When giving a reference, an employer has a duty to be fair, truthful and accurate. However, it should be remembered that the giver of a reference has these duties not just to the subject of the reference, but also to the person who has requested the reference. The reference must therefore reflect reality and not be too glowing if this is not justified, or too negative if this would also give a misleading impression.

References are a legal minefield for employers as getting it wrong could potentially result in liability for negligence, discrimination, defamation or data protection breaches. This explains why many employers will now only give basic factual references in respect of employees as this limits their legal risk significantly.

Do employers have to provide a reference?

Generally, there is no obligation for an employer to give an ex-employee a reference, except where not doing so would amount to discrimination or victimisation, or they are contractually obliged to do so, for example as part of a settlement agreement.

In some sectors, such as financial services or education, there are specific regulatory rules which require and govern the writing of references.

It is recommended that an employer has a general policy regarding references, how they are written and who has authority to write references. Ideally, such a policy will be in the staff handbook so that employees know what to expect. Having such a policy will ensure consistency of approach.

What an employer should not do is provide a full reference for one employee and a basic one for another. This would leave the door open for claims of discrimination.

Can employers provide a basic written reference only?

Many employers mitigate against the legal risks by giving basic references which state job title and dates of service but nothing else. These types of reference are fairly unhelpful for potential employers as they fail to address the skills and quality of an individual.

An employer is entitled to do this, so long as they provide the same type of reference for all employees/ex-employees. If an employee is leaving under the terms of a settlement agreement, it may be possible to agree a more detailed reference as part of the package.

Giving oral references is generally to be avoided as there is no record of what was said in the event of a future dispute.

Negligence claims from new employer

The reference must be fair, truthful and accurate: it must not give a misleading impression to the person receiving it. Although the reference doesn’t need to be fully comprehensive by including absolutely every detail, it should include what is necessary to avoid being misleading.

New employers can claim for financial loss caused to them by relying on a letter of reference that is too good or misses out important facts about the employee and their work.

Because of this, those giving references would be well advised to include a disclaimer to guard against any potential negligence claims. For example:

“This reference is for the use of the addressee only and is true, fair and accurate to the best of [the employer’s] knowledge as at the date of this letter. However, [the employer] does not accept liability for any errors, omissions or inaccuracy in the information set out above or for any loss or damage that may result from reliance being placed upon it by the addressee or any third party.”

Can an employer write a “bad” reference?

The answer all depends on what you regard as “bad”. A reference may contain what are considered to be negative comments about an individual and/or their attitude and abilities, but the question is whether these are true and can be justified.

If a reference refers to a concern about the individual or their work, this must be something that has previously been raised with them and must only include known facts which can be proved. Negative speculation and conjecture should not be included.

However, as the recent case of Hincks v Sense Network Ltd shows, employers can lawfully express negative opinions providing they have carefully considered these and the underlying material which justifies them.

Equally important is that any criticism of performance or attendance included in a reference does not spring from a disability related reason, otherwise this could found a discrimination claim.

It is important that an employer sticks to the facts that they know and can prove about the employee. Often, a prospective employer will ask whether the old employer believes the individual is suitable for a particular role. In many cases this will be inappropriate as the employer is being asked to state an opinion regarding a job and organisation they don’t know much about.

It all comes back to whether a “bad” reference is fair (in the circumstances), truthful (i.e. does it contain anything which is obviously wrong or misleading) and accurate (e.g. has something been left out which would alter the perspective if it were included?).

What can employees do if they receive a negative referral?

An ex-employee can bring a claim of discrimination or victimisation in the employment tribunal if an employer refuses to provide a reference or gives a negative reference unjustifiably, which is linked to a protected characteristic such as disability or race.

If the reference is untrue, unfair on inaccurate, the individual may bring a claim for negligent misstatement in the ordinary courts. The Hincks case above was a claim for negligent misstatement (although the ex-employee in that particular case failed in their claim).

Where the author of the reference has made a disparaging statement and has no justification or other defence, there may also be a basis for the employee to claim for defamation. However, such claims must also be taken to the ordinary courts, not an employment tribunal.

If an ex-employee has an issue with the way information in a reference has been processed or disclosed, they may be able to make a complaint to the Information Commissioner or make a claim under the Data Protection Act 2018.