12 FAQs about giving employment references.
- Do we have to give a reference to an employee who resigns or is dismissed?
- Do we have to give employees references for mortgage applications, property rentals or other personal reasons?
- Do we need the employee's consent before giving a reference?
- What information do we need to include in an employment reference?
- Is it best to have a policy of only giving minimal employment references?
- What should I say if I want to give an employee a good reference?
- What should we do about giving references for employees who have performed poorly or been dismissed?
- Do we have to show the reference to the employee?
- Can an employee sue us if we give a poor reference?
- Are we liable if a new employer relies on an inaccurate reference we give?
- Can we avoid liability by including a disclaimer on employment references?
- What is the legal position for employment references given in person or by telephone?
1. Do we have to give a reference to an employee who resigns or is dismissed?
You are not usually required to provide a reference, but there are exceptions.
Your employee might be entitled to a reference as part of their employment contract. Even if the contract does not explicitly state that you will provide a reference, the employee may have the right to one if you have made a habit of providing references in the past.
If you normally provide references, but choose not to for a particular employee, the employee might be able to claim that this is done for discriminatory reasons (for example, because of the employee's gender or race). If the employee has already made a claim of discrimination, your failure to provide a reference might also allow the employee to make a claim of victimisation.
When you dismiss an employee, you may negotiate a settlement agreement with them in order to avoid potential legal action. As well as any compensation payment, it is common for settlement agreements to include an obligation to provide a reference, in agreed terms.
If your business is regulated by the Financial Conduct Authority, you may be required to provide a reference for an employee who is an 'approved person'.
2. Do we have to give employees references for mortgage applications, property rentals or other personal reasons?
As with references for employees who have resigned or dismissed, there is no general obligation to provide a reference unless you have agreed to do so.
However, refusing to provide a reference is likely to make life difficult for your employee and harm your working relationship. At worst, the employee might feel that they have no choice other than to resign and claim constructive dismissal.
References of this kind are generally restricted to providing basic employment facts such as date of employment and salary details. Provided you give accurate information, giving a reference like this should not cause you any problems.
3. Do we need the employee's consent before giving a reference?
References include personal information, so you need to be careful to make sure you are complying with your data protection obligations. This is particularly important if the reference is going to include sensitive personal data, such as details of sickness absence.
It is good practice to ask for the employee's consent, and to check that you are giving the reference to the right person.
4. What information do we need to include in an employment reference?
You can choose just to give the basic facts. For example, you might confirm that the employee works (or worked) for you, the dates, job title and salary (see 5).
You should bear in mind that some prospective employers may see a reference like this as a coded warning about the employee. Also, by omitting important information you might be at risk of providing a misleading reference. So you may also want to state that it is your policy to only provide the bare facts.
You can choose to provide more detailed information (see 6). If you have dismissed the employee you might say so, and give the reason. You can also give more information about the employee's character and work performance. Be aware that even if an employee does not work for you anymore, they can still make a claim against you for post-termination victimisation and/or detriment. (See 9.)
Whatever information you give should be accurate and not misleading.
5. Is it best to have a policy of only giving minimal employment references?
Giving a reference may open you up to potential legal claims (see 9). The employee might blame you if they fail to get a new job because of the reference. Conversely, a new employer will be unhappy if you give a good reference and they later discover that you knew the employee was a poor performer (see 10).
At the same time, it can be problematic if you usually give full references but choose not to in particular cases - or if you normally give minimal references but choose to go into detail about an individual employee's poor performance.
Having a policy of always giving minimal references can be a good solution. By restricting yourself to the bare facts - and making it clear that this is what you always do - you make it unlikely that either the employee or the prospective employer could take successful legal action against you. Many employers now follow this policy.
6. What should I say if I want to give an employee a good reference?
You should start with the basic facts: typically dates of employment, job role and salary.
You can then go on to provide more details about the employee's character and work performance. For example, you might outline the various job roles the employee has had, their responsibilities and how well they have performed.
You should be careful to provide accurate information and to avoid being misleading. If you restrict yourself to talking about good aspects of the employee's performance while omitting key negative information, you might expose yourself to a legal claim from the future employer (see 10).
7. What should we do about giving references for employees who have performed poorly or been dismissed?
The safest option may be to restrict yourself to confirming the employee's employment dates and job title.
If you are going to give more details, you must make sure the reference is accurate and not misleading.
Again, it is best to restrict what you say. For example, you might state that the employee was dismissed and give the reason. If you go out of your way to criticise the employee, you might encourage them to claim discrimination or victimisation (see 9).
8. Do we have to show the reference to the employee?
You are not normally obliged to show a reference you have written to the employee it is about.
However, refusing to do so may make the employee suspect that there is something questionable in the reference. The employee will normally be able to obtain a copy of the reference by making a 'subject access request' to their prospective employer to see information held about them.
9. Can an employee sue us if we give a poor reference?
An employee might be able to take action against you if you provide inaccurate information and they suffer as a result. For example, an employee who has a job offer withdrawn as the result of the reference might make a claim for loss of earnings.
However, provided the information provided in the reference is true, any such claim would be very unlikely to succeed.
You should bear in mind that giving a poor reference may prompt an employee to look at making a claim of unfair dismissal, or discrimination or victimisation. You should be particularly careful if the employee has made previous complaints of discrimination or victimisation. So in the reference it is advisable to not refer to any previous discrimination or victimisation complaint made by the employee.
10. Are we liable if a new employer relies on an inaccurate reference we give?
A new employer might be able to claim for any loss they suffer as a result (for example, if the new employee harms their business).
However, to succeed the new employer would need to show not only that the reference was misleading but also that you were negligent. As long as you genuinely believe the information you give and are trying to provide a fair and accurate reference, there should not be a problem.
11. Can we avoid liability by including a disclaimer on employment references?
You may want to include a disclaimer in any references you give to help reduce the likelihood that a potential employer could take legal action against you if the reference is inaccurate or misleading.
However, you should not rely on a disclaimer as a way of avoiding any potential liability. You cannot exclude liability if you provide inaccurate information when as the employer you should have known the facts.
You can use a disclaimer to say that the prospective employer should not rely on any opinions you have given, or to clarify that you have only limited knowledge of the employee in question.
12. What is the legal position for employment references given in person or by telephone?
The same rules apply to information given orally as opposed to in writing. In practice, of course, it is much harder to prove what has been said when there is no written record.
Some prospective employers make a habit of following up a request for a reference with a phone call to ask if there is anything else they should know. You should avoid saying anything that you would not be happy to put in writing.