Employees' rights following negative references from employers

Discussing employers' rights to give negative references and the legal considerations surrounding this, Susan commented:

"An employer has no legal obligation to provide a reference. However, if a reference is given, it must be accurate and not misleading.

"If a misleading or inaccurate reference is given, then the employer could face claims by the subject of the reference or their new employer who receives the reference. While there are no specific rules about negative references, in practice, if an employer gives a negative reference, it is likely that the employee will allege that it is misleading or inaccurate.

"While there is no legal duty to provide a reference, an employer could face claims for victimisation under section 27 of the Equality Act 2010 if the reason for not providing a reference is that the employee alleged discrimination took place. The same would apply if an employer gave a negative reference. There are similar protections when an employer refuses to provide a reference because of a protected characteristic, such as race or sex, however this is difficult to prove in practice."

Susan also discussed how employees can challenge negative references from employers:

"An employee could bring claims for defamation, malicious falsehood, or negligent misstatement if their employer gives an inaccurate reference, and could claim victimisation or discrimination in the Employment Tribunal.

"Other than seeking financial compensation, there is little an employee can do to challenge a bad reference. If a new employer is put off by a bad reference, the court cannot order the potential new employer to change its mind, and it would have probably filled the relevant position anyway before any claim made its way into court."

Susan continued, highlighting reputational considerations for employees:

"Employees will often agree on a reference and announcement as part of their agreement upon leaving.

"Ironically, it can be the most difficult employees who get the most positive references. Adding to the irony, an employee who has alleged discrimination is also more likely to receive a neutral reference because employers will be wary of claims for victimisation.

"In other cases, having a good relationship with senior colleagues is important. Individuals are often less cautious than companies and may be willing to give positive personal references."

Susan further commented on the employer's obligations and rights with respect to offering references:

"The employer’s obligation is to give a reference that is accurate and not misleading, and they have the right to refuse to give a reference as long as that refusal is not discriminatory.

"The new employer - being the recipient of the reference - can also sue the old employer if a misleading reference was given.

"For example, if Employer A dismissed an employee for theft and then described the employee as “honest”, that would be misleading. If Employer B relies on that reference in hiring the employee, it could sue Employer A if it also became a victim of theft from the same employee. As a result, the safest approach for employers is generally to give a “factual reference” to everyone, merely confirming the employees' dates of employment and job title, and sometimes objective facts like sales figures.

"In the private sector, factual references are increasingly the norm because they are the safest option, with teaching being a notable exception. In practice, most employees will ask a former colleague rather than their former employer for a positive reference.

"Some regulated professions have specific reference templates an employer has a legal duty to complete. For example, the FCA requires a specific reference for senior employees in the financial sector."

Susan concluded by highlighting the benefits of seeking professional help in light of a negative reference:

"Yes, and it is strongly advisable that people do so. While an employee can only claim large amounts of compensation following a bad reference if they are out of work for a long time, thus being able to demonstrate a clear financial loss, a letter from a solicitor can put an ex employer on notice and help ensure that bad practice is not repeated."

Susan's comments were published in The Telegraph, 4 July 2024.