References

The thorny issue of whether to provide a reference, and if so, what to say, was covered in a previous Letter of the Law (8 August). A new Court of Appeal decision has changed the way in which employers should be looking at the issue of references, once again making the easy option of not providing any reference, or only a standard reference, look more attractive.

Current case law

In a case involving Sun Alliance Life, the Court of Appeal decided that the approach employers should take in considering what to put in a reference is similar to that developed by misconduct dismissal case law. Confused? I think we are all a bit mystified. Essentially, Lord Justice Mummery's view was that only matters which have been properly investigated and which the employer has reasonable grounds to believe are true, should be mentioned in any reference.

In the Sun Alliance Life case, an employee was thought to have been guilty of dishonesty, amounting to corruption - potentially a gross misconduct offence. Before the disciplinary hearing took place, however, the employee resigned and thus the charges of dishonesty were never properly put to him. It also seems that there had not been a proper investigation. In that case, the employer was found to be negligent in stating in a reference that it had a reasonable basis for dismissing the employee.

Conclusion

In order to take reasonable care, therefore, employers should, in the view of Lord Justice Mummery, confine unfavourable statements about an employee to those matters into which "they had made reasonable investigation and had reasonable grounds for believing to be true". He went on to say that where an agreed termination takes place in such circumstances, the parties should try to agree the wording of a reference, as commonly occurs. The problem many employers will immediately see, however, is that in these circumstances, the expectations of an employee are often quite unreasonable. They may have done a good job in the past, but it is not open to an employer simply to refer to previous good performance without also making a reference to the potentially bad performance which resulted in the dismissal.

At its worst, the decision gives employees a way of avoiding a bad reference by resigning and refusing to take part in any investigation of misconduct. At its best, it is still a powerful incentive for employers to stick to the basic facts, and avoid comment on more subjective matters. This is a shame since many employers would agree that the reference system works to their benefit. Employers should now, at the very least, be developing their own policy on references.