There is no detailed legislation specifically designed to deal with the provision of employment references. There is no statutory obligation on an employer to provide a reference at all. However, some legislation and case law impact on different aspects. Surprising, this area of employment law is largely governed by the law of contract. Although employment law also involves obligations of good faith, unless the employer has agreed to provide a reference, they cannot be forced to do so. This may seem odd, particularly given that most employers will make an offer of employment, subject to a satisfactory reference when hiring.
Employers are not under an obligation to check a job applicant’s references, or provide an existing or ex-employee with a reference. It is, however, very good practice to contact an applicant’s referees to seek objective information on the applicant’s suitability and reliability for a role. If you work in certain sectors, such as Financial Services or the Health and Social Care Sector, work references must be supplied, and all appointments are conditional on the references not identifying any concerns.
It is a myth that you cannot give a bad reference. If you give a reference, you have a duty to take reasonable care to ensure it is true, accurate and fair, and that it is not misleading. This duty is owed to both the employee and to the new employer.
A bad reference which you cannot substantiate with facts e.g. gross misconduct dismissal, runs a risk of the employee suing you for damages, if they lose a job directly as a consequence. They could also bring a claim for defamation or discrimination. The new employer could sue you for giving a good reference to someone who is/was patently unsatisfactory, if they have suffered losses as a consequence. In the circumstances, it is perhaps not surprising that many employers opt for giving just a ‘tombstone’ reference, e.g. “she/he worked from X to Y as a clerk”.
One option is to provide no references at all which, unless there is a contractual right, this is a lawful approach, but is not exactly helpful to either the employee or their new employer. There is still a risk, particularly of discrimination claims, unless you stick rigidly to your no references policy. Remember that you too might later in your career need an employment reference supplied by your current employer!!!
New guidance from the Advisory, Conciliation and Arbitration Service (ACAS), provides employers with a timely reminder in relation to their obligations when providing and obtaining references, which is an area in which employers can easily fall foul if they are not careful.
It is increasingly common for employers to provide simple factual references as standard, which includes only basic facts about the applicant, such as their employment dates and job descriptions. ACAS advise that if you are providing further detail (in relation to an ex-employee’s skills, abilities, character etc.), that this should be true and accurate, and a fair reflection of the individual. Take reasonable care to ensure that the information in the reference is true.
When opinions are provided, they should be based on facts. References should not include irrelevant personal information. To avoid claims, employers who express opinions in references (as opposed to facts) should review the references for inaccurate or discriminatory material.
ACAS also suggest that employers should have a policy to help them handle reference requests, telling them what information they and their employees can provide. We are introducing a suitable Reference Policy into your 2019 Handbook updates, so your HR Consultant will be in discussion with you on this matter.
ACAS also recommend that for employers looking to obtain references, it is important to always remember to seek a candidate’s permission to approach their previous (or current) employer. More on this later.
If an employer decides to provide a reference, it should be produced by someone with training in preparing references, and have all the relevant information. Employers should ensure the reference is factually accurate and fair, and not misleading in the overall impression it gives to the recipient. Employers should also:
- Establish if there is an express contractual obligation to provide a reference.
- Consider any implied contractual obligation to provide a reference.
- Check whether there are any other consequences of refusing to provide a reference, including potential discrimination claims.
- Check all employee information (for example, dates of employment, career history, appraisals, record of absence).
Other matters to consider include:
- References should be addressed to a named person rather than ‘to whom it may concern’, and marked ‘“Strictly Private and Confidential”, and “to be opened by the addressee only”. Providing “to whom it may concern” references raises the risk that the reference may fall into the hands of third parties without the required duty of interest. This has various negative consequences for the employer.
- Verbal (oral) references can be given, but notes should be kept of the conversation, and no statements made that the employer would not be willing to make in writing.
If supplying a reference where a settlement agreement has been reached with the employee, it is often normal to have reached an agreement on the precise wording of the reference, or the generally positive tone, to avoid any future litigation.
Employers should remember that although references are given in confidence, the recipient may be required to disclose a reference under certain circumstances, such as a request for disclosure by an Employment Tribunal or under the Data Protection legislation.
Many employers seek references after the job offer has been made; other employers take up references before conducting interviews with all their shortlisted candidates. The purpose of referencing is to obtain objective information on the candidate’s suitability for the role. Employers are under no obligation to take up references for job applicants, and former employers are under no obligation to provide one.
It is important to state in all job adverts, and/or offer letters, that any job offer is conditional upon the receipt of satisfactory references. This means an employer can withdraw an offer without being liable for damages if this requirement is not met. If a job applicant is offered a job, there are two types of job offer that can be made:
- A conditional job offer – This can be withdrawn if the applicant does not meet the employer’s condition for example, satisfactory references. Once an employer has received satisfactory references, and informed the job applicant, an unconditional job offer can then be made.
- An unconditional job offer – Once an unconditional offer is made, this cannot be withdrawn, and if accepted, a contract is formed.
Employers should usually ask for a minimum of two references; one of which should be the applicant’s present or most recent employer. Current employers should only be approached with the applicant’s permission. The following points should be borne in mind:
- For jobs involving the safeguarding of children or vulnerable adults, the details of any concerns that relate to the safety and welfare of children or vulnerable adults can be requested.
- Prospective employers may ask whether there have been any disciplinary procedures relating to the applicant, but this should be limited to current sanctions that have not expired.
