Avoid refereeing disputes by being clear on the rules

A recent ruling has clarified the extent of employers’ duties when giving
references about ex-employees

Employers are often unclear about the terms on which they are required to
provide references for former employees.

About six years ago, in Spring v Guardian Assurance, 1994, IRLR 460, the
House of Lords held that an employer owes a duty of care to an ex-employee when
preparing a reference to ensure that its contents are true and accurate. An
individual can sue for damages to compensate for the harm to their employment
prospects caused by a negligent and inaccurate reference.

Last year, the Court of Appeal went even further, holding that the
employer’s duty is to provide a reference which is substantially true, accurate
and fair. Even if the separate components of the reference are factually
correct, it must not give an unfair or misleading impression (Bartholomew v
London Borough of Hackney, 1999, IRLR 246).

Holding the line

Most recently, in Kidd v Axa Equity & Law Life Assurance Society and
another, High Court, 27 January 2000, unreported, an unsuccessful attempt was
made to push the boundaries of the referee’s duty of care still further.

Much of the evidence in the case was hotly disputed and, to save time and
costs, the court proceeded on the basis of an assumed set of facts. In essence,
Kidd was an approved representative for Equity & Life, authorised to sell
its financial products. He resigned, intending to join Allied Dunbar.

The references provided by Equity & Life were poor, referring to the
fact that investigations were continuing into the conduct of Kidd’s affairs
with clients as a result of a number of complaints. Allied Dunbar decided not
to proceed with the engagement of Kidd, and he filed for damages against both
firms. The crux of his case against Equity & Life was that it had owed him
a duty to provide a full, comprehensive and fair reference.

Mr Justice Burton encapsulated the legal obligation on a reference-provider
as follows: " …a duty to take reasonable care …not to give misleading
information …whether as a result of the unfairly selective provision of
information, or by the inclusion of facts or opinions in such a manner as to
give a false or mistaken inference in the mind of a reasonable recipient."

There is no additional duty, however, to give a full and comprehensive
reference or to refer to all material facts. The judge concluded that this
would be imposing a fresh and possibly crippling burden on employers. Kidd’s
claim therefore failed.

Balanced approach

While this latest ruling is reassuring for employers, there are still
potential difficulties with the duty as defined. In particular, the need to
avoid giving an unfair impression suggests that a balanced approach is needed,
covering the former employee’s strengths as well as his or her bad points. Note
also that employers owe a duty of care to any recipients of the reference.

More generally, employers can substantially reduce the potential for
negligence claims by having a clear policy that all references are prepared by
authorised personnel with appropriate knowledge and training.

Richard Lister works in the employment law department at Lewis Silkin

Key points

• An employer who provides a reference for an ex-employee owes a duty to
take reasonable care in compiling the reference and to make proper enquiries to
ensure that its contents are true.

• Even if the reference is factually correct, it should not give an unfair
or misleading impression overall. There is, however, no duty to give a full and
comprehensive reference.

• References given over the phone should be prepared as carefully as written
ones. Keep a note of the facts and opinions expressed.

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