How to avoid risk when providing employer references

Giving departing employees a reference should be a risk-free procedure. But there are potentially damaging pitfalls to avoid, warns lawyer Rhona Darbyshire.

During recruitment, employers usually seek the details of a candidate’s previous or current employer in order to obtain an employment reference. Most employers are happy to provide references upon request although they are not under a legal obligation to do so (with the exception of certain regulated roles such as financial services or where there is a contractual obligation to do so, for example in a settlement agreement).

If an employer is considering refusing to provide a reference, they need to be aware that if the reason for not giving a reference can be linked with a protected characteristic, or because an employee has previously brought some form of discrimination claim, an employee might have a potential discrimination or victimisation claim.

It is important that businesses and specifically those staff involved in giving references, understand the requirements and potential implications of providing those.

Contents of employment references

Any employer providing a reference owes the employee the duty to take reasonable care in ensuring the information provided is true, accurate and fair. They are not required to provide a certain or minimum amount of detail in the reference. Importantly, reference providers must take care to ensure that information delivered does not give an impression that is misleading, or they risk being sued for something known as “negligent misstatement”.

Crucially, employers should avoid making any comments in the reference that could amount to discrimination. For example, consideration should be given before employers remark on the subject’s performance, attendance or sickness absence where there is a risk that these comments may give rise to disability discrimination. In Pnaiser v NHS England and another UKEAT/0137/15, it was found that a negative verbal reference given in relation to a disabled employee’s sickness absences, which resulted in a job offer being withdrawn, had amounted to discrimination arising from disability.

GDPR concerns

The provision of a reference involves a data controller (ie, the employer) processing personal data, and as such, the EU General Data Protection Regulation (GDPR) and data protection principles will apply. The Information Commissioner’s Employment Practice Codes includes guidance on compliance with data protection regulations in relation to references. It states that employers should maintain a clear references policy and should not provide confidential references about workers unless consent to this course of action has been obtained from the subject.

Therefore in the vast majority of cases, unless explicit consent has been obtained, there will be no legal basis for the processing of information in the course of providing a reference. In practice, however, subjects ordinarily instigate the reference process and as such would implicitly provide their consent as a part of this process.

Despite this, problems can arise when an employer gives a bad reference, which the employee was not aware of. The employee may then seek to argue that their consent was not sufficiently informed to be valid.

If disclosing details of an employee‘s sickness absence, this will amount to sensitive personal data. It is therefore essential that their express consent is sought before making the disclosure. 

Reference policies

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The written reference policy should include details regarding the specific individuals who are allowed to provide references, the circumstances in which references may be provided, as well as what the references can and cannot include. Some employers may wish to consider providing template wording for references to help promote consistency in the provision of employment references. For example, it is common for employers to provide basic factual information only, such as the employee’s dates of engagement and job title. If an employer chooses to adopt this approach, it should state within the reference itself it is their policy to provide references in this format.

Practical pointers

Providing references is considered a normal activity of being an employer.  However, such an everyday task should be approached with caution as it does not come without its risks. Employers may find the following guidelines useful when responding to reference requests:

• An effective reference policy should be strictly adhered to.
• Consent should always be sought from the individual who is the subject of the reference request.
• Any reference given needs to be true, accurate and fair, remembering there is a duty of care owed to both the employee and their new employer.
• Information given regarding the individual’s performance or absence from work should be carefully scrutinised so as to not fall foul of disability discrimination provisions.
• If reference is made to allegations of misconduct that have not been investigated, the fact they have not been investigated must be stated.
• Written references should be marked as “strictly private and confidential” and addressed to the name of the individual who has requested it only.
• Employers may wish to consider including a disclaimer of liability within the reference. Although the effectiveness of such a disclaimer will often be limited, there may be certain situations in which a disclaimer does assist in limiting liability.