As an employer the request for a reference is on the face of it a straight forward matter. In most cases the ex-employee is unlikely to ask for a reference if they know their work isn’t up to scratch, and when a deserving ex-employee makes the request, we’re generally happy to oblige. Of course the other side of the coin is when an employer requests a reference and seeks to rely on it. We will look at both these issues in the hazy light of case law, past and present.
In fact there is no general duty placed on employers to provide a reference (Gallear v Watson & Son Ltd 1979 IRLR 306). There is one unusual exception to this, and one possible exception. The former occurs where there is a clause in the contract of employment that obligates the employer to provide a reference. The latter may occur when the employee works in a profession that would usually expect a reference, and that employee cannot hope to obtain a role without a satisfactory reference. In such a case it is arguable that there is an implied term in the contract that would create a duty on the employer to provide a reference.
Receiving a Reference
Looking at the situation when an employer is seeking to rely on a reference, it is vital that the employer makes it abundantly clear to the prospective employee, that any offer of employment made is conditional on that reference being satisfactory and that an unsatisfactory reference will void the contract. In a 1987 case, Stubbes v Trower, Still & Keeling, a firm of solicitors failed to make it clear to a prospective articled clark that his position depended upon him passing his exams. When he failed the exams, the firm could not back track and withdraw the offer of employment. By analogy the same restriction will apply to a company receiving an unsatisfactory reference if they fail to make the offer of employment conditional on a satisfactory reference. In fact the safest route is to insert into the employee’s contract a clause to the effect that if an unsatisfactory reference is received after the employee has started working the employer has the right to dismiss.
When though is a reference satisfactory? Case law suggests ‘satisfactory’ in this context means subjectively satisfactory to the employer. This gives the employer a lot of leeway in deciding what is satisfactory, provided their decision is not motivated by unreasonable or illegal considerations e.g. discrimination under the Equality Act 2010. In Wishart v National Association of Citizens Advice Bureau Ltd, 1987 [IRLR] 321, a reference showed that the applicant had a high level of absence. His explanation did not satisfy the employer who decided to withdraw the offer of employment. The Court of Appeal felt the employer’s decision was reasonable. We can assume there were no disability discrimination issues, which if present, may have led to a different result.
Giving a Reference
What though if you are the employer giving the reference? In 1995, the case of Spring v Guardian Assurance  2 AC 296, was decided. In consequence of an unfavourable reference a company refused to appoint Mr Spring as a company representative. The court at first instance accepted Mr. Spring’s counsel’s description of the reference as being "the kiss of death" to Mr. Spring’s career in insurance. The House of Lords held that if an employer does choose to provide a reference it is under a duty to exercise reasonable care and skill to make sure that any facts communicated from which an adverse opinion might be drawn are accurate. Failure to exercise that reasonable care and skill will be a breach of a duty of care in negligence, and an implied term to that effect in the contract of employment.
In a later case in 1999, Bartholomew v LB of Hackney 1999 IRLR 246, the Court of Appeal decided that the employer’s duty of care should be expanded to ensure not just that the reference was factually correct but that it did not mislead so as to give an overall unfair impression of the employee. This does not though mean that a reference has to be full and comprehensive.
The previous two cases were examples of negligent misstatement but there can be contractual considerations as well. In TSB v Harris 2000 IRLR IRLR 246, Harris was turned down for a job after the TSB had submitted a reference which detailed factually a number of complaints that had been made against her. However, Harris was unaware of most of the complaints and so never had the chance to dispute them, and in one case there was an explanation for the complaint. Harris resigned. The TSB’s failure to consult her about the complaints before putting them in the reference, and by reason of their misleading portrayal which was likely to have a detrimental effect on her career, was held to be a breach of the implied term of trust and confidence.
A recent case, McKie v Swindon College, has extended negligent misstatement even further, and beyond references. In this case, Mr McKie left Swindon College in 2002, with an unblemished record and a great reference. During the court case there was a plethora of evidence from past colleagues extolling his professionalism and competance while at Swindon College. He left to work for the City of Bath College, and then Bristol College and finally in 2008 moved to the University of Bath. This last position took him into contact with his old employer, Swindon College. An email was sent from Swindon College to the University from one Robert Rowe, Human Resources Manager saying, “Further to our telephone conversation I can confirm to you that we would be unable to accept Rob McKie on our premises or delivering to our students. The reason for this is that we had very real safeguarding concerns for our students and there were serious staff relationship problems during his employment at this College. No formal action was taken against Mr McKie because he had left our employment before this was instigated. I understand that similar issues arose at the City of Bath College.” The University of Bath promptly sacked Mr McKie.
Bath University, in a sense were in a relatively strong position. The claimant had only just started working for them. He was in his probationary period. At common law, therefore, if they sacked him, provided only they paid the one month notice, they were in the clear and, because he had only worked for a few weeks, any protection under the unfair dismissal legislation would not be available to him. In a nutshell, they could act unfairly with impunity.
The Court found that the contents of the email were not supported by any evidence, and in His Honour Judge Denyeri words, "I also take the view that the circumstances surrounding the sending of the email flouted elementary standards of fairness, diligence, proper enquiry, natural justice, whichever set of epithets you wish to use". He went on to ask whether the law in fact provides a remedy to someone such as Mr McKie, who has clearly and obviously suffered financial loss by virtue of being dismissed by the University of Bath on the basis of a negligent email from Swindon College.
The Court was clear that the email did not amount to a reference and as such there was no past case law to point. The Court did however rely on Caparo Industries Plc v Dickman & Ors  2 AC 605, which looks at when to impose a duty of care in the tort of negligence. Caparo identified a three stage test for establishing a duty of care; forseeability, proximity and that the court should find it just and reasonable to impose such a duty. Here, In the light of the evidence from the defendants, clearly accepting that they realised the email might potentially have an impact on Mr McKie’s employment position, foreseeability was established. In terms of proximity, despite the passage of some years, Swindon College brought about the relevant degree of proximity by their own actions, and on the somewhat shaky ground that Mr McKie would be left without a remedy if the court didn’t so decide, it was also just and reasonable to impose a duty of care. The net result? Swindon College was found liable for Mr McKie losing his job with Bath University.
One final but important issue relates to the refusal to provide a reference because the employer is annoyed at the employee’s decision to bring an action against the employer. In Coote v Granada Hospitality Ltd, after referral to the European Court of Justice, it was held that am employer’s failure to provide a reference becasue they had been sued by the employee for sex discrimination, amounted to victimization.
If you are offering a job, and a reference is important to you, make sure the offer is clearly communicated as being conditional on receiving a satisfactory reference. What amounts to satisfactory is largely up to you as long as your reasons are not illegal or discriminatory.
When asked to provide a reference this is largely a straightforward matter. However every now and then you will have pause for thought, depending on the circumstances and the ex-employee seeking a reference. You can’t go far wrong as long as you ensure that the facts in the reference are accurate; any opinions given are based on accurate facts; the reference does not present an unfair and/or misleading impression of the employee and you don’t refuse to provide a reference to an employee who has brought a claim against you for discrimination just because they’ve brought that claim. As ever, when in doubt take advice!
And of course with the recent decision in McKie v Swindon College, you also now need to take care in what you say about employees generally because a duty of care may arise, in which case you will be responsible for the words you use.