knowledge | 10 September 2018 |
Will You Be My Referee? Practical Guidance for Employers on Employee References
Will you be my referee?
Employers should think carefully before answering this question as employee references have been the subject of litigation with somewhat surprising regularity.
The legal position is that there is no general obligation on an employer to provide a reference to a departing employee. However, an obligation may arise in certain circumstances, such as where it is an implied term of the employee’s contract that they will receive a reference by custom and practice, or otherwise.
In the UK, certain financial services employees are subject to a new regulatory reference regime which requires banks, dual regulated investment firms and insurers, to seek references from previous employers before appointing persons to certain roles. Equally, those previous employers are obliged to provide those references in a prescribed form, and they must include all information relevant to an individual’s fitness and propriety for the previous six years, and details of any instances of serious misconduct.
Under the Central Bank of Ireland’s fitness and probity regime, regulated financial service providers are expected to make all reasonable efforts to obtain references from former employers or other relevant persons. However, there is no corresponding obligation to respond to a reference request, so if no response is received, the new employer is entitled to hire the employee as long as they make reasonable efforts to obtain a reference from the previous employer.
Duty of care
Employers who do provide references to current or former employees will owe a duty to take reasonable care and not defame an employee when preparing a reference. At its most basic, that duty is to ensure that any reference given is true, accurate and fair. In Spring v Guardian Insurance plc for example, a former employer gave a less than favourable reference, labelling a former insurance salesman as being “a man of little or no integrity and could not be regarded as honest”. It was described as the ‘kiss of death’ to his career in insurance. The Court found that the reference had been carelessly prepared, and in these circumstances that the employer had breached its duty to take reasonable care in their preparation of a reference.
While it is most common for inaccurate references to be challenged by way of a claim for negligent misstatement, employee references can also be challenged in defamation. There are however a number of defences that can apply to such claims, including the defences of truth, honest opinion and potentially qualified privilege.
In an effort to mitigate the risks arising from the duty of care outlined above, many employers choose to provide simple ‘statements of service’. The basic details of these statements reduce the legal risk for employers but are of little use to the potential employer. However, more detailed references are still provided to departing employees in many organisations.
How to write your reference?
Earlier this year, the High Court of England and Wales issued its decision in Hincks v Sense Network Ltd. This is a case which involved a claim of negligent misstatement arising from a negative reference, and it emphasises that employers should take particular care when expressing opinions in employee references. In this case, the Court provided some very useful guidance on what might be the extent of an employer’s obligations when preparing a reference in any given case. They are:
(a) to conduct an objective and rigorous appraisal of facts and opinion, particularly negative opinion, whether those facts and opinions emerge from earlier investigations or otherwise;
(b) to take reasonable care to be satisfied that the facts set out in the reference are accurate and true and that, where an opinion is expressed, there is a proper and legitimate basis for the opinion;
(c) where an opinion is derived from an earlier investigation, to take reasonable care in considering and reviewing the underlying material so that the reference writer is able to understand the basis for the opinion and be satisfied that there is a proper and legitimate basis for the opinion; and
(d) to take reasonable care to ensure that the reference is fair, and not misleading either by reason of what is not included or by implication, nuance or innuendo.
Should I include details of allegations, investigations and disciplinary issues?
Whether or not an employer should include details of disciplinary matters or on-going investigations in a reference is a question that regularly arises, particularly in cases with a complex employee relations history. Employers need to take particular care in these circumstances to ensure that they comply with their obligation to ensure that the reference is true, accurate and fair.
An employer should not comment on allegations against the employee unless they have been investigated and upheld. It is clear from the Hincks decision that when referring to disciplinary matters (which have been investigated and upheld), there is no general obligation on employers to examine the procedural fairness of the disciplinary investigation. However, if there are any obvious errors to the reference writer, or if the reference writer has become aware of information which casts a doubt on the reliability or integrity of the facts or opinions in the underlying investigation, reasonable care would require the reference writer to make further inquiry.
Given the potential difficulties associated with referring to investigations and disciplinary issues in a reference, employers should seek legal advice before responding to any request for a reference, particularly for roles in regulated industries.
Protecting your business
To a degree, employers can protect themselves from prospective claims by having a written policy in place for employee reference requests. The policy may include the following general principles:
(a) The personnel authorised to provide references should be limited;
(b) Employees should refrain from providing personal or character references for colleagues;
(c) References should be in a particular form and limited to confirming factual matters that are easily verified including the employee’s dates of employment, a description of their role and duties and responsibilities. References should not stray into matters of opinion regarding performance or conduct;
(d) The company should confirm that it is their policy to provide such generic references only and apply the policy consistently throughout the organisation;
(e) Where references are provided orally, the policy should be applied and the details given should be confirmed in writing; and
(f) No “special categories of data” as defined in the Data Protection Act 2018 and the General Data Protection Regulation should be included in the reference, such as an employee’s membership of a trade union or medical information.
Our Employment team regularly advises on all aspects of employee references. Please contact your usual contact in the McCann FitzGerald Employment Group, for further information.
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.