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The duty of an employer when expressing a negative opinion in a job reference

Every employer at some time or another will have struggled with their conscience when preparing a reference for a departing or former member of staff. What exactly is the extent of their legal responsibility and duty of care when expressing an opinion in a job reference?

The High Court recently provided some useful clarification on this in a case where a reference went beyond statements of fact and included opinions related to a previous internal investigation. Of course, we absolutely appreciate that any reference provided must be carried out with care and should be true, accurate and fair. Any failure in this regard can expose the relevant company to a potential claim.

Mr Hincks was an independent financial adviser employed by CIFS with authority to conduct FCA-regulated activities as an appointed representative for Sense Network Ltd.  His conduct during his work for Sense Network had sparked a number of investigations at the company.

A reference provided by Sense Network referred to the findings of one of these investigations, mentioning that he had “knowingly and deliberately circumvented” processes which required him to seek pre-approval before giving advice and making transactions. Mr Hincks actions had led to £12,000 worth of compensation pay outs to clients.

Hincks brought a claim against his former employer for negligent misstatement, on the basis that he believed his former employer had not exercised reasonable skill and care to ensure his reference was true, accurate and fair.

The basis of Hincks’ claim was that the opinions expressed in the reference were based on an investigation that had been an “inadequate sham” and therefore gave a misleading impression of him.

The High Court dismissed his claim and in doing so clarified the extent of an employer’s duty when providing a reference.

The Court held that there was evidence to support the statements made by Sense Network Ltd and therefore the reference was neither inaccurate nor misleading.

Employers should take reasonable care to be satisfied that the facts set out in a reference are accurate and that, where an opinion is expressed, there is a proper and legitimate basis for the opinion. Where an opinion is based on a previous investigation, as with Mr Hincks, reasonable care should be taken by the reference writer to understand the basis for the opinion and be satisfied of its legitimate basis.

It is worth reminding ourselves here that in most cases (with the exception of certain statutory requirements such as those within the education and financial sectors) employers are under no obligation to provide a reference at all. In difficult situations, where it may prove tricky to provide a reference that is true, accurate and fair without straying into territory that may require defence at a later stage, employers often choose to restrict themselves to a brief factual statement confirming dates of employment, role and duties. If a decision is taken to give an opinionated reference, employers should be able to back this up if asked to do so with statements obtained during any investigation, appeal details and decisions and any other relevant recorded evidence.

My final comment for senior management would be to implement a consistent approach to reference giving. Any wild departures from otherwise standard responses could attract allegations of discrimination.