What are an Employer’s Obligations When it Comes to Providing a Reference?
When an employee is in the process of applying for a job or has left their employment, the willingness on the part of their employer to provide a reference will depend upon the circumstances surrounding the employee’s departure. Often, when an employee informs their current employer that they are seeking alternative employment this is seen as a real slap in the face and can signal the end of the employment relationship. In these circumstances, most employees will attempt to conceal the fact that they are job hunting. If however you are a teacher, you have no choice but to inform your school that you have an interview and require time off to attend. Sometimes this can have a positive impact on the relationship, the school are now aware that the teacher is unsettled and steps can be taken to iron out any creases in the relationship, but what is the obligation on an employer when it comes to providing a reference?
Generally speaking, there is no obligation on an employer to provide a reference for an employee or ex-employee and employers can therefore refuse to provide one. However, a refusal to provide a reference is capable of amounting to breach of the implied term of trust and confidence. In reality, it is very rare for an employer to refuse to provide a reference (or to attempt to scupper an individuals chances of securing employment by providing a negative reference) but what about if your experience of an employee has been a negative one? What obligations does an employer owe an employee and a prospective employer?
The obligation owed to the employee is simple enough - to ensure that the reference is neither false nor misleading. An untrue statement which damages the reputation of a person may amount to defamation. Where such a statement is in writing it will be "libel" and where it is in made orally it will be "slander". In these circumstances, the precise wording of a negative reference is vitally important. For example, if an employee has been dismissed because they were suspected of theft, there is a significant difference between giving a reference which states "the employee was dismissed because they were suspected of theft" and "the employee was dismissed because they were stealing".
A referee can be sued for negligence by both an employee and a prospective employer if it provides an inaccurate reference. The duty of care which an employer owes to an employee was considered in Lawton v BOC Transhield  IRLR 404 where the Court identified the following test: would a reasonably prudent employer have expressed the opinions which were stated in that particular reference? If the answer is yes – then the referee cannot be held liable for providing that reference. In Spring v Guardian Assurance  ICR 596 it was held that an employer who agrees to provide a reference owes the employee a duty to take reasonable care in the preparation of the reference.
This principle was developed further in Cox v Sun Alliance Life Ltd  IRLR 448, where 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. However, this case can be distinguished from Jackson v Liverpool City Council  IRLR 1009, where the Court held that no breach had been committed whereby an employer provided a reference which referred to allegations against a former employee, but specifically stated that the allegations had not been investigated. The reference in this case was true, accurate and fair.
A referee also owes a common law duty of care to the prospective employer. If the referee provides false or misleading information, and that information is relied upon by the prospective employer, then the referee could be sued for negligent misstatement. That said, Kidd v Axa Equity and Law Life Assurance Society plc  IRLR 301 confirmed that as long as the reference does not give a misleading impression; there is no obligation on the referee to provide a reference of any particular length or detail.
In light of all of the above, employers have taken to relying on policies specifying that only factual references will be given. The problem with a policy limited to factual references is that an employer has no discretion to help an employee secure alternative employment where they might wish to do so, and such a policy is unlikely to be a valid defence to claim of negligent misstatement from a prospective employer.