The starting point is that there is no legal obligation on an employer to provide a reference for an employee or ex-employee.
So when asked to provide a reference, an employer can refuse to provide one, unless they are regulated by the Financial Conduct Authority or the Prudential Regulation Authority.
Also, an employer must be fair and consistent in their approach to giving or not giving references or they could face claims of discrimination, victimisation, breach of contract or breach of trust and confidence.
Some employment contracts and most settlement agreements expressly state that a reference will be provided. Therefore, it would be a breach of contract not to do so and the employer could be liable for damages.
Personal and Corporate References
References can either be given in a personal capacity or on behalf of the employer as a corporate reference. Employers are legally responsible for the content of a corporate reference. So if an employee provided a corporate reference to a former employee, without any authority from his employer, then the employer could still potentially be liable to the former employee.
A personal reference is given by an employee, often a line manager, in their personal capacity. There is always a risk that this could later be considered to be a corporate reference. To limit the risk, personal references should not be written on company headed paper and should not include the job title of the person giving the reference.
An employer generally has no duty to provide a reference, but if he does so it must be fair and accurate. So an employer owes a duty towards both the former employee and their prospective employer not to be unfair or misleading.
General advice is for employers to avoid broad brush statements about an employee that could give the wrong impression to a potential new employer. Employers should also avoid speculating on an employee’s future performance with a new employer. Employers should only include factual information that is full and accurate and leave out any assumptions.
There is no obligation on an employer to answer any questions from a prospective employer. To avoid potential liability, many employers choose to limit their references to simple factual details and not provide any further information.
Information in a standard references often only includes, confirmation that the employee worked there, start and end dates of the employment, and the employee’s job title
Potential liability for providing a reference
A former employee who is not satisfied with a reference, perhaps because it is unfair or inaccurate, can bring a claim against their former employer for negligence. Employees who are still employed when they ask for a reference could potentially claim constructive dismissal if their employer fails to take all reasonable care when preparing the reference.
Employers are often aware that an employee is doing something wrong, but lack all the details and the concrete evidence to prove it. It is therefore dangerous to make non-factual statements about an employee’s supposed wrongdoing and can lead to claims of defamation, malicious falsehood and negligent misstatement.
Employers often wish to terminate an employee’s employment using a settlement agreement. It could be due to poor performance or misconduct, but it is often difficult for an employer to prove any wrongdoing or they may simply want to avoid the potential confrontation and bad feeling generated by going through the disciplinary process. The offer of a reference is often a very useful “carrot” in the negotiations with an employee regarding the terms of their settlement agreement.
Performance, attendance and sickness absences
Commenting on these issues in a reference can be considered to be disability discrimination if these issues relate to a disability suffered by the employee. Claims for disability discrimination are uncapped and can be substantial.
Providing a reference will generally involve the processing of personal data and therefore falls within the scope of the Data Protection Act. The employer providing a reference is the data controller in this instance, and must process the personal data in compliance with the data protection principles.
Employers must have particular regard to the Data Protection Act when providing information in a reference about an employee’s sick record or reasons for periods of absence, because information about health is defined as sensitive personal data and is subject to strict controls.
If you require any further information regarding Employment References then please contact our Employment Law specialist at [email protected].
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Justin deals with all aspects of Dispute Resolution for both businesses and individuals, including including Contentious Probate, Employment Law ( for both businesses and individuals) and Commercial Litigation. This means that he is familiar with the many different courts and tribunal as well as the many different methods for resolving disputes, including alternative dispute resolution such as adjudication and mediation.