Contrary to popular belief, except in certain sectors (e.g. education and financial services), employers are not legally obliged to provide those who leave their employment with a reference unless they have given express agreement to do so. Where a reference is given, the employer has a duty of care to the departing employee and to their prospective employer to ensure that the information provided is true, accurate and fair.

In a recent case (Hincks v Sense Network Limited), an independent financial adviser who had been the subject of a number of investigations into his conduct whilst in his former employment, which had ended in him being prohibited from transacting activities regulated by the Financial Conduct Authority, challenged a reference given by that employer that was critical of his conduct and included the finding that he had ‘knowingly and deliberately’ circumvented processes that required him to seek pre-approval before giving advice to clients and making transactions.

The financial adviser claimed that his former employer was guilty of negligent misstatement and of acting in bad faith. He argued that the opinions expressed in the reference had given a misleading impression of him as the investigation on which they were based was a sham. It was his contention that where a negative reference is based on the findings of an internal investigation, the referee must satisfy themselves that the investigation was both procedurally and substantively fair.

In dismissing his claim, the High Court acknowledged that the nature of the duty of care when providing a reference will depend on the individual facts of the particular case, so it is difficult to prescribe a precise standard to be exercised in such circumstances. Nonetheless, it identified certain common features of the duty. These are that reference providers should:

• conduct an objective and rigorous appraisal of facts and opinion, particularly negative opinion, whether those facts and opinions emerge from earlier investigations or otherwise;
• take reasonable care to be satisfied that the facts set out in the reference are accurate and true and that, where an opinion is expressed, there is a proper and legitimate basis for the opinion;
• where an opinion is derived from an earlier investigation, take reasonable care in considering and reviewing the underlying material so that they are able to understand the basis for the opinion and be satisfied that there is a proper and legitimate basis for it; and
• take reasonable care to ensure that the reference is fair, in the sense of not being misleading either by reason of what is not included or by implication, nuance or innuendo.

However, the person giving the reference does not need to consider the adequacy and fairness of previous investigations that formed the basis for facts and opinions expressed in the reference except where there is a ‘red flag’ that makes further enquiry necessary.

In this case, there was evidence to support the former employer’s statements and the reference was therefore neither inaccurate nor misleading.