Are references really worth the paper they are written on?

Are references really worth the paper they are written on? What courses of action, if any, do employers have against former employers who have provided references which have failed to truly reflect an employee’s skills and abilities?

It is not uncommon for employers to make offers of permanent employment conditional on the receipt of a satisfactory reference from the job applicant’s previous employer. In doing so, the new employer can help ensure that the employee is well-suited for the position and has the requisite skills, ability and experience.

Where a former employer does provide a character reference, and is negligent in its preparation, the recipient employer of that reference who suffers damage may be able to sue the former employer for negligent misstatement. This is settled law arising out of the case of Hedley Byrne & Co Ltd v Heller in 1964 which, despite the numerous developments in the law relating to references since that date, remains good law.

However, while redress against a former employer under this tort is still available, its practical use, in modern times, has reduced dramatically.

There is no legal obligation on an ex-employer to provide anything other than a reference that is true, accurate and fair and does not leave a misleading impression. Developments in the law giving employees greater scope to bring claims against their former employers for, among other things, defamation, malicious falsehood and negligence misstatements have led to employers providing only the most basic factual details. To minimise the risk of litigation, an increasing number of employers now provide references setting out purely factual details, such as the dates of employment, the job title, the salary and the reason for termination of employment.

Furthermore, express terms in agreements (such as employment contracts, compromise agreements or COT3 settlements through Acas) often operate to prevent an employer departing from an agreed reference in a specific format.

The result of this is, therefore, that the prospective or current employer has little scope to claim that the former employer has negligently misled him when the details given are purely factual. This is, of course, assuming that the former employer has given the correct details in respect of dates of employment, job title, etc.

Having said this, it is important not to lose sight of the fact that liability may arise for not only what is said, but possibly also what is not said in certain circumstances. A failure to mention, for example, significant disciplinary proceedings taken against the employee may lead to a breach of the duty of care to the prospective employer. Providing the existence of those disciplinary proceedings was factually correct and did not give an overall inaccurate or misleading impression, a former employer should not let concerns about tortious liabilities to his former employee for making negligent misstatements prevent him from disclosing details of those matters to a future employer.  

Generally, however, there is a high burden of proof on a prospective employer to show that a former employer was negligent in not divulging specific details relating to an employee. After all, what might be reasonably deemed as particularly relevant information to one employer may not be reasonably viewed as such by another. In cases such as this, establishing liability for negligence is not straightforward.

As a means of obtaining a fuller picture of a job applicant’s employment history from former employers, prospective employers are now more inclined to make specific enquiries, often by telephone, to a former employer rather than simply relying on a purely factual reference.

This immediately increases the risks for the former employer. While he still has to bear in mind any obligations he may have to provide a standard form reference (for example under the terms of an agreement reached with the employee), it immediately places a greater burden on the employer to consider whether he should divulge more information than he may otherwise choose to do had a purely factual reference been requested. If the prospective employer indicates aspects of the employee’s employment history he considers particularly important, the ex-employer should then consider whether or not he owes a duty of care to that employer to divulge particular information, albeit purely factual and accurate.  

While providing too full a reference that gives an overall unfair impression could lead to a claim by the employee, a reference which neglects to mention matters of fact that could cause a detriment to a prospective employer could equally be seen as a breach of duty to that employer.

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