It is a common misconception that an employer is under a duty to provide a reference for an existing or former employee. In fact, other than where a reference is needed by a regulatory body or there is a prior written agreement to provide a reference, there is no strict obligation on an employer to give a reference to an employee.
In practice, however, it is rare for an employer to refuse to provide a reference. This is partly because it is good practice to do so and partly because of the adverse consequences a refusal would have on the employee concerned. The response to a general request for a reference may contain nothing more than factual information about matters such as job description, length of service and reason for leaving.
Sometimes, though, prospective employers ask more specific questions about matters such as competence and character. It has been established over the last few years that employers owe a duty to former employees to take reasonable care over the preparation of references. Although a reference given by one employer to another about an employee has qualified privilege, which protects employers from liability for untrue statements provided they ‘honestly believed’ in the truth of what they said, there are some limits to what an employer can say.
An employer must not:
- give any information about convictions that are spent under the Rehabilitation of Offenders Act 1974 (Rehabilitation of Offenders (NI) Order 1978 in N. Ireland), unless the job in question is exempted
- maliciously make false statements or
- negligently make a wrong statement
An employer also needs to consider carefully giving favourable references to employees whom they have dismissed on the grounds that their work was unsatisfactory. Although they may have no wish to ruin the former employee’s future career just because the working relationship broke down, this could backfire if the employee then challenges the reason for dismissal in an action for unfair dismissal.
In Castledine v Rothwell Engineering Ltd 1973 IRLR 99 a tribunal held that an employee had been unfairly dismissed after his employers failed to show a proper reason for dismissal. The employer argued that the reason for dismissal was the employee’s lack of ability but the tribunal found this irreconcilable with the very favourable references they gave him on leaving.
Employers are often not aware of the action an employee can take if they have suffered a loss as a result of an inaccurate reference. This could be either because they are unable to obtain employment or because they are dismissed for having unsatisfactory references. There are three possible causes of action available to them under the general common law category of ‘tort’, namely defamation, malicious falsehood and negligence.
Where an inaccurate reference attacks the employee’s reputation, the tort of defamation is the most obvious cause of action. One element of a defamatory statement is its falsity. If the maker of the statement wants to allege that the statement is true, then he or she has the burden of proving it is so. As mentioned earlier, the context of job references, the referee will have the protection of the defence of qualified privilege. The tort of malicious falsehood protects a person from loss of business reputation. The employee has the burden of proving that the statement was made ‘maliciously’ which is defined as ‘calculated to cause damage.’
However, both malicious falsehood and defamation may prove to be inadequate remedies due to the difficult task of establishing malice and the fact that an employee is looking for a remedy that will compensate him for loss of opportunity. The best course of action for an employee who gets an inaccurate or unfair reference is to sue his former employer in negligence.
An employer could be liable in negligence for providing an inaccurate reference as the employer has a duty of care not to make negligent misstatements. The case of Spring v Guardian Assurance plc & ors 1994 ICR 596 confirmed that an employer who gives a reference in respect of a former employee is under a duty to take reasonable care in the preparation of that reference and would be liable to the employee in negligence if the reference was inaccurate and the employee suffered loss as a result. The duty requires employers to take reasonable care and skill to ensure the accuracy of any facts which are either communicated to the recipient of the reference from which he or she may form an adverse opinion of the employee concerned.
It has long been a matter of debate whether an employer has a contractual duty to take reasonable care in preparing a reference. The courts have usually declined to imply such a term into the contract of employment because, generally, it is not necessary to give the contract ‘business efficacy’. In Spring there was an implied term in the contract as it was standard practice in that industry for a prospective employer to require a full and frank reference and as a result, a duty to take reasonable care over the reference could be implied into the contract. In TSB Bank plc v Harris EAT upheld a tribunal’s decision that, in preparing a reference that was misleading and unfair to the employee, the employer was in breach of the implied term of mutual trust and confidence.
One further point to consider is the case of an employer who recruits someone on the basis of a good reference which then turns out to be inaccurate as they may suffer loss as a result. The employer may have to go through the expense of recruiting again, or suffer loss through the incompetence or dishonesty of the employee. In some situations, a remedy could be available in the tort of deceit for fraudulent misstatement but, where a referee has been careless, the employer will have a potential action against the referee for negligent misstatement. The reference content may come to light if an employee asks their new or prospective employer for a copy of the reference, because there is no exemption from the need to disclose data. Although under the Data Protection Act 1998, an employee is not entitled to see a reference given by their employer for the purposes of the education, training or employment of that employee.
It would appear that a referee now owes two incompatible duties: one to the future employer and one to the employee. On the one hand, the employer must take care that he or she does not paint too bad a picture of the employee so as to blight his or her prospects. On the other hand, the employer must ensure that he or she mentions any facet of the employee’s capability or conduct which he or she thinks might be material to the future employer.
At the end of the day, employers must exercise care when preparing references . However, if an employer takes a commonsense approach, there should be nothing for the employer to worry about. Employers must ensure that all the facts on which the reference is based are accurate and that the overall impression of the employee is not misleading.
Some key points for employer’s to remember:
- make a decision who can and who cannot give references and referees should state their relationship to the employee concerned
- decide the nature and scope of references; do they merely confirm the employee's details or do they give an assessment of the employee's work and character?
- ensure that there are guidelines in place to deal with both the giving and the noting of oral references
- ensure that all the facts in the reference are accurate and that any opinions given are based on accurate facts
- ensure that the reference does not present an unfair or misleading impression of the employee
- do not refuse to provide a reference to an employee based on characteristics such as sex, race or disability discrimination and ensure that all employees are treated equally
- avoid including information in the reference about the employee's poor performance if the employee has not yet been approached about the standard of their work
- consider whether to expressly mark the reference as being ‘confidential’
- consider whether it is appropriate to add a disclaimer on liability arising from the content of the reference
By employment associate solicitor, Phil Richardson