The Pitfalls Of Providing References

Please note that this is an archive article from 2000. Check more recent articles at Employment Law Updates for any further developments.

The recent case of TSB Bank plc -v- Harris in the Employment Appeals Tribunal highlights the degree of caution employers need to exercise when providing references.

The Basic Principle:

The House of Lords case of Spring -v- Guardian Assurance in 1994 held that an employer who provides a reference concerning an employee or former employee to a prospective employer owes a duty of care to the employee regarding the preparation of the reference. The employer may be liable to the employee in damages for any economic loss suffered as a result of a negligent misstatement.

TSB -v- Harris:

In the present case during the course of Ms Harris' employment the TSB had received a number of complaints from customers about Miss Harris. However Miss Harris was not asked for her comments on those complaints and was unaware that they had been made. Whilst still employed by the TSB, Miss Harris applied for a job at the Prudential. The TSB provided a reference stating that 17 complaints had been made against her, four of which had been upheld and eight being outstanding. The reference was entirely factual, but failed to comment on her character and ability. Unsurprisingly, the Prudential declined to employ her.

Miss Harris was shocked that not only had so many complaints been made, but that they had never been discussed with her and that she had no opportunity to comment on them. Ms Harris resigned and claimed constructive unfair dismissal.

E.A.T. Decision:

Ms Harris had been unfairly constructively dismissed. An employer who has undertaken to give a reference for a current employee is under a contractual obligation to ensure that it is fair and reasonable. Failure to do so may be in breach of the implied term of trust and confidence.

The reference had the potential to destroy Ms Harris' career in the financial services industry. The TSB's practice of revealing complaints in a reference which the employee did not know about amounted to a breach of the implied term of trust and confidence, even though it was standard practice in the industry.

Practical Points:

It is unwise for employers to follow a policy of not revealing complaints to the employee concerned. Comprehensive Disciplinary and Capability Procedures need to be in place which should ensure that the employee is in the position to make comments on any allegations made against him or her after an investigation has been conducted.

If the reference you propose to give is not favourable to the employee, you must be careful that it is factual and not simply based on the subjective opinion of the line manager. It may also be a good idea to disclose it to the employee before sending it to the prospective employer.

When writing the reference, do not confine yourself to 'facts' without a balanced assessment of the employee's character or ability.

You may also wish to include a disclaimer of liability at the end of the reference. In drafting a disclaimer you must ensure however that it satisfies the test of reasonableness under the Unfair Contract Terms Act 1977

This bulletin is intended for general guidance only and should not be relied upon without detailed legal advice on your specific circumstances.

If you would like further information about this or anything else please e-mail lonemp@steeleslaw.co.uk or visit our web site www.steeleslaw.co.uk

This article copyright © 2000 Steeles Law. All rights reserved.