Except where giving a reference has been agreed in the contract of employment, or where the employer’s business operates in certain regulated industries, there is no legal obligation for an employer to provide a former employee (or a prospective employer) with a work reference.
However, most businesses do provide references recognising that they are important for both the former employee and the new employer.
Before providing a reference, there are certain things about which you should be aware.
What should a reference include?
A reference does not have to do follow any prescribed format or include any specific information.
A short one may simply confirm that the employee worked for the business in a particular role between two dates. It may also confirm a final salary level.
A longer one might include a more detailed description of the role carried out, and a positive assessment of the character of the employee.
That is not to say that a reference cannot be negative.
Whatever a reference says, the information must be fair and accurate.
You don’t need to prove to the reader that what you say is true, however, if challenged by the former employee, you should have evidence that backs up what you write.
Data protection considerations
Right of access
Under the Data Protection Act (which incorporates the General Data Protection Regulation or GDPR), confidential references are exempt from the provisions relating to the right to be informed and the right of access.
That means that if you give or receive a confidential reference, the employee does not have the right to request a copy of it.
However, that is not to say that an employee might not obtain a copy.
Basis for processing
When you give or receive personal information, the Data Protection Act applies. The must be a legal basis for “processing” the data. For the prospective employer, that basis may be Consent (the prospective employee has given explicit consent) or it may be Contract (the reference being a prerequisite for completing the process of entering into a contract. For the former employer, the basis may be Consent (again, the prospective employee has given explicit consent) or Contract (the employment contract states that a reference will be given).
Consent is best obtained in writing by the prospective employer, and then a copy of that consent sent to the former employer with the request to provide a reference. If the former employer is not sure whether Consent exists, he or she could telephone or (better) email the former employee.
Alternatively, you might ask about the employee's consent in the exit interview.
Special category data
Some personal information about the former employee may be classed as special category data. This includes information about race, gender, sexual orientation, health and religion. It also includes information about trade union membership and political opinion. Explicit consent to provide this type of information should be sought, in addition to any other consent to provide information more generally.
Unfair or misleading references
If a former employee thinks that a reference is unfair or misleading, he or she might claim damages against you.
Whether he or she is successful will depend both on whether there is strong evidence that the reference was indeed misleading or inaccurate, and on the ability to prove that a loss was suffered for which compensation should be paid. The latter is difficult.
Even though a prospective employer may take a negative reference into account in deciding whether or not to hire, there are likely to be other factors that contribute to the decision. Proving that the reference swayed the decision is difficult.
Managing risks
Having a business policy in place about providing references is often useful. This helps line managers, who are often the people who write the references to be consistent in what information is provided and how it is presented.
Your business policy should be to provide references only in writing so that there is evidence of what information was given.
You should also apply your policy consistently to all former employees. You could be discriminating against some former employees otherwise.