If the prospective employee cannot provide two employment references, it is good practice to accept an educational reference, or a character reference to avoid placing the individual at a disadvantage. Job offers can be made conditional on receipt of a satisfactory reference, allowing organisations to withdraw the employment offer if the references are not deemed satisfactory.
The process for carrying out reference checks should be:
- Step one: request details of referees from applicants, often via an application form.
- Step two: once a conditional offer of employment is made, send a reference request to the referee.
- Step three: on receipt of the reference, consider whether this contains information that reflects on the prospective employee’s suitability for the role.
Particular care should be taken with absences because:
- Asking for an applicant’s attendance record and the amount of sick leave taken is common, but can lead to claims of disability discrimination if the reason for the applicant’s absence is disability related.
- Mentioning other absences may be classed as sensitive data, the provision of which breaches Data Protection legislation. Revealing the number of days an employee has been absent, but not the reasons for the absences, will not require explicit consent.
- Employers must get explicit consent from the individual if they are providing sensitive personal data, such as physical or mental health information.
- Rejecting a job applicant, or withdrawing an offer of employment once they know about a prospective employee’s extensive absences is risky. Long term absence is a good indicator of a disability, and employers may be deemed to be aware of a candidate’s disability once the absences have been revealed.
Disclosure of References
Previously under the Data Protection Act 1998 (DPA), employees had the right of subject access to personal information held by their current or former employer, and this could, in principle, include references given by current or former employers. However, there was an exemption whereby an employer who provided a confidential reference was permitted to decline to disclose this to the employee. This protection was, however, undermined by the fact that the employees could then apply to the recipient employer for a copy of that reference, who could not then rely upon the same exemption.
Under the GDPR and DPA 2018, employees still have the right to make subject access requests. However, the loophole in the previous legislation has been closed, and personal data held by either the giver, or the recipient, of a reference may be withheld where it consists of a reference given, or to be given, in confidence for the purposes of the:
- Education, training or employment, or prospective education, training or employment, of the data subject.
- Placement, or prospective placement, of the data subject as a volunteer.
- Appointment, or prospective appointment, of the data subject to any office.
- Provision, or prospective provision, by the data subject of any service.
Even though access to a confidential reference may have been made more difficult, an unhappy person may be able to rely upon exercising their enhanced data subject rights, including the right to restrict processing, erasure, object and rectification. Employees (or former employees) retain the right to complain to the Information Commissioner if they think their rights under the legislation have been infringed, and they also now have enhanced rights to seek compensation from the employer giving a reference, if they suffer material or non-material damage as a result of infringement of their data protection rights.
The final decision on whether to release a copy depends on whether it is reasonable. Reasonableness is assessed by considering: –
- The ex-employer’s need for confidentiality
- Employees’ interest in seeing what has been said about them
- The requirement that a reference must be truthful and accurate
- The potential impact on the employee.
When responding to reference requests, employers need to consider and document their lawful basis for processing the personal data of the employee. This is central to the concept of “fair and lawful processing”, which is at the heart of data protection legislation. In an employment context, the lawful grounds or conditions which should usually be relied upon will be either that the processing is necessary for the performance of the contract with the employee, or that it is necessary to fulfil a legal obligation. However, neither of those fit easily with the provision of a reference.
Consent is an additional ground. Most commentators on data protection and, indeed the Information Commissioner suggest, that in most cases any consent given by employees will not be valid because of the imbalance in the power relationship. However, in the case of the provision of employment references, it is clearly in the employee’s interests to give consent, and they are not in any way under pressure from the current employer such as might invalidate any consent given.
The lessons to learn from the case law are:
- oral references (formal or informal) are just as (if not more) likely to lead to legal claims than written ones;
- employers should, wherever possible, avoid giving negative subjective assessments of former employees, particularly orally;
- Managers should be trained not to be caught off guard by telephone calls seeking amplification of written references;
- if a positive reference would be unfair, inaccurate or misleading, an employer should, wherever possible, fall back on confirming dates of employment and what the job entailed, without giving any commentary on how good that person was within the job role, or, give no reference at all.
Employers often include a disclaimer of liability arising from errors, omissions or inaccuracies in the information provided in a reference. You should make use of disclaimers, as they may deter an employee, or a new employer from making a claim, but be aware that disclaimers may be void if tested in the Courts. The circumstances in which a disclaimer will be effective are limited. However, there is no disadvantage to the employer including one.
A disclaimer will normally say something to the effect that the reference is given confidentially and in good faith. Disclaimers will explain that, although the employer believes the reference is accurate based on the information available, the employer and its Directors will not be liable if inaccuracies lead to loss as a result of relying on the reference.
The effect of a disclaimer is to attempt to limit the referee’s liability in negligence. A disclaimer used in these circumstances is void unless it is reasonable, and legislation sets out the test of ‘reasonableness’. It is generally thought that liability cannot be excluded for mis-statement of facts (performance, disciplinary record, and so on), which are normally known to an employer. However, a disclaimer in relation to an opinion on the employee’s suitability for a particular job may be reasonable.
Bearing in mind the possibility of liabilities in this area, employers should have robust internal procedures in place for how references are undertaken.
A disclaimer should also say that the contents are not to be revealed to the subject.
You are welcome to raise any concerns with our Consultants, who would be pleased to advise you on any element of the issues arising from this newsletter.