Do employers have to give a reference?

There is generally no obligation for employers to provide a reference for an exiting employee, unless there is a contractual agreement that they must provide one, or if they operate in a regulated industry. Where a reference is given, it must be true, accurate and fair.

In this guide for employers, we consider the rules on references and the benefits of implementing policies and documentation to avoid legal risk.

What are employment references?

There are two main reasons a prospective employer requests a reference from someone’s previous employer:

• To confirm the accuracy of any statements or claims the prospective employee made within their application and during the course of the interview
• To obtain the previous employer’s opinion as to the candidate’s suitability for the role in question and their future potential. Although personal views should be avoided.

When providing references, an employer must be aware that they owe a duty both to the prospective employer and their leaving employee. The duty imposed is one of reasonable care and to provide information that is true, fair, and non-discriminatory.

If a careless, misleading, or false reference is given, and the prospective employer acts on it to their detriment (such as suffering a financial loss), there may be grounds for legal action for providing a fraudulent or negligent misstatement. Additionally, the worker may be entitled to compensation for damages caused by a negligent reference.

When does an employer have to give a reference?

There are two instances where an employer must provide a reference. These are:

• If there was a written agreement to do so. For example, a term in the employee’s contract of employment, or part of a redundancy or settlement agreement.
• Certain sectors or regulated industries, such as financial services companies regulated by the Financial Conduct Authority (FCA), or the Prudential Regulation Authority (PRA). This is typically for roles known as ‘controlled functions’.

If a reference is given, it must be fair and accurate and can include information about an employee’s performance, and state if they were dismissed.

What can be included in a reference?

Beyond being fair and accurate, the employer can generally include or omit information as they see fit. The reference does not have to be extensive, but it must not give a misleading impression of the employee. Therefore, it is essential that any reference is based on facts which, if challenged, can be supported with evidence. Subjective personal views and opinions which cannot be substantiated should be avoided.

Any statement should be consistent with those made elsewhere, such as within appraisals or annual performance reviews.

Basic reference

This is a brief summary (also known as a ‘factual reference) of the employee’s time with a company, such as job title, and the dates worked there.

Detailed reference

This is also called a ‘character reference’ and includes:

• Answering questions from the new employer who is requesting the reference
• Information about skills, ability and experience
• Information about the employee’s character, strengths, and weaknesses surrounding their suitability for the new role
• How often the employee was absent from work
• Any disciplinary details
• The reason they left their role (if known)

The amount of detail provided in the reference is up to the person providing it, unless the employer has a specific policy for providing references of a certain type.

Telephone or verbal references

Requests for such references, although not common, should be avoided in order to minimise the risk of misinterpretation. Where a telephone reference is given, both parties should make a full note of the questions asked and the answers given and follow up the conversation in writing.

What a reference should not say

References cannot:

• Be misleading
• Include irrelevant information about the individual
• Detail spent criminal convictions

Employees may be able to claim damages from a court if:

• Their contract of employment stipulates they must be given a reference but their employer refuses to do so
• The employee is dismissed by the employer because they have been asked to provide a reference while the employee is still working for them.

If an employer has discriminated against an employee in a reference, they may have the option of making an employment tribunal claim. Although this needs to be started within 3 months of the date the discrimination occurred.

If the employee can show they suffered loss, they may be able to make a claim to a county court if the reference was misleading or inaccurate. This is particularly so where the job offer was rescinded as a direct result of the reference.

With these risks in mind, employers tend to favour basic references which say very little beyond job title, role, salary, and dates of employment. Such references are generally worthless to the prospective employer because they do not give sufficient granular evidence of what the selected candidate is really like.

Criminal convictions

Spent criminal convictions cannot be mentioned within a reference, and only those unspent convictions that are relevant to the job can be detailed, for example, if an employee had been convicted for stealing from work.

