References
Checking references is just one means of establishing someone’s suitability for a role. In certain circumstances an employment agency or business may be required by law to check references, otherwise it is a matter of good practice or agreeing with a client who shall check references and when. This section looks as the statutory requirements to take references, good practice, who is entitled to see a reference and the record keeping requirements.
What are the obligations on agencies and employment businesses obtaining references on work seekers?
Under the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (Conduct Regulations) there is a duty on agencies and employment businesses to take up references on work-seekers in certain circumstances as set out under Regulation 22.
Employment agencies and employment businesses are only required to obtain references when supplying or introducing work-seekers into roles in which they will work with vulnerable persons.
For all other positions not covered by Regulation 22, although taking up references may not be strictly required under the Conduct Regulations, it is considered good practice to do so, as reference taking is an excellent way of checking a work-seekers suitability. In any event a recruiter is still required to check whether the work-seeker possesses the skills, experience and training required for the role before introduction or supply to a client.
See 'References - what are regulatory references' below for information on references in the financial sector.
I have tried to obtain two references for a work-seeker but have not had any responses from the referees - can I still introduce or supply the work-seeker?
With one exception, there is no statutory obligation to obtain references when introducing work-seekers to clients to be engaged directly by the client. However you may have a contractual obligation to do so, so you should check the terms of the contract with your client to see what your obligations are. In any case it is advisable to be transparent with your client so they are clear as to whether the service you provide does or does not include the checking of references.
The exception to this is when you are introducing or supplying a work-seeker to a client for a position that involves working with vulnerable persons. Under regulation 22 of the Conduct Regulations, you are required to obtain two references from non-relatives of the work-seeker. Where you are unable to fully comply with this requirement you must ensure that you comply with the requirements to the extent that you are able to do so. For instance you may ask the work-seeker to provide alternative referees. If you cannot obtain the references you must provide the client with details of the steps that you have taken to try to comply fully with this requirement.
I would like to take up references before engaging a work seeker for temporary work can I contact her current employer?
You must not disclose any information relating to a work-seeker (or the person who would be supplied to do the work if the work-seeker is a limited company) to any current employer without the work-seeker’s prior consent, which has not been withdrawn by the time of the disclosure and you may not make the provision of any services to that work-seeker conditional upon their consent being given or not being withdrawn.
is there an obligation to provide a reference?
With the exception of certain roles in the financial sector (see 'References - what are regulatory references?' below) , there is no legal obligation on any employer to give a reference unless they have previously agreed to do so in the contract of employment. Employers must take extreme care in providing references and should not include any information in a reference without first checking the truth of any comments made. This is because an employer owes a duty of care both to the employee and also the recipient of the reference. It is not unlawful to provide a “bad” reference if the information given is accurate, truthful and not misleading and it is given in good faith without malice.
In addition, there is generally no obligation to provide a full and comprehensive reference (with the exception of certain roles in the financial sector, see 'References - what are regulatory references?' below) so employers sometimes provide objective standard form references, limited to dates of employment, job title and basic facts.
What are the rights of the recipient of a reference?
It is reasonably foreseeable that the recipient of the reference will act on its contents. If that recipient relies on a reference, which is inaccurate because it was carelessly prepared, and thereby suffers loss, s/he could bring a claim for damages against the employer on account of the employer’s negligence.
For example, if an employer states in a reference to a prospective employer that the employee performed his tasks successfully, when in fact the employee was incapable of performing the tasks in hand, and the employee is taken on, the new employer could bring a claim for damages as a result of the ex-employer’s negligent statement if s/he suffers loss arising out of his/her employment of the employee.
Is it possible to exclude liability for the content of a reference?
Employers may include an express provision in the reference excluding any liability for the content of the reference. This can act as a deterrent against an action in negligence, either by a future employer who subsequently suffers financial loss after reliance on a favourable reference or where an employee loses an opportunity for employment as a result of an adverse reference. However in order for an employer to avoid liability to the subject of the reference, the employer will need to obtain the employee's prior agreement to a reference being given on that basis.
Furthermore, the enforceability of such a provision cannot be guaranteed.
If a work-seeker has requested to see copies of the information we hold on them including references what is the procedure that we have to follow?
Under the Data Protection Act 2018 (the Act), work-seekers (both temporary workers and permanent candidates) are entitled to obtain a copy of any information that constitutes personal data that is being held, shared or used in relation to them. They have a right to make a ‘subject access request’ (SAR) in writing to the employment agency or business that they believe is holding their personal data. The work-seeker should email or write to the employment agency/business to request to see the information on their personal file, and a response must be sent to the work-seeker within 1 month of receipt of the request.
