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It is important that employers get the position right when it comes to employee references as an employer could potentially be liable to the employee and the new employer if they get it wrong. This article therefore includes some top tips for employers to consider when providing employee references.
Generally an employer has no legal obligation to provide a reference, except where the employer is an FCA-only authorised firm, there is an express obligation to provide a reference in an employee’s contract of employment, the employer has agreed to provide a reference in a settlement agreement and where an obligation to provide a reference is implied by custom and practice.
Despite this, employers should be careful when refusing to provide a reference, as the refusal could be viewed as discrimination because of one of the protected characteristics (e.g. race, disability, religion or belief). In addition, if an employee has previously brought a discrimination claim against the employer, or given evidence in connection with such proceedings, and the employer refuses to provide them with a reference, this could potentially result in a further claim of victimisation.
As well as ensuring that a refusal to provide a reference is not discriminatory, an employer must also take care to avoid discrimination when providing a reference. Employers should be particularly careful when making comments about an employee’s sickness absence, attendance or performance as such comments could constitute disability discrimination.
Provide true, fair and accurate references
When providing a reference, an employer must be true, fair and accurate. If an employee believes that their employer has provided an unfair or misleading reference then the employee could bring a claim of defamation, malicious falsehood, negligent misstatement, victimisation and breach of contract. In addition, if an employee asks for a reference whilst still employed and the employer breaches their implied duty of care when writing the reference, the employee could potentially resign and claim unfair constructive dismissal.
An employer also has a duty of care towards the new employer when providing a reference. Therefore, if an employer breaches this duty and gives an untrue reference, the new employer could bring a claim for negligent misstatement. In addition, if the employer knowingly includes false information regarding the employee with the intention that the new employer will rely on it, the employer could be liable to the new employer for the tort of deceit.
Have a policy in place
References can be produced in a corporate capacity or in a personal capacity. Where a corporate reference is given the employer will be legally responsible for its contents as the reference is being provided on behalf of the employer. It is therefore advisable for employers to have a policy in place regarding which employees or level of management can give a reference. Those selected to write references should understand their obligations and the consequences of providing inaccurate references. Such a policy could also state in what format references should be provided (verbal or written), what information the references should include and in what circumstances references should be provided. Following a consistent approach in providing references will potentially reduce the risk of discrimination and victimisation claims being brought against the employer.
It can be useful for a policy to set out a template reference. If an employer is prepared to provide oral references then a detailed note should be kept of the discussion.
Employers should mark references as “strictly private and confidential, for the addressee only” and include a disclaimer of liability in respect of any negligent misstatement. Usually, a disclaimer would be effective in respect of any claim of negligent misstatement by the recipient of the reference (i.e. the new employer) provided that it is reasonable. However, if an employer wants to avoid liability to the subject of the reference, they would need to get the employee’s prior agreement to a reference being provided on this basis, which seems unlikely.
GDPR – special category data
Under the GDPR as well as having a lawful basis for processing data under Article 6, a specific condition under Article 9 must also be satisfied when processing special category data. An employer should therefore ensure that they do not provide confidential information (such as health information) about a worker within a reference unless the worker has given their explicit consent.
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