so under the terms of the Financial Services and Markets Act 2000.  In general it is best to have a company policy about whether or not a reference will be provided.  Even where there is no policy or other legal obligation to provide a reference, failure to provide a reference can give rise to liability.  Where it is the employer’s normal practice to provide references but he / she refuses to do so in a particular case, the individual concerned could claim that failure to provide one is discriminatory (if they fall into a category protected by discrimination legislation) especially in the absence of an adequate explanation from the employer.

If an employer does provide a reference then the “golden rule” is that it owes duties towards both the ex-employee and the recipient of the reference to take reasonable care to ensure that the information contained within it is true, accurate and fair.

So, what is “true, accurate and fair”?

The basic point is that the reference should not be misleading i.e. that it should contain sufficient detail for the recipient to obtain an accurate reflection of the former employee.

Problems can arise where a reference is too full, particularly where the provision of certain details could be deemed unfair to the individual.  For instance mentioning complaints against the ex-employee which were never brought to the attention of the ex-employee during their employment and therefore which they did not have an opportunity to comment on would be unfair. 

Indeed, there is no obligation on employers to give full and comprehensive references provided that the reference that is given is true, accurate and fair overall.

To complicate matters, problems can also arise where an overly cautious employer drafts a reference omitting to mention something so that it gives a misleading impression of the ex-employee.  For instance if the ex-employee was dismissed due to serious misconduct such as misuse of IT facilities in company time but the reference omits to mention this whilst going into some detail about the individual’s generally satisfactory performance, this arguably would not give the recipient an accurate reflection of the former employee.  If the behaviour was repeated by the ex-employee, in the course of their new employment this could give rise to a liability on the part of the former employer.

Besides the dates of employment and the role(s) undertaken by the ex-employee, other matters that could be covered in a reference are: performance in the job; disciplinary record; absences; time-keeping; reason for leaving etc.  But in respect of each of these categories, whilst it may seem fair to the former employer to give what appears to be factual information, the employer should take care not to provide ‘facts’ without important and relevant contextual information.  For instance if the employer knows that the employee’s performance in the job started waning due to personal difficulties which the employee raised with the employer, it may not be fair to simply state that the employee’s performance was inconsistent.  Similarly if the employer knows that the employee’s absence record is affected by an underlying medical condition it will not be fair to simply state the number of days absence (also see comments below concerning disabled employees).

In seeking to balance the duties owed to the recipient of the reference and the ex-employee, referees have increasingly adopted one of three strategies:

1. declining to provide references as a matter of course;
2. providing a reference which is confined to stating the dates of service of the individual and the capacity in which he or she was employed but nothing more; or
3. providing a more detailed reference with positive and negative remarks, accompanied by a carefully worded disclaimer.

In order to avoid the first two strategies being construed as negative against the employee, employers often include a statement that that is their company policy and it should not be taken to be disparaging of the former employee in any way.

It is worth noting that whilst a disclaimer in a more detailed reference may provide protection against a claim brought by the recipient of the reference, it may not be as effective against the subject of the reference.  Unless the reference is well drafted and the assertions in it are based on objective evidence which is available, the reference giver could still be vulnerable to complaints that the reference is discriminatory. 

One way to avoid difficulties is to give references that are agreed with the employee.  Reference wording is frequently agreed with employees as part of settlement of an employment dispute.  So, for instance, where the employment relationship has soured, the employer may offer the employee an agreed reference pursuant to a compromise agreement and compensation to ensure they do not bring claims against the employer.  This approach gives both parties clarity and confidence that no claims will ensue between them regarding the reference.  It is particularly useful in cases where the relationship has broken down due to personality differences or other subjective factors which a prospective employer may not necessarily need to know.

Frequent problems

What if a referee is asked to speculate about an ex-employee’s suitability for a new job?
Former employers are commonly asked questions regarding an ex-employee’s suitability for the job he/she is being offered. Where the new position is similar to the one they previously performed this should be straightforward, although it is still sensible to limit comments to the referee’s specific knowledge of the employee. Where the new job is, however, markedly different it may be preferable for an employer to decline to speculate and instead simply limit comments to offering an account of the employee’s duties and performance in their previous role.

What if the employee was dismissed for misconduct?
Clearly, failure to make mention of the dismissal and the underlying reasons behind it would amount to a negligent omission on the part of the referee. Conversely, it must also be borne in mind that a good reference may undermine the case of an employer seeking to defend an unfair dismissal claim by justifying a dismissal for gross misconduct or incompetence. The contents of a reference should therefore be consistent with any reason for a dismissal.

What if the referee is asked to provide details of a former employee’s sickness records?
Employers are often asked to provide details of a former employee’s sickness record. Care should be taken to provide this information without revealing any sensitive personal data such as the reasons for the absence which could potentially lead to liability under data protection laws. If however an employer is asked to provide specific information regarding the reasons for the employee’s absence it should seek consent from the employee before providing such information.

In cases of employees who experience long term sickness absence, employers should consider whether such employees might be ‘disabled’ within the meaning of the Disability Discrimination Act 1995 and therefore protected from discrimination.  If the condition causing the sickness is long term (i.e. has lasted or is likely to last for 12 months or more) and it is a physical or mental impairment which effects the individual’s day to day activities, then that person may be ‘disabled’ within the Act.  The definition is broad and therefore someone with long term persistent back ache may be disabled.  Even if the person has not declared that they consider themselves ’disabled’, the employer may have sufficient knowledge of the condition to make this judgement.

Care must be exercised by the referee not to report on the employee’s sickness record in such a manner as to be construed as discriminatory on the grounds of disability. For example, where there is an employee with a good absence record who suffers a back injury which results in a period of prolonged absence which results in the termination of that person’s employment on the grounds of capability, the referee must be careful to point out that the employee’s attendance record was good prior to him/her having developed an underlying condition (taking care at all times not to reveal details of that condition if consent has not been secured) which subsequently caused the prolonged absence.

In summary providing a reference is a delicate balancing act.  The referee has to balance their obligations to the former employee with their obligations to the prospective employer.  Being “true, accurate and fair” is not as easy as it sounds particularly where an employee has departed in difficult circumstances.  Unless there are overriding legal obligations regulating the employer’s industry or sector, a wise employer will agree a reference at the employee’s departure from employment.

“Companies need to recruit and train people in whom they have confidence and whom they can trust. It is confidence and trust that are real safeguards against fraud and disaster, and they can only be fostered and instilled on a sound ethical basis”

Sir Adrian Cadbury, Committee on the Financial Aspects of Corporate Governance, 2002

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