Employee References – A Guided Tour of Eventful Case Law

Employee references can often be a rewarding experience. A chance to pass on well-earned positive feedback for the benefit of a colleague’s future career. Many references are straightforward to give and useful to receive. They can, of course, cause complications when feedback is not entirely positive or when organisation’s fail to have a clear policy in place. Here is our guided tour through an eventful array of cases which illustrate their potentially contentious nature. The aim being that along the way you will pick up some tips on how you should go about giving (or receiving) employee references.

First things first – do you have to provide employee references?

There is no legal obligation to provide a reference for an employee or ex-employee and so if an employer wants to, they can refuse to give a reference. This was stated in the case Lawton v BOC Transhield Ltd [1987] IRLR 404. Employers should be careful, however, to treat employees consistently so they are not accused of discriminatory behaviour or of breaching an implied term of trust and confidence in employment contracts. It follows that organisations should have a policy in place to decide whether to give employee references at all and also on the nature of the information to be given.

On or off-the-record – be careful whenever making a statement

Case Number 1: McKie v Swindon College [2011] EWHC 469 (QB)

What happened? The claimant worked in higher education management. Leaving Swindon College in 2002, he went on to work at Bath College based on positive employee references he had received from Swindon College. In 2007 he went to work at Bristol College and then in 2008 he accepted a position with the University of Bath. Part of his role involved making site visits to Swindon College. This led to the University of Bath receiving an email from Swindon College saying they would not be able to give the claimant access for safeguarding concerns. The claimant was subsequently dismissed by the University of Bath. Such issues had not been mentioned in any reference and Swindon College claimed no investigation took place because the claimant left before it could go ahead.

Judgement: it was found that Swindon College was liable for negligent misstatement to the claimant in its employee references. The judge stated that ‘I am satisfied damage was foreseeable, the relationship was sufficiently proximate [and that], it is fair, just and reasonable and there is a causal connection between the negligence in and about the sending of the email and the damage whereof the claimant complains’.

Lesson: this case highlights why employers should be cautious when making any statement about a former employee. Even if a statement is not intended to be a reference, employers should remember that the tort of negligent misstatement can apply.

Recipient of employee references? – you could still be liable

Case Number 2: Bullimore v Pothecary Witham Weld Solicitors and another UKEAT/0189/10

What happened? The claimant had left her job with Witham Weld Solicitors (WW). She claimed unfair dismissal and sex discrimination against WW. After leaving she was offered a job subject to satisfactory employee references. A partner of WW wrote a damaging reference including that the claimant had brought proceedings against them. As a result, the claimant’s new employment contract was revised to include a six-month probationary period. The claimant refused to accept this change in terms and conditions.

Judgement: The Tribunal ruled that the claimant had been unlawfully discriminated against by both her former and prospective employers. Before the remedy hearing the claimant settled her claim against the prospective employer for £42,500 and was awarded £7,500 for injury to feelings against her former employee. The claimant then successfully appealed the case, claiming that the former employee was liable for future loss of earnings.

Lesson: The recipients of employee references must also be careful about any action they may take following receipt of a potentially discriminatory reference.

Liability only to the subject of the reference? – No, it can also be to the recipient

Case Number 3: Playboy Club London Ltd and others v Banca Nazionale del Lavoro SPA [2014] EWHC 2613 (QB)

What happened? Playboy Club Ltd operated a casino in London called The Rendezvous. In October 2010 Mr Bakarat, a member of the club, requested a cheque cashing facility of £800,000. As per Playboy’s policy, the club made a request for a positive banker’s reference for twice the amount of the cheque cashing facility. Mr Bakarat’s bank, Banca Nazionale del Lavoro SPA, was able to support such a financial commitment. Later, when Playboy tried to cash the cheques, Mr Bakarat had deposited, it was discovered they were counterfeit. Mr Bakarat’s account with the bank turned out to have always maintained a zero balance.

Judgement: It was held by the High Court that the bank could not have exercised reasonable skill and care in preparing the reference and was liable. However, on appeal, the Court of Appeal held that the bank did not assume responsibility to the casino, it being relevant that  reference had been requested but the bank did not know for what purpose.

Lesson: The reference giver is generally being asked by a prospective employer for information about an ex-employee because it has specialist knowledge. If the employer fails to do this and the prospective employer relies on the reference, then the reference giver could be liable for negligent misstatement to the prospective employer. However, this can be avoided by using an effective disclaimer or when a reference is given for an unknown purpose (as shown in the case described). Given that employee references are given for a specific purpose, i.e. to judge suitability for employment, it is less likely that an employer could argue that it did not know the purpose of the reference, which was the effective defence of Banca Nazionale del Lavoro in the case described.

Disclaimers and sickness absence

Case Number 4: AB v A Chief Constable [2014] EWHC 1965 (QC)

What happened? The claimant was a senior police officer with the defendant chief constable’s police force. Disciplinary proceedings were commenced against him alleging that he had improperly sought to influence a recruitment and selection process. During this time, he applied to a regulatory body for a job and was led to believe that any reference would not refer to the outstanding disciplinary proceedings. The claimant was offered the job subject to employee references being ‘entirely satisfactory’. A reference was sent which did not include information about the disciplinary proceedings and did not answer questions regarding the claimant’s sickness absence, which was extensive. After getting the job, the claimant received correspondence from the chief constable of the police force saying the initial reference had not answered all the questions and they intended to send a corrected response which they enclosed.

Judgement: The claimant argued that the corrected reference was in breach of the Data Protection Act 1998. There was no question that the contents of the reference amounted to personal data to which the Data Protection Act applied. Illness records would amount to sensitive personal data and no argument was advanced by the chief constable that this had been processed lawfully. The information about the disciplinary proceedings was deemed to be lawful for data protection purposes with the processing being ‘necessary for compliance with any legal obligation to which the data controller is subject’ – that obligation being the public law duty of honesty and integrity. However, given that the force had earlier given the claimant an assurance that employee references would be sent without such information, which was their policy and practice, and he had resigned from his position to take the new job, the force was found to be liable.

Lesson: The content of a reference amounts to personal data under the Data Protection Act 1998. Which means data must be disclosed fairly and lawfully. It is also important to note that the court mentioned that public sector workers have additional public law duties to act with honesty and integrity which would ordinarily mean that, in circumstances such as this case, providing a basic standard reference would be misleading.

Practical advice

Employers should have a clear policy, preferably in writing, about whom within the organisation can provide employee references, in what circumstances, what they can include and what they should not include. It would be useful for the policy to set out a template reference so that consistent wording is used. As shown by the case law, finding the line between providing useful information to a prospective employer and respecting the rights of the subject of the reference can be a delicate business. Taking a step back and making sure that all the information provided is fair and useful can be a good starting point. And finally, do remember to mark any reference ‘private and confidential for the addressee only’.

If you have any questions or need help dealing with employee references or other employment law issues please contact any one of our employment lawyers, Marc Jones or Imogen Finnegan, or call us on 0203 637 6374.