Employee reference letters

Employers are generally not obligated to give references, but if an employer chooses to give one there are certain things, such as avoiding discrimination and data protection that they should be aware of. Read this guide to find out in what circumstances employees have to give a reference, what to include and what to leave out.

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Do employers need to provide references for departing employees?

As a general rule, employers are under no obligation to provide references for their existing or former employees who are applying for new jobs. But there are two main exceptions:

  • If there was a written agreement to provide a reference, this must be honoured. For example, this may be part of the employment contract.
  • If the employee works in certain regulated industries (eg financial services) it may be necessary to provide a reference.

Some businesses have a company policy about providing references. This helps to ensure consistency when providing references(either providing references to every employee or to none). This can avoid potential allegations of discrimination.

Previous managers and colleagues can also provide more detailed references if they wish.

What must a reference include?

If an employer chooses to provide a reference, it must be fair and accurate. Any problems with the employee - such as poor performance or misconduct - can be included as part of the reference. An employer can provide a negative reference as long as they can back-up their reference with evidence such as poor performance letters or records of any disciplinary action.

However, there is no need to provide extensive details; stating the basic facts (eg job title, dates of employment, salary) is fine. Where opinions are provided, these must be based on fact.

Previous managers and colleagues may additionally be asked to provide character details.

Bad references

If the worker thinks they've been given an unfair or misleading reference, they may be able to claim damages in a court. The previous employer must be able to back up the reference, such as by supplying examples of warning letters.

Workers must be able to show that the reference:

  • is misleading or inaccurate; and
  • they ‘suffered a loss’ - for example, a job offer was withdrawn.

How should a reference be provided?

The best way to provide a reference is in writing, to ensure that a record is kept of any statements made about a former employee (in case they later suspect a reference is discriminatory). Although sometimes references may be sought by telephone, it will often be better to ask for time to respond by email.

LinkedIn is now used by many employees as a replacement for CVs. It is possible to “recommend” connections (such as a former employee) - and this recommendation function can essentially be viewed as a new form of providing a reference. However, note that your recommendation can be viewed by others and that it remains on the LinkedIn profile.

Are there any legal risks when providing references?

Discrimination

A fair and consistent approach should be applied to the provision of references. Not only should the references be fair and accurate in terms of their content, but the decision to provide a reference or not should be applied consistently. Any unfairness or inconsistency may potentially lead to allegations of discrimination.

Data protection

Disclosing any details about your former employees to third parties must comply with your data protection obligations.

Providing a reference is likely to involve processing personal data under data protection laws, therefore, the employer must provide a legal basis for processing that data. In relation to a reference, the most likely legal basis is that the employee has consented to their data being processed. However, in the context of providing a reference, an employee or former employee is likely to have a genuine choice about whether or not to consent.

The ICO recommends that employers have a policy on giving references. It also recommends that, when an employee leaves the organisation, the employer should keep a record on file of whether or not the employee wants the employer to provide references for them.

The prospective employer will normally enclose a photocopy of the employee's signed consent to requesting a reference. This will normally be sufficient for the employer to process the personal data.

If the employer has any doubts about whether or not the employee has given consent, it should contact them to check that they consent for the reference to be provided. The employer should obtain the consent in writing if possible, or should at least make a note of the employee's verbal consent.

The employer must not provide sensitive personal data (or data coming within the 'special categories' of personal data) in a reference, for example, information about the individual's health, race or sexual orientation, without first obtaining the employee's explicit consent. To obtain the their explicit consent, the employer should write to them, clearly stating why it wishes to process the data, the specific information to be processed, to whom the data will be provided and for what purpose the information will be provided. The employer should provide a means for the employee to indicate whether or not they consent to the data being processed, for example, a form to complete.

Do former employees have a right to see the reference provided?

Former employees do not have a right to demand to see any references provided by a former employer. However, they can ask their new employer to see a copy of a reference - known as a Subject Access Request - once they start work.

A Subject Access Request entitles employees the right to find out what personal data is held about them by their new employer, why the organisation is holding it and who their information is disclosed to by their new employer. This right will continue under the GDPR and subsequent data protection laws.

The GDPR provisions do not apply to personal data consisting of confidential references given by former employers (or to be given) in confidence for the purposes of education, training or employment (or prospective education, training or employment) of the data subject (ie the former employee). Therefore, former employers do not have to provide subject access to references they have confidentially given in relation to a former employee's employment.

How to resolve an issue with references?

Where a worker is unhappy with a reference that has been provided about them, they can request a copy of the reference sent to the employer. This should usually be done in writing. The request should be made to the employer who made the reference.

Where a worker is applying for an internal vacancy (eg a promotion) and there is an issue with a reference, they should first informally approach their line manager or human resources.

If an employer is unable to obtain a reference from the worker’s nominated referee, they should inform the worker of this and consider if another suitable reference can be obtained. Other options include hiring the worker on a probationary basis to assess the worker’s suitability.

How can employers avoid any problems associated with references?

  • Have a company policy on references and apply this consistently.
  • Ensure that any references you provide are fair and accurate.
  • Provide your references in writing and keep a record.
  • Consider your data protection obligations.
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