Should employers provide a reference?

Do employers have to provide a reference?

There is a myth that employers must provide exiting staff with a reference. This is not the case. There is no legal obligation to provide a reference for staff and employers are entitled to refuse to do so. However, in certain sectors such as financial services or in situations where candidates are applying for a position at an academy or a maintained school in England, employers must provide a reference.

Another circumstance where employers are obliged to provide a reference is if there is an express obligation, for example within the contract of employment or a settlement agreement. When there is a contractual obligation to give a reference, it is advisable to take legal advice before agreeing to the content of the reference to avoid binding your company to providing a reference that could expose it to legal liability.

Employer duties

Employers who provide a reference have a duty that is owed to both the individual and the prospective employer. This duty requires the current employer to take reasonable care to ensure the information contained in the reference is true, accurate and fair. This means that the reference must be based on facts which, if challenged, can be reinforced with evidence. Subjective personal views and opinions which cannot be supported should be avoided.

Employers also have a duty that is owed to the individual alone. This duty requires the current employer not to make defamatory statements about the individual. Employers must not provide references maliciously or negligently, giving an impression which is either too negative or misleadingly positive.

What to include when providing a reference

Typically employers will provide a factual reference which will include the dates of employment, the role. Sometimes employers will provide a character reference, which includes additional information on time keeping, the reason for leaving, disciplinary record, performance and absence records.

What not to include when providing a reference

References should be limited to the referee’s specific knowledge rather than speculation as to the employee’s suitability for a new role.

Employers must not detail spent criminal convictions unless either the employee agrees or the job is covered by the Exceptions Order to the Rehabilitation of Offenders Act 1974.

Data Protection

As providing a reference will normally involve processing an employee’s personal data, employers must ensure they comply with the UK GDPR and Data Protection Act 2018 (DPA 2018). It is recommended by the Employment Practices Code that unless the employee consents, employers should not provide confidential references about the employee. Employers should take care when processing any special category data – for example, in relation to an employee's sickness absence record. Employers should also bear in mind that employees have the right to make subject access requests under the DPA 2018.

Risks

Employers must make sure that when refusing to provide a reference it is not discriminatory due to any of the protected characteristics under the Equality Act 2010 which are as follows: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. Protection for employees who are discriminated against extends to after employment has ended as well as during employment.

Employees can also claim for damages in negligence for loss of earnings if their employer provides an inaccurate reference. The prospective employer claim against the employer for wasted recruitment costs and damages if a misleadingly positive reference is provided.

Do’s and Don’ts

Employers should:

• Consider whether they are under a duty to provide a reference and whether any exemptions to the general rule apply.
• Implement a clear written reference policy. Factors such as who in the organisation can provide a reference and what should and should not be included in the reference are useful to ensure consistency. This will help in circumstances where the employer may need to defend any allegations of discriminatory treatment.
• Mark the reference as private and confidential.
• Consider whether a disclaimer of liability should be included within the reference.

Employers should not:

• Include any inaccurate or misleading statements.
• Exclude any information which would result in the reference being misleading.
• Provide a reference containing any special category data without considering data protection obligations.
• Include any comments about performance or absence that might contravene disability discrimination provisions of the Equality Act 2010.

If you have questions about providing references or implementing a reference policy contact our Employment Team by emailing employment@warnegoodman.co.uk or by calling 023 8071 7717.