When Is a Reference not a Reference?

Irrespective of the circumstances for the termination of a contract of employment, an employer owes a duty of care to the employee to provide a reference that is true and accurate.

The duty of care extends not only to the truth or accuracy of a reference, but also to the fairness or unfairness of it and the overall impression given to the reader.   To fail in this duty may result in a claim of negligence and damages against the employer. 

Damages will be payable if the ex-employee proves that, as a result of the unfair reference, he has lost a reasonable opportunity of employment and has, therefore, sustained loss.  An ex-employer may also be liable to an ex-employee in damages for defamation, if the ex-employee can establish that a reference was given without honest belief in its contents, or recklessly, maliciously or with an improper motive. 

An employer cannot always avoid potential liability by refusing to give a reference.   In some cases there may be an implied duty in the contract of employment to provide a reference, and failure to do so could result in a claim for breach of contract. 

Employers may obtain some protection by including a disclaimer in a reference.  However, this is likely to be ineffective if the ex-employer is trying to disclaim liability over facts within its own knowledge.  It may be reasonable to seek to disclaim liability in respect of grievances, such as the suitability of the ex-employee for a new position.

Overall, an employer needs to carefully consider whether it is under a contractual obligation to provide a reference.  If the employer is not under a contractual obligation, are there any other consequences of refusal, such as a potential discrimination claim?  Employers should ensure that all references are prepared by the correct personnel with appropriate knowledge and training to minimise possible claims of negligence, from either the subject of the reference or its recipient.
 

Reprinted, with permission, from an article by Hammond Suddards, commercial law firm, in Legal Update published by the Institute of Directors, January 2000.  Their initial contact for advice on employment matters is David Mears. Tel: 020 7655 1000.

The information and opinions contained in this article are provided by national law firm Hammond Suddards, and do not necessarily represent the opinions of B Robertson Associates.  No liability, express or implied, is accepted for actions taken following reading this article.