Legal Q & A: Providing staff references

James Moss, a solicitor at Palser Grossman

Ex-employees often insist we provide them with a reference. Are we obliged to
do so?

This depends on what was agreed with the employee. There may be a term in
their employment contract obliging you to provide a reference or another
manager in the firm may have verbally agreed to do so.

the worker’s employment was terminated on the basis of a compromise agreement,
or if they have brought a claim that has been compromised by such an agreement,
it may include a term requiring you to provide a reference. When negotiating
the terms of any compromise agreement, ensure as far as possible that the
precise wording of any future reference is fully discussed, clearly agreed and
carefully recorded in writing.

certain circumstances, if your business activities are regulated by a
regulatory body – such as the Financial Services Authority – the regulator may
require you to provide a reference for staff applying for work with other firms
regulated by it.

Our finance director was suspected of dishonesty. An investigation was
overtaken by a settlement, which also required us to provide a written
reference. Should we refer to this matter?

If an employer is obliged to provide a reference, it should remember its
common-law duty to take reasonable care to provide one that is both accurate
and fair. It must not contain misleading information, or create a misleading
overall impression of the employee. But it doesn’t have to provide a full,
comprehensive report of all the material facts concerning their employment.

you feel that failing to mention the investigation might mislead the recipient
of the reference, then refer to it – but confine yourself to factually
indisputable statements in respect of the investigation.

the case of Cox v Sun Alliance Limited (2001) EWCA Civ 649, the Court of Appeal
suggested that employers should only refer to unresolved
investigations/disciplinary proceedings if they can satisfy a test similar to
that set out in BHS Ltd v Burchell (1978) IRLR 379, which is used in deciding
the fairness of misconduct dismissals. Namely, the employer must:

Genuinely believe the employee was guilty of misconduct

Have reasonable grounds for that belief; and

Have carried out as much investigation into the matter as was reasonable in the

should not fear giving a reference containing unfavourable comments, so long as
they are limited to matters where reasonable investigation has been made, and
the employer has reasonable grounds for believing the comments are true.

Having provided an agreed reference, a prospective employer asked whether I
would describe the ex-employee as ‘honest’. The reference makes no mention of
their honesty, so can I comment?

If asked a question that falls outside the terms of an agreed reference,
your response must be fair and accurate. However, if you agreed with the
employee that questions not dealt with in the reference would be answered
honestly by you, then do so. This is a less stringent standard than the common
law duty to provide a fair and accurate reference.

Cox, the referee had provided a written reference, but then inacurately told
the prospective employer that Cox had been suspended for serious matters of
dishonesty; that the charges had been thoroughly investigated; and that the
only reason Cox had not been dismissed was due to the difficulty in proving the

dishonesty charges had never been put to Cox or properly investigated, it was
neither fair nor accurate to make such comments. An unfair and inaccurate
reference is probably more damaging to a worker’s employment prospects than an
unfair dismissal.

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