In most cases an employment agency or business cannot charge a fee to process the information request. However a "reasonable fee" can be charged to cover the administrative costs if the request is:
- clearly unfounded or excessive; or
- an individual requests further copies of their data following a request.
To respond to the SAR an employment agency or business must confirm the identity of the work-seeker and locate all relevant information whether stored electronically on a computer or in manual filing systems. A non-exhaustive list of information that can be passed to the work-seeker includes their names, address registration form details, copies of CVs, interview notes, personnel file etc. Relevant information also includes references received from previous employers.
If a work-seeker makes a request to have a copy of a reference which has been provided by a third party such as a former employer this can give rise to a conflict of interest.
The difficulty here is that there is a conflict under the Act. On the one hand, the information provided by the former employer may contain the views and opinions of the former employer about the work-seeker. This amounts to the former employer’s personal data which is protected from disclosure under the Act. On the other hand, the Act gives the work-seeker a right to access information about him or her which amounts to personal data.
Thus, you would need to balance both sets of rights when dealing with this request. Particularly where the reference is provided in confidence, the most straightforward way to deal with the request would be to ask for the referee’s permission to disclose it to the work-seeker.
Where consent is refused, if possible to disclose the information without identifying the referee, then you should do so. However it is likely that the work-seeker will be able to identify the referee.
Therefore as a final step you need to consider:
- Any express assurance of confidentiality you have given to the referee
- Any relevant reasons the referee has given for withholding consent;
- The potential or actual effect of the reference on the work-seeker;
- The fact that the reference should be truthful and that without it the work-seeker will not be able to challenge its honesty;
- That good employment practice suggest that an employee should already be aware of the any weaknesses; and
- Any risk to the referee.
It is important to note that any information contained in the reference which is described as confidential may in fact amount to the confidential information, if it is known to the employee.
Further guidance on confidential references can be found on the Information Commissioners Office website. See also below - 'A former candidate has submitted a Subject Access Request asking to see a reference that we obtained from their previous employer. Am I able to give it to them?'.
A former candidate has submitted a Subject Access Request asking to see a reference that we obtained from their previous employer. Am I able to give it to them?
Under the Data Protection Act 2018, there are certain exemptions that apply which do not require you to disclose certain information in response to a Subject Access Request. One of these exemptions relate to references given in confidence in connection with employment. If this occurs, then the exemption to disclose will apply and the candidate will not be able see it – unless the former employer who provided the reference has given its consent to do so.
If a reference has been given in confidence and thus this exemption is being relied upon, the reasons for non-disclosure of the reference should be documented. When responding to the candidate’s Subject Access Request you should also clearly explain to the candidate why you will not be disclosing the reference. In the event that the candidate raises a complaint with the Information Commissioner's Office (the body responsible for enforcing data protection laws) regarding any failure to disclose the reference, you may be required to show evidence as to how you reached your decision.
If you receive a reference which has not been provided in confidence by the former employer, then you may be able to share/send it to your candidate. If it is unclear whether the former employer intended for the reference to be for the recipient’s eyes only, it is recommended that the former employer is contacted for clarification.
If you are certain that the reference has not been given in confidence, meaning that it can be disclosed, any information included on the reference, which does not concern the candidate (for example personal data of a third party) may need to be redacted - unless you have obtained consent from the third parties to share that information, or it is reasonable to provide this information without the other individual's consent. This requires you to balance the rights of the candidate to access their personal data against the third party's rights regarding their own information.
The ICO have provided further guidance on references and exemptions. For the avoidance of doubt and for future reference, it is recommended that you confirm with an employer upon request for a reference whether it should be kept confidential, or whether it can be shared with a candidate - should they request for it.
What effect does making an offer of a job subject to references?
Most job offers will be made “subject to receipt of satisfactory references” this is because if the references turn out to be unsatisfactory the employer may wish to withdraw the offer of employment.
If an offer is made unconditionally (i.e. without being made “subject to satisfactory references”) if the employer attempts to withdraw an offer of employment because the references received prove unsatisfactory they could face a claim for breach of contract.
Should an employment business give references for temporary workers?
There is no obligation in law to provide references. In addition references, when they are given, are usually given in confidence and the recipient must protect that confidentiality.
References obtained from other employment businesses may not, of course, give first hand information about a particular temporary worker’s performance, time keeping or attitude as they normally do not have control over the day to day activities in an assignment. Such references are often limited in scope and often do no more than confirm the dates a particular worker has worked and whether satisfactory reports or otherwise have been received from clients. Provided that the information given is factual, correct and accurate, employment businesses have little to fear from giving such references. Although there is no legal requirement to give references, Principle 3 of the REC Code of Professional Practice requires that members not undertake actions that may unfairly or unlawfully jeopardise a work-seeker’s employment. Apart from jeopardising the work-seeker’s opportunity to secure other roles your refusal to provide a reference could be detrimental to the employment businesses. Given that if a negative inference is drawn from a refusal to give a reference and the work-seeker in question can demonstrate that the refusal to provide the reference is either malicious or negligent, s/he could pursue a claim against the named referee.
