Not recommendedOn 1 Apr 2000 in Personnel Today Granadawas recently forced to pay almost £200,000 compensation to an ex-employee forfailing to supply a reference, highlighting the importance of getting it right.Veronica Dean answers some of your most frequently asked questions Is an organisation obliged to provide a reference? As a rule there is noobligation on an employer to provide a reference to a prospective employer ofone of its past or current employees. But as with all general rules there areexceptions – as Granada Hospitality discovered recently when an award of£195,000 was made against it. Granada refused to provide a reference to a former employee as a consequenceof her having brought a successful sex discrimination action against thecompany in 1993 (she was awarded £11,000). Granada refused to provide any ofthe organisations she applied to with a job reference, making it very difficultfor her to secure new employment. The ex-employee, who had been the manageressof a bowling alley owned by the Granada Group, brought her second claim againstthe company in 1994. It took five years to pursue, including a referral to theEuropean Court of Justice. The Employment Appeal Tribunal in Coote v Granada Hospitality (No 2), 1999,IRLR 452, held that in light of the directions given by the ECJ, Coote wasentitled to have an employment tribunal determine her claim that she had beenunlawfully victimised, contrary to the Sex Discrimination Act 1975 when Granadarefused to provide her with a reference. This was despite the fact that she wasno longer employed by the company. Coote was ultimately awarded £195,000 incompensation. This case is undoubtedly an extreme example. The law relating to referencesis constantly changing but despite the Granada case the general rule remainsthat there is no obligation on an employer to provide a reference. What is our duty of care to the subject of the reference? An employer may be liable to an employee for any economic loss he or shesuffers as a result of any negligent misstatement. In the case of Spring v Guardian Assurance, 1994, IRLR 460, the House ofLords determined that an employer has a duty to take reasonable care incompiling or giving a reference and in verifying the information on which it isbased. Where an employer gives an inaccurate reference about an employee to aprospective employer and it is foreseeable that the employee may be causedfinancial loss as a result of failing to obtain new employment, then it is fairand reasonable that the employee should be compensated. That is not to say that the reference must in every case be full andcomprehensive, however, as shown by last year’s Court of Appeal case,Bartholomew v London Borough of Hackney, 1999, IRLR 246. Bartholomew wasemployed as head of Hackney’s race equality unit. He was suspended pendinginvestigations into alleged financial irregularities and Hackney begandisciplinary proceedings against him. Bartholomew, meanwhile, brought a claimagainst the Council alleging racial discrimination. The parties reached asettlement and as a result Bartholomew withdrew his complaint and thedisciplinary action automatically came to an end. Hackney was subsequently asked for a reference. The reference confirmed hehad taken voluntary severance following deletion of his post and that at thetime of leaving he had been “suspended from work due to a charge of grossmisconduct and disciplinary action had been commenced. This disciplinary actionlapsed automatically on his departure from the authority.” Bartholomew hadan offer of employment withdrawn as a result of the reference and he made aclaim for damages against Hackney. Bartholomew alleged that the council was in breach of its duty of care inproviding a reference which, although factually correct, was unfair. The court heldthat there was a duty of care to provide a reference that is in substance true,accurate and fair and not unfair or misleading overall, even if its separatecomponents are factually correct. The duty does not mean that a reference mustin every case be full and comprehensive. What should a reference contain? In general any reference should contain details such as the length of theemployee’s service, the position the employee held, the employee’s competencein the job, their timekeeping and attendance record, reason(s) for leaving, andany personal observations relating to the employee that might be relevant totheir employability. Care should be taken, however, where the information provided is opinionrather than fact. It must be possible to justify every statement in thereference, for example from personnel records or performance reviews. Allreferences should be vetted before despatch to check for pitfalls andliabilities that might flow from any inaccuracies. What are the obligations towards the prospective employer? Not only does an employer owe a duty of care to the subject of the referencebut also to the recipient. If reasonable care is not taken in preparing areference the recipient may sue the referee for any damages incurred as adirect result of relying on it. Employers should therefore guard against giving inaccurate references in thehope of “offloading” troublesome employees. In practice, if a job isoffered subject to satisfactory references and as a consequence of thereference the job offer is made unconditional, it is clear the reference hasbeen relied upon. Losses may include wasted recruitment, training and legalcosts. Can we avoid liability through a disclaimer? Disclaimers in a reference can be of some assistance but the disclaimer issubject to a test of reasonableness under the Unfair Contract Terms Act 1977.It is likely to be deemed unreasonable to seek to disclaim liability in respectof facts in the referee’s own knowledge, although it may be reasonable todisclaim liability in respect of opinion, for example about the employee’ssuitability for the prospective position. Is it safe to withdraw a job offer if the references are unsatisfactory? While it is for the recruiting employer to decide if the employee is suitablefor their needs, what is a “satisfactory” reference must bedetermined using objective tests. Particular care should be taken whenwithdrawing an offer of employment in light of a reference, especially wherethe reference discloses for the first time a disability or involvement in tradeunion activities that a prospective employer does not wish to accommodate.Withdrawing an offer of employment may in such circumstances give rise to adiscrimination claim. Does the subject of the reference have the right to see it? All references should as matter of course be marked private andconfidential, if only to protect the referee from libel actions. But bear inmind that under the provisions of the Data Protection Act 1998, employees mayhave a right to see information about themselves. Although the employee has noright of access to the confidential reference provided by the former employer,they arguably have a right to see the reference once it is in the prospectiveemployer’s hands. Veronica Dean is partner in employment law at Edge Ellison www.edge.co.ukCase Study Kidd v Axa Equity & LawAvoid a crippling burden on employersIn Kidd v AXA Equity & Law Life Assurance Society and another, HighCourt, 27 January 2000, unreported, an unsuccessful attempt was made to pushthe boundaries of the referee’s duty of care still further.Much of the evidence was hotly disputed and, to save time and costs, thecourt proceeded on the basis of an assumed set of facts. Essentially, Kidd wasan approved representative for AXA Equity & Law, authorised to sell itsfinancial products. He resigned, intending to join Allied Dunbar.The references provided by AXA Equity & Law were poor, referring to the factthat investigations were continuing into the conduct of Kidd’s affairs withclients as a result of a number of complaints. Allied Dunbar decided not toproceed with the engagement and Kidd commenced proceedings for damages againstboth companies. The crux of his case against AXA Equity & Law was that it had owed him aduty to provide a full, comprehensive and fair reference. Mr Justice Burtonencapsulated the legal obligation on a reference provider as: “… a duty totake reasonable care… not to give misleading information… whether as a resultof the unfairly selective provision of information, or by the inclusion offacts or opinions in such a manner as to give a false or mistaken inference inthe mind of a reasonable recipient.”There is no additional duty, however, to give a full and comprehensivereference or even to refer to all material facts. The judge concluded that thiswould be imposing a fresh and possibly crippling burden on employers. Kidd’sclaim therefore failed.Richard Lister works in the employment law department of Lewis SilkinGolden rules of references– Do not discriminate against an employee or former employee for an unlawfulreason in refusing to give a reference.– Ensure all references are marked strictly private and confidential and forthe attention of the addressee only.– Consider marking the reference with a disclaimer.– Get all references vetted by personnel department before they are sent. Comments are closed. Previous Article Next Article Related posts:No related photos.