Providing an employment reference is a potential minefield for employers, with competing risks of liabilities to the employee and new employer. After speaking to a variety of HR leaders in the space, we have shared an overview to help you mitigate risk while capturing as much of the upside as possible.
An employer doesn’t usually have to give an employment reference, but if they do, it must be fair and accurate, such as job title, salary and when the worker was employed. It can also include details about worker’s performance and if their employment was terminated. Employers must give a reference if there was a written agreement to do so or they’re in a regulated industry, like financial services, security or aviation. Outside of this, the provision of employment references is deemed to be Best Practice, and one that most employers embrace.
Once the worker starts with a new employer they can ask to see a copy of a reference. They have no right to ask their previous employer. Workers may be able to challenge a reference they think is unfair or misleading. If the worker thinks they’ve been given an unfair or misleading reference, they may be able to claim damages in court. The previous employer must be able to back up the reference, by supplying examples of warning letters, for example.
Adversely, workers must be able to show that the reference is misleading or inaccurate and that as a direct consequence they have ‘suffered a loss’ – for example, if a job offer was withdrawn. If upheld the workers may claim Discrimination and / or Unfair Dismissal – both of which enable significant damages to be claimed in court. Alongside these punitive financial measures run the very real risk of reputational damage.
So, what options do employers have?
You could refuse to give an employment reference. While on the face of it this might remove some risks, it could result in a claim for breach of contract and/or give rise to a discrimination claim. In addition, in some sectors statutory rules mean that employers are obliged to give references and provide certain information.
Alternatively, you can provide a standard fact only employment reference (such as the position held by the employee, salary and other benefits, commencement and termination dates).To avoid the new employer reading anything into the fact that you have not provided full details, it is helpful to state that it is your policy to only give factual references. And if this is your policy, it is important to ensure you comply consistently, since singling out certain employees for this type of reference, whilst providing more detailed information for others, could again lead to claims of breach of contract and/or discrimination. When speaking to HR leaders, this was by far the most common route, not only because of the aforementioned benefits, but also because it was seen as the quickest option.
You can provide a full subjective reference which contains all the bare facts, with commentary on performance and reliability and/or responses to specific questions from the prospective employer. As long as the reference is true, accurate and fair and the employer has acted reasonably in expressing any opinions the risks of any liability should be low. Experience dictates that this is seldom the outcome and litigation is now commonplace in this area.
Don’t forget Data Protection
Adding another layer of complexity, employers also need to ensure that they comply with their duties under the Data Protection Act 1998 and GDPR. This may, at times, conflict with the other duties we’ve outlined. It may be a balancing act, particularly where sensitive personal data is involved, in weighing up the obligations under the DPA, and the risk of breaching obligations to the new employer.
In summary, the nirvana for the employer would be a hybrid mix of factual and subjective Employment Referencing. However, in this litigious world employers are typically (and rightfully risk averse) and therefore they might choose to deal only in facts. Luckily, Konfir makes it easy to provide factual references in an instant. By using Open Data as our source of truth, you can be sure that all information is standardised, factual, and low-risk. Find out more about how your company can use Konfir to streamline their reference requests here.Back to blog home