Some employment businesses and employment agencies supply short-term relief staff of a type where references are vital. In these cases they will often seek references, not only from other recruitment companies the work-seeker has used but also from previous employers. While previous employers may not have a large number of requests for references and may therefore be more willing to provide them, recruitment companies using those references should be aware of their limitations.
What are the implications of forwarding references onto clients?
Where references are obtained and recruitment companies wish to pass the contents of those references to their clients or others they must make the referee aware of this fact. If the referee agrees, that agreement should be obtained in writing and only then can the contents of that reference be passed to clients. If the referee refuses to allow the recruitment company to pass the reference on, the recruitment company will have to make a judgment based on the contents of that reference, as to whether the work-seeker in question is suitable and should be supplied or introduced to clients. If the recruitment company decides that the work-seeker should be supplied or introduced, it should inform its client that confidential references have been obtained, that the referee has not given permission to pass the contents on and that they should therefore apply direct to the referee if they wish to use the services of the work-seeker in question.
It is important that a failure to obtain references, or any refusal on the part of a referee to allow the recruitment company to pass on the contents of a reference to clients, are made clear to clients in writing. This will avoid any future claims by clients that the recruitment company has failed to properly inform them about the status of the reference checks carried out on particular work-seekers. This is perhaps particularly but not exclusively relevant to the placement of nurses, care workers, short-term nannies, locum doctors and locum teachers.
In certain circumstances permanent recruiters take up references on behalf of their clients. In the event references are taken up on behalf of a client the permanent recruiter should advise the client to verify the truth of any references obtained in order to avoid liability for any loss suffered by the client as a result of a false or misleading reference. The REC’s Model Terms of Business for the Introduction of Candidates by an Employment Agency places the onus on the client to satisfy themselves as to the work-seeker’s suitability.
Case law
The following cases reaffirm the fact that employers owe a duty to take reasonable care in compiling or giving a reference and in verifying the information on which it is based. Any reference given must be factually accurate and must not give a misleading overall impression. If unproven allegations are mentioned in a reference, it must be made clear to the recipient of the reference that those allegations have not been investigated or proven. The cases also illustrate the fact that employers will not be penalised for giving information that may result in a job offer being withdrawn if the information given is correct and what is stated is fair.
In the case of Jackson v Liverpool City Council 2011 Jackson left Liverpool City Council to join Sefton Borough Council, after a year he applied to join the Youth Offending Service at Sefton Council to which he required satisfactory references. Two references which were provided were satisfactory, however one reference which was provided by his former employers Liverpool City Council raised a concern. The reference produced by Liverpool City Council outlined Jackson’s strengths but also raised issues regarding his performance. Liverpool City Council did not answer questions regarding whether they would re-employ Jackson or if they knew any reason not to employ him. Liverpool City Council had a subsequent conversation with Jackson’s prospective new employer, Liverpool City Council made it clear that the allegations had been raised after Jackson had left their employment and that they had not been formally investigated.
The Court of Appeal overturned a decision of the county court that a reference was unfair because it raised unproven allegations about the employee’s performance. The Court of Appeal concluded that overall, the reference was not unfair or misleading.
The leading case on the legal status of references is Spring v Guardian Assurance Plc 1994. In this case Mr Spring sold insurance policies issued by Guardian Assurance on behalf of his employers. Sometime later his employers sold the business to Guardian Assurance Plc who dismissed him. When Mr Spring tried to take up a job with another insurance company he was given a very bad reference by Guardian Assurance Plc. Mr Spring pursued a claim for negligence, breach of contract and malicious falsehood. The Courts did not find that Guardian Assurance had acted maliciously, but Mr Spring’s claim for breach of contract and negligence succeeded. The trial judge in reaching a decision stated that the reference “was so strikingly bad as to amount to the kiss of death to [Mr Spring’s] career in insurance”. The House of Lords held that an employer owes a duty of care to an employee about whom he writes a reference. The employer’s duty is to take reasonable care in the preparation of the reference, and he will be liable to the employee in negligence if he fails to do so and the employee thereby suffers damage.
The case of Bartholomew v The London Borough of Hackney 1998 also considered the duty of care owed by an ex-employer to a former employee in respect of references. Mr Bartholomew was employed by the London Borough of Hackney as head of their race equality unit. He was suspended in September amid allegations of gross misconduct involving financial matters. A settlement was reached and Mr Bartholomew accepted voluntary severance in February 1994. The terms of the severance were that Mr Bartholomew’s disciplinary matter would