References and discrimination

An employer cannot provide or ask for a reference containing any of the ‘protected characteristics’ and any such provision/request will be unlawful. The protected characteristics are:

• Age
• Disability
• Race
• Gender reassignment
• Marriage and civil partnership
• Pregnancy and maternity
• Religion or belief
• Sex
• Sexual orientation

So if an employer withdraws the offer of a job because the individual has a disability as outlined above, and it was mentioned in the reference, a claim for unlawful discrimination can be made.

There is an exception to this rule, and this is when a protected characteristic is essential to perform a role. In law, this is known as an ‘occupational requirement’. For example, if a women’s domestic violence refuge wants to employ a female member of staff.

Bad references

Providing the reference is fair and accurate, a reference can confirm that an employee is not suitable for a job. It is perfectly acceptable for a reference to state that an employee does not have enough experience for a job, or that they were dismissed.

Although a ‘bad’ or non-favourable reference can be given, there are certain circumstances where they can be challenged by the employee. Therefore, if it can be proven that the reference was:

• Misleading
• Inaccurate, or
• Discriminatory

The employee may be able to make a claim. For example, if a reference stated an employee had been investigated for theft at work and then failed to mention they were completely exonerated, this could mislead a new employer.

An employee can challenge an unfair or inaccurate reference, or one that led to discrimination, particularly where such a reference gives rise to a job offer being withdrawn.

The employer receiving the reference should speak directly with the prospective employee about concerns regarding the contents of the reference, allow them to address any issues and provide evidence of misleading or inaccurate information. The employee should be allowed to obtain other references for comparison or, the employer may consider setting a probationary period to give them peace of mind. These are ways that can make all the difference to a prospective employee and will save and employer costs and time having to re-start the recruitment process.

A prospective employee may ask to see their reference if there is non-favourable information contained within it. However, if a reference was provided on the strict understanding it stays confidential, then disclosure may be an issue under the Data Protection Act 1998 (DPA).

Can an employer refuse to provide a reference?

It would be unlawful and potentially classed as victimisation to refuse a reference for an employee who has, for example, threatened to bring discrimination proceedings, or who has engaged in whistleblowing. In addition, it would be a breach of contract if the employer refused to give a reference where it is a provision in their contract of employment. All these situations could mean that the employee could make a claim.

As it has already been discussed, many employers have a policy of only giving a reference with very basic information, some only go as far as confirming dates of employment and job title. The general rule of thumb is where an employer has regularly provided routine references in the past. The safest option is to provide at the very least, a rudimentary statement for every employee leaving the company. This alleviates the chances of being accused of victimisation.

An employer may also consider including a disclaimer at the end of the reference stating they bear no responsibility for any losses suffered by future employees/employers who rely upon the reference. Although, in practice, this will only have limited protection if the disclaimer is ‘reasonable’. It should also be stated that the disclaimer is company policy and is in no way a result of any behaviour or wrongdoing on the part of the employee.

Developing reference policies

It is beneficial for a company to develop a policy for dealing with references. This should include identification of who within the organisation can provide a reference on behalf of the company, for example, the employee’s line manager or HR department. And enables businesses to consistently respond to requests and avoid allegations by embittered employees that an employer has acted unfairly or unlawfully.

It is therefore recommended that an employer only provide brief, factual details and include a short statement that it is company policy to only provide the basics and that such provision should not be misconstrued as disparaging to the employee in any way. It should also be noted that there will be no further comments or dialogue entered into.

Additionally, if an employer has agreed to provide a statement as part of a settlement agreement, they must ensure they do not deviate from this, by adhering to a regulated process as to who provides the reference and how they will do it.

Confidentiality and data protection

References sent from one employer to another are likely to be covered by the DPA. This can become complicated when one individual (the subject of the reference) requests access to information which is about them but may not necessarily have access to information given by the provider, including their opinion, which has been provided in confidence.

Best practice suggests operating an open recruitment and selection policy, with any references provided being copied to the employee. The previous employer should be notified of the policy beforehand so they are aware the employee will read their comments.

Employee reference FAQs

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Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.