Generally, there is no legal obligation to provide a reference, so why do we do it? Because it’s the ‘done’ thing, or we value a positive and supportive experience at every stage of the employment journey? Despite genuine intentions, providing a reference can lead to litigation from the exiting employee, their prospective employer and fines from the Information Commissioner’s Office.
So, where do risks lie?
• If the employee hasn’t consented to the provision of a reference you’re probably acting unlawfully as far as data protection laws are concerned. That said, providing a standard reference just confirming the start, end date and role carried out by the employee is unlikely to lead to a complaint by them.
• If complaints of discrimination have been made or a claim issued by the employee then the refusal to give a reference or giving a poor reference may amount to victimisation with the possibility of unlimited compensation.
• Finally, if you mistakenly or intentionally misrepresent facts within the reference and either the exiting employee or their prospective employer are put at a disadvantage, compensation can be claimed.
Despite the risks, a blanket refusal to provide a reference isn’t necessary if you follow these steps:
• Secure consent in your employment contracts or settlement negotiations to the provision of a reference
• Centralise who has responsibility for sending references and ensure that it’s only those individuals that do so
• ‘Loose lips sink ships’ – avoid verbal references and managers interested in expressing their opinion about an exiting team member
• Be clear within your exit process what employees can expect from a reference and the process for requesting them
• Keep them simple and consistent – job title and dates of employment
• Explain it’s your policy to provide only standard references and limit your liability by including a disclaimer