References

In this series, we delve into the Xpert HR reference manual to find
essential information relating to one of our features. This month’s topic…

Overview

An employer is not usually obliged to provide a reference for an employee or
former employee. This is the case whether the request comes from the employee,
a prospective employer or any other third party, such as a bank or landlord.
However, references are often given because a refusal can put the employee in a
difficult position. Some companies have policies governing giving references to
ensure control over consistency and what is said.

Once an employer chooses to give a reference, a number of legal
considerations arise because claims may be made by the employee and recipient
of the reference.

However, if an employer makes a statement about a former employee that falls
short of a formal reference and is not relied upon by any third party, the
employee’s claim for negligent mistatement will not succeed (Legal &
General Assurance Ltd v Kirk, 2002, IRLR 124 CA).

Duties to the recipient

The employer owes a duty of care to the intended recipient of the reference.
If, therefore, an employer gives a negligent or careless reference, failing,
for example, to mention the fact that the employee was actually incompetent at
their duties, the recipient will be able to sue the employer if they rely on
that reference and as a result suffer a financial loss (Hedley Byrne & Co
Ltd v Heller & Partners Ltd, 1964, AC 465 HL).

The reference must in substance be true, accurate and fair, and must not
give a misleading overall impression (Bartholomew v London Borough of Hackney,
1999, IRLR 246 CA).

Duties to the subject

The employer will also owe duties to the employee who is the subject of the
reference. Again, that duty is to take reasonable care in the preparation of
the reference and if, for example, the employee fails to secure a new job
because of a carelessly prepared reference, they will be able to sue their
ex-employer (Spring v Guardian Assurance plc and others, 1994, IRLR 460 HL).

The reference must be true, accurate and fair and must not give a misleading
impression. However, this does not mean it has to be full or comprehensive
(Kidd v Axa Equity & Law Life Assurance Society plc and another, 2000, IRLR
301 HCQBD). Effectively, it means an employer must take care not to be unduly
selective about the information it provides, if that information is likely to
give a misleading picture overall.

One occasion when there can be difficulties in reconciling the duties owed
to the employee and recipient, is where the employment has terminated during
unresolved disciplinary proceedings. Here, before divulging any unfavourable
information, the employer must make sure it genuinely believes the information
is true, must have reasonable grounds for that belief, and must have carried
out as much investigation into the matter as is reasonable in the circumstances
(Cox v Sun Alliance Life Ltd, 2001, IRLR 448 CA).

Liability for discrimination

Generally, employees cannot bring claims for discrimination against their
former employer where the discriminatory act takes place after the employment
has terminated (Jones v 3M Healthcare and others March 2002 IDS Brief 704).
However, there is one exception to that, which relates to post-termination acts
of victimisation on grounds of sex.

Unlike the Race Relations Act 1976 and the Disability Discrimination Act
1995, the Sex Discrimination Act 1975 must be interpreted in the light of
European law, including the European Equal Treatment Directive.

The European Court has ruled that victimisation of an employee that occurs
after termination of employment (but that relates to a complaint about sex
discrimination which took place during employment) is covered by that directive
(Coote v Granada Hospitality Ltd (No.2),1999, IRLR 452 EAT).

Although the scope of claims is limited, it can cover victimisation by
refusing to provide a reference or by providing an inaccurate and detrimental
reference.

Miscellaneous points

– Many employers aim to limit liability by adding a disclaimer stating that
they cannot accept any liability for errors or omissions in the content of a
reference. The general view is, if the reference is simply giving facts that
are expected to be within the employer’s knowledge – such as the dates of
employment or position held by the employee – the employer cannot exclude
liability by such a disclaimer where the facts given are inaccurate.

This is a result of the Unfair Contract Terms Act 1997. Often, however,
employers are asked to express an opinion about the employee, perhaps in
response to a specific question from the prospective employer, and although
there is no guarantee that a disclaimer will be effective, there is no
disadvantage in including one in those cases.

– References should be marked ‘confidential’ and clearly for the attention
of the addressee only. There are two reasons for this. The first is that the
law gives protection from a libel claim by an employee about inaccurate
information in a reference in limited circumstances. This is where the
reference is given by an employer (or ex-employer) to a prospective employer,
if the employer giving the reference genuinely believes the contents to be true
and does not give the information maliciously.

However, this protection applies only because the law takes the view that
the employer and prospective employer have a common interest in exchanging
information in this way. If, therefore, the reference is allowed to go to other
recipients who do not have this recognised common interest, the protection does
not apply.

– The Data Protection Act 1998, section 7, provides that employees are not
entitled to have access to any reference given in confidence by their employer
if the reference is given for the purposes of the education, training or
employment (both present and prospective) of the employee.

There is a slight loophole in the law in that the employee can ask their new
employer for a copy of the reference, but this is limited in that it does not
allow the employee to automatically see a copy of a reference given by a third
party (such as a former employer) where showing the reference would identify
that third party. It can be disclosed to the employee only if the former
employer consents, or it is reasonable to disclose without consent.

The Employment Practices Data Protection Code (Part 1: Recruitment and
Selection), issued by the Information Commissioner under the DPA, provides that
the taking up of references is covered in section 2(4) of the code, which deals
with verification.

It can be accessed at www.dataprotection.gov.uk/dpr/dpdoc.nsf

Action point checklist

– Ensure the information given in a
reference is accurate or genuinely and reasonably believed, after adequate
investigation, to be correct

– Be consistent about the type of information provided and when
references are given

– Try to limit the number of people within the organisation who
can give references

– Mark the reference private and confidential

– Try to avoid telephone/oral references

– Consider whether a disclaimer would be appropriate

Questions and answers

Is an employer obliged to supply a reference?

Most employers are not obliged to provide a reference about an
employee or ex-employee, whether the request for a reference comes from the
employee, a prospective employer or any other third party such as a bank or
landlord. Some companies have set policies on giving references to include only
basic information about the employee’s length of service and position held.

What are the duties of an employer
if it does supply a reference?

An employer owes a duty of care to the intended recipient of
the reference to ensure it is true, accurate and fair, and does not give a
misleading impression. The recipient could sue if it suffers a financial loss
because of a negligent or careless reference. The employer also owes a duty to
the ex-employee to take reasonable care in the preparation of the reference.
If, for example, the employee fails to secure a new job because of an
inaccurate or misleading reference, they will be able to sue their ex-employer
for damages.

What duties does an employer owe
to a former employee whose employment has terminated during unresolved
disciplinary proceedings?

Before divulging any unfavourable information in a reference,
the employer must make sure it genuinely believes the information to be true,
that it has reasonable grounds for that belief and that it has investigated the
matter.

Should references always be marked
confidential?

Yes. References should be marked ‘confidential’ and for the
attention of the addressee only. This helps to protect an employer from a
potential libel claim and gives protection under the Data Protection Act 1998,
which says employees are not entitled to have access to any reference given in
confidence by their ex-employer. A reference can then be disclosed to the
employee only if the former employer consents, or it is reasonable for the new
employer to disclose it without the previous employer’s consent.

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