MYTH-BUSTING: EMPLOYMENT REFERENCES

There's a common misconception out there that employers are not allowed to give 'bad references'. As with many things, it is simply not this straightforward. It's worth noting that the misconception really seems to revolve around the idea that if you do something at work that is bad and you lose your job, a new employer cannot be told about it because to do so would be to provide a 'bad reference'.

This belief has always bugged me because it's simply not true. And when an idea like this takes hold and becomes a myth - when misinformation has done the rounds so extensively that people 'know' they're right, that's when I feel the need to step up and say something.

So listen up...

When asked for a reference, an employer has a number of options:

• Refuse to give a reference. While on the face of it this might remove some risks, it could result in a claim for breach of contract and/or give rise to a discrimination claim. In addition, in some sectors, notably the financial sector, statutory rules mean that employers are obliged to give references and provide certain information.

 

• Provide a fact only reference (such as the position held by the employee, salary and other benefits, commencement and termination dates). To avoid the new employer reading anything into the fact that you have not provided full details, it is helpful to state that it is your policy to only give factual references. And if this is your policy, it is important to ensure you comply consistently, since singling out certain employees for this type of reference, whilst providing more detailed information for others, could again lead to claims of breach of contract and/or discrimination.

 

• Provide a full reference which contains all the bare facts, with commentary on performance and reliability and/or responses to specific questions from the prospective employer. As long as the reference is true, accurate and fair and the employer has acted reasonably in expressing any opinions the risks of any liability arising is low.

Generally, it’s not possible to sue for defamation for the contents of a reference, provided it was made in good faith and without malice. It doesn’t matter whether the information is actually correct or not, as long as the employer genuinely believes it, since they will be able to rely on the defence of “qualified privilege”. This defence may be available if the employer has ensured that the reference was marked as “strictly private and confidential – for the addressee only” and the reference has been distributed no further than the intended recipient.

If wrong information is given deliberately, the employer is likely to be liable for malicious falsehood. As with defamation, the presence of malice will be the key point when considering liability for any claim. Provided the employer can show it acted in good faith, the claim is unlikely to succeed.

The High Court case of Hincks v Sense Network Limited (2018) examined the duty of care owed by an employer when providing a reference.

The law in this area is well established, but the case did provide some further clarification.

Mr Hincks was an independent financial advisor. A reference prepared for him by his former employer Sense Network Limited referred to an internal investigation which had been critical of Mr Hincks conduct (in relation to giving advice and certain transactions). Mr Hincks brought a claim for negligent mis-statement on the basis that the reference was misleading.

On the facts of this particular case Mr Hincks’ claim failed and the Court concluded that the reference was factually accurate and therefore not actionable. However, some useful guidance was provided with regard to the duty owed to an employer in this situation:

Common features of the duty of care (particularly where the reference is likely to include negative content) are:
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1. To conduct a rigorous appraisal of the facts and opinion, particularly negative opinion;

2. To take reasonable care that the facts set out in the reference were accurate and true;

3. Where statements made in the reference were derived from an earlier investigation, to take reasonable care to consider and review underlying material (notes, minutes etc. from previous investigations);

4. To take reasonable care so as to ensure that a reference was not misleading by reason of what is not included or by implication, nuance or innuendo.

A core complaint of Mr Hincks was that the previous investigation was unfair and consequently the conclusions reached inaccurate.

However, in providing its clarification the Court ruled against extending the duty of care to include examining the procedural fairness of the investigation. It was noted that this would cause “formidable difficulties” if reference writers were obliged to enquire into the fairness of such investigations in every case. This might be required where the relevant material identified a “red flag” pointing to the need for further enquiry into the veracity of the earlier investigation.


Liability to new employer

With so many risks attached to the giving of references, it might be tempting to avoid negativity in a reference. However, there will be obligations to the prospective new employer that make this equally dangerous.

It’s important to ensure that the reference is not misleading. For example, if drafted in glowing terms omitting a negative, such as a disciplinary warning, a reference would be misleading to a prospective employer. In such a case, or where the information given is not true, accurate and fair, a new employer may have a claim of negligent misstatement if it takes a reference at face value and subsequently suffers loss as a result of the recruitment of an unsuitable candidate.

The risk of a claim by the new employer is reduced if a glowing reference contains a disclaimer stating that no liability is accepted for the information provided. The downside to this is that employees often feel that this will undermine an otherwise good reference. This is to some extent true, but disclaimers are common practice and likely to be seen as such by the recipient, rather than an indication that the reference is not accurate.

Even if the reference does contain such a disclaimer, it is good practice to ensure that the reference is not misleading or inaccurate in any event. Public sector employers should also bear in mind that their public duties to act with honesty and integrity cannot be circumvented by using a disclaimer in a reference.

Unsurprisingly, a disclaimer will be no defence if a referee knowingly includes false information and knows that the recipient will rely on it. Such a referee could be liable to the recipient for deceit or even fraud.
 
 
Employees who leave under a cloud

Despite popular belief to the contrary, an employer can, and often should, refer to disciplinary proceedings. This may be the case even if they have not been not fully completed. If they have not been formally investigated, it is possible to safely refer to misconduct or poor performance allegations, as long as the referee makes clear that there was no formal investigation.

Make sure that the reference reflects the real reason for leaving. If an employee brings an unfair dismissal claim in due course and the reference does not reflect the fair reason for the dismissal, it will be harder for the employer to defend the subsequent claim.
 
The above information was sourced and re-produced from the websites of:

Mitchell Law
Shoosmiths
Holmes & Hills
gov.uk


Follow links for further info.