Generally, there is no obligation on an employer to request a reference for a potential employee unless there is a statutory requirement to do so as in some regulated industries such as those regulated by the Financial Conduct Authority or a requirement under an insurance policy, such as professional indemnity insurance. Equally, the same applies to the requirement of an employer to give a reference in respect of a departing or previous employee, unless there is a statutory requirement to do so.
Consequently, therefore in general terms and employer can choose whether or not to provide a reference. However, an employer’s policy on whether or not to give references, and what sort of information to include, should be consistent or it could lead to allegations of discrimination or breach of the implied term of trust and confidence.
Duties to the subject of the reference
If an employer does decide to give a reference, then it owes the subject a duty to take reasonable care to ensure the information it contains is true, accurate and fair, and does not leave a misleading impression. However, there is no obligation to provide any detail in the reference or for it to be comprehensive. Consequently, to avoid liability many employers now adopt a policy of giving a pure factual reference consisting only of job title and dates of employment.
If an employer chooses to go beyond basic confirmation of dates of employment and job role in a reference then they need to take particular care to as to any comments made in order to avoid discrimination claims. For example, care should be taken if commenting about performance, attendance or sickness absence where there is a risk that they may give rise to disability discrimination. The House of Lords in Spring v Guardian Assurance PLC  ICR 596 held that in some circumstances there will be an implied term in a contract of employment that the employer will take all reasonable care, when preparing a reference on behalf of an employee, even after the employee has left employment. Further a referee can be sued for negligent misstatement if it provides an accurate reference. This duty of care has been examined by the courts on a number of occasions.
Any reference that is given must be true, accurate and fair. For example, in Cox v Sun Alliance Life Limited  IRLR 448, the Court of Appeal held that an employer would be negligent in providing a reference that alluded to an employee’s misconduct unless the employer had carried out an investigation and had reasonable grounds for believing that the misconduct had taken place. By contrast, in Jackson v Liverpool City Council  IRLR 1009, the Court of Appeal held that a former employer had not be in breach of its duty of care when it provided a reference which referred to allegations against the former employer but made it clear that they had not been investigated. The employer was not negligent as the reference was true, accurate and fair. However, it is indicative of the fact that costly litigation can ensue in the event of giving a reference that goes beyond simple factual details.
Liability to the recipient of the reference
The referee will owe a common law duty of care to the recipient when providing a reference. However, this can be varied by the use of an appropriate clear disclaimer, unless the referee knowingly includes false information, with the intention that the recipient will rely on it, the referee will be liable to the recipient for the tort of deceit.
Data protection issues
The provision of the reference will involve the processing of personal data by the data controller (the employer) and so will be subject to data protection principles. On 25 May 2018, the EU General Data Protection Regulation (GDPR) took effect and the Data Protection Act 2018. The Information Commissioners Employment Practices Code makes a number of recommendations for employers on providing references. It recommends that an employer should draw up and publicise a clear policy on which employees can provide corporate references and in what circumstances and that they do not provide confidential references about a worker unless they are sure that the worker consents to this course of action.
A job applicant who is unhappy provided about them is entitled pursuant to the legislation to request that the author of the reference provide a copy of any reference sent to a new employer.
Therefore, it is important that employers are clear on who can give a reference within the organisation and agree the scope on the content of any references to avoid potential costly and time-consuming litigation.