Pitfalls with References

This revision provides employers with further clarification on what rights and obligations employers have when requesting and being requested to make an employee reference.

What is an employment reference?
An employment reference is a reference given by a previous employer to a potential new employer that can be used to aid the recruitment process and help determine whether an employee is suitable for the role.

There are two different types of employment references:

Corporate references are provided by the employer and contain a more general and impersonal account of the employees role and performance in the company. This will include how long the employee worked there, their job role, attendance record and any other details that the employer's policy permits.

Personal references are provided by an individual employed by the employer but that does not represent the company when making the reference. The individual makes comment on the employee's character and personal traits rather than facts about the job role. A personal reference may be given by the employee's line manager or someone who has worked closely with the employee. It is therefore at the individual's discretion whether they wish to provide the ex-employee with the reference.

The guidance below relates to corporate references as it is at the discretion of the individual alone to determine whether or not to provide a personal reference.

Rights and obligations of the employer
An employer is under no legal obligation* to ask employees for a reference from their previous employment or provide a reference to an ex-employee. It is a matter that is solely at the discretion of the employer and their company policy.

Employers may wish to rely on other sources when determining whether an employee is suitable for a role or not, examples include the interview and application process or any necessary assessments or tests.

(*Employers in the financial sector are under a legal obligation to request and provide regulatory references for certain employees working under the FCA and PRA.)

Guidance on requesting a reference
It is however, common practice to request at least one reference from a potential employee. Employers will typically have a policy in place with procedure to follow when requesting a reference from a potential employee.

This will include:
• when a reference is required
• how much weight to place on the reference
• what should be included in the reference
• policy to deal with references that uncover potential issues concerning the potential employee (for example, their attendance or poor performance in previous role)
• what to do when an employee fails to provide a reference
• how to deal with unsatisfactory references.

Employment references and their significance are therefore entirely dependent on the employer and their applicable policy and procedure.

However, it is important that where an employer has a specific policy and procedure in place this must be applied consistently with all potential employees to avoid unduly claims of less favourable treatment.

Conditional and unconditional offers of employment
If an employer wishes to make an offer of employment on the condition that they receive a satisfactory reference, the employer must state this when making the offer – “We would like to offer you the position of X, subject to the receipt of two satisfactory references”. There is no contractual relationship between the employer and the employee until the employee satisfies the prescribed condition.

In situations where the employer makes an unconditional offer of employment, it may amount to a breach of contract if the employer later wishes to withdraw the offer due to unsatisfactory references. In cases where the employee has already started work conditionally and an unsatisfactory reference is provided, the employer can legally terminate the employment on that basis.

Discrimination claims and references
Employers should exercise caution when receiving a reference which highlights concerns about the employee. For example, the employee has poor attendance and doesn't perform certain tasks well.

The employer should give the potential employee the opportunity to address the concerns and not just rely on the previous employers assertions. The employer should ask questions about it, where appropriate, watching to avoid pre-employment health questions that are not for prescribed reasons.

This is important because the potential employee could have an underlying health issue which amounts to a disability under the Equality Act 2010 and could give rise to a discrimination claim if the potential employee's poor attendance and/or performance arises from his/her disability.

Guidance on providing a reference
As stated above, it is at the employer's discretion whether to provide references to ex-employees. But it is important to emphasise that if company policy is to never provide references then this should be followed consistently.

Employers should be cautious not to fall into the trap of providing references to some employees and withholding references from others, based on their performance or professional relationship. Withholding a reference where policy provides a reference to be appropriate may amount to a variety of claims from the employee including discrimination and/or victimisation.

In some circumstances employers may be contractually obliged to provide an employee with a reference. For example in a settlement agreement an employer might insert a clause which reads “the employer will respond to any reasonable requests for a reference”.

Drafting a reference
Key points to consider:
• follow company policy (use a template where applicable)
• be fair and accurate
• no false or misleading information
• exercise caution when providing info. On job performance.

What to include*:
• date of employment
• employee's role(s)
• job performance
• time keeping
• disciplinary or absence record
• reason for leaving
• the requester may ask specific questions, such as whether the referee thinks the employee will be suitable for the job.

(*these examples apply to requesting a reference also)

The employer should be as objective as possible when providing a reference and should be careful to comment on anything without being supported by facts or evidence. This is important as employees can sometimes make claims against the employer if the information is false or misleading.

Equality Act 2010 and employment references
Employers should be careful not to include any information that could be seen as discriminatory against the employee, even where it relates to the employees performance or attendance.

Poor performance and a poor attendance record could be indication of an underlying impairment/disability and where an employer gives a poor reference as a result or where a new employer relies on this information when deciding against an offer of employment, this could give rise to a discrimination claim on either or both parties.

A case that represents this issue is Bullimore v Pothecary Witham Weld Solicitors and Another UKEAT/0189/10. In this case the tribunal held that the previous employer and the new employer had both been discriminatory against and victimised Ms Bullimore. This was due to a claim of sex discrimination that she had brought against her previous employer at an employment tribunal.

Ms Bullimore's new employer requested a reference from her previous employer, a firm of solicitors. The firm provided the reference but made statements referring to her “poor relationship” with the partners of the firm; the claim she had made previously and that she could “be inflexible as to her opinions”.

When her new employer received the reference they imposed a 6 month probationary period on Ms Bullimore and when she subsequently refused, the offer of employment was withdrawn. The tribunal found that both the firm and the new employer were liable in this case and had both victimised her due to her claim.

The employer had given her a poor reference due to her claim against the firm and the new employer had given so much weight to the reference that they withdrew the offer of employment on that basis.

This case emphasises the importantance of giving employees a fair reference and not using anything against them (whether or not it is a protected act under 2010 act) which could hinder their chances in their application.

New employers should also exercise caution when relying on references as they cannot take the reference as pure fact but must ascertain their own opinion on the employee's suitability for the role.

Employment references should be a statement of fact to aid a potentially new employer in their decision of suitability. References should not be used as an opportunity to hinder the employee's future employment opportunities.