Employer Reference Best Practices: Lawful & Fair

Providing references for former employees can feel routine, but get it wrong, and your business could face legal claims or reputational damage. Employers have a legal duty to ensure references are accurate, fair, and not misleading. Whether you're a small business owner, HR manager, or senior leader, understanding your obligations when giving a reference is essential to protect your organisation.

This article explains when you're legally required to provide a reference, what you should (and shouldn't) include, and how to reduce legal risks when responding to reference requests. You'll come away with practical steps to handle references confidently and compliantly.

If you're unsure about your reference policies or need expert advice on a tricky situation, our employment law solicitors are here to help.

Is there a general duty on the employer to provide a reference for an employee? No. There is no general duty on an employer to provide a reference for an employee or former employee, but there are exceptions when there is a duty to provide a reference.

When is there a duty to provide a reference? There is a duty to provide a reference:

• If there is an express term in a contract that a reference will be given. Whilst this is uncommon, if it exists, you have an obligation to provide a reference. It is usual for there to be an express requirement to provide a reference in a settlement agreement and in those circumstances your duty and contractual obligation is to provide the reference, as negotiated and in the agreed terms set out in the settlement agreement. When you contractually agree to give a reference, it is advisable to take legal advice before agreeing the content of the reference to avoid binding your organisation to providing a reference that could expose it to legal liability.
• If there is an implied term in a contract that a reference will be given. If your organisation has always given references for its employees or for employees at a certain level, then it is possible that the employee could argue that it was always implied that you would provide a reference if they left your employ.
• If there is an obligation to provide a reference set out in an applicable regulatory body for your organisation. If your organisation is authorised by the Financial Conduct Authority or the Prudential Regulation Authority, you are required to request and provide references as part of their assessment of the person's fitness and propriety for the role.

What is best practice when providing a reference? It is best practice for your organisation to have a clear written policy setting out:

• Whom in your organisation is authorised to provide a reference
• What can and should be included in a reference
• What should not be included in a reference
• A template reference which sets out the language to be used, to ensure consistency of wording used every time a reference is given
• Whether an oral reference can be given and that where it can, that this is consistent with any written reference
• Whether there is any vetting/checking process on the proposed reference and if so, how that is carried out

Can employers refuse to give a reference for an employee? Yes. Unless you have a contractual or regulatory obligation to do so, you can refuse to give a reference, but should consider the following, if you choose to do so:

• Dose your organisation's policy state circumstances, you can refuse to give a reference?
• Do the circumstances you are refusing to give the reference fit completely with the exceptions on providing a reference in your organisations policy?
• Could the refusal to give a reference be based on a discriminatory reason?
• Have you kept a written, dated record of the reasons why you have declined to provide a reference?

If you do not have a written policy, then you still have an obligation to consider how you have dealt with requests for references in the past, whether the reasons why you do not wish to provide a reference are consistent with the reasons you have refused previously, and that they are not discriminatory. A written policy can assist in ensuring you make consistent decisions on the same basis, our expert employment law solicitors can help you draft or update your policy. Regardless of whether you have a written policy about references, it is advisable to keep a written dated record of the reasons why you are declining to give a reference.

What are the legal requirements if you do provide a reference? There is no legal standard format for a reference. That said, there are legal standards that you must keep to if you are going to provide a reference.

A reference must be truthful, accurate, fair and must not give a misleading impression. It must be all those things; not just some of them.

A statement is capable of being both truthful and misleading. Here are a couple of examples:

• You have an employee who was habitually late for work (and you took no disciplinary action) but their work when they arrived was good. Stating in a reference that the individual always produced good work would both truthful and misleading. It is an accurate assertion, but it does not present the full picture and it is not fair. On this occasion, it is not fair on the prospective employer.
• You have a high-flying employee who was out-performing all other colleagues and you simply describe their work as satisfactory. It would be true that the employee's work was satisfactory, but it would be unfair to the employee not to highlight the fact that the employee was a high performer, and it would give a misleading impression of their ability.

Do you have to give a comprehensive or detailed reference? No. The legal obligation is to give a reference which is truthful, accurate, fair and not misleading.

This does not mean that you must give a detailed or comprehensive reference. As indicated, it is fine for you to give a 'certificate of employment'. It is legally acceptable for your policy or business practice to be that you provide a reference that simply states the start and finish date of employment and position(s) held by the employee.

Do, however, bear in mind that even if you do not have a legal obligation to provide a certain type of reference you must be consistent. Keeping to your organisation's policy or past practices if you do not have a policy, are the best ways of ensuring this.

A more detailed reference is likely to include information about:

• Job performance
• Disciplinary record
• Time-keeping
• Absence record
• Reason for leaving

In the majority of cases the employer's official reference will be a basic factual reference, and a personal reference by an individual who has worked with the employee leaving the organisation, will generally be more detailed.

What is the potential liability for the employer in giving a reference? There are potential areas of liability regarding the giving of references. Most references are stated to be given on behalf of the employer or former employer. If, however, during a verbal reference it is not made clear that an individual is giving the reference on behalf of the employer, it is possible for that individual to be held personally responsible for the contents.

Potential claims that could be brought include and against whom they could be brought are set out in the table below:

Potential claim Against? From? What evidence is needed for claim?

Discrimination Organisation and/or individual giving the reference. Employee (or ex-employee) who has previously brought discrimination proceedings against the employer, given evidence or information in connection with such proceedings, made an allegation of unlawful discrimination or done anything else under or by reference to discrimination legislation. The unfavourable reference was given because of an actual or perceived 'protected characteristic '.

Victimisation Organisation and/or individual giving the reference. As above. The unfavourable reference was given because the individual raised a discrimination claim or supported such a claim.

Defamation Organisation and/or individual giving the reference. Subject of the reference. An untrue statement that diminishes the reputation of the individual in the estimation of right-thinking members of society. There is a defence if it is made without malice and there was a legal, social or moral duty/interest in making the statement.

Malicious falsehood Organisation and/or individual giving the reference. Subject of the reference. The reference includes an untrue statement, which the person giving the reference knew was untrue or was recklessly indifferent to the truth.

Negligent misstatement Organisation and/or individual giving the reference. Subject of the reference and/or new or prospective employer. A statement that was given without reasonable care that the content is truthful, accurate and not misleading.

Breach of contract Organisation giving the reference. Subject of the reference. There is likely to be an implied duty to take all reasonable care when preparing a reference and if the statement was not given with such care, it could be a breach of contract.

Deceit Organisation and/or individual giving the reference. New or prospective employer. The person giving the reference knowingly includes false information with the intention that the recipient will rely on it.

Breach of Data Protection Act 2018 Organisation giving the reference. Subject of the reference . click apply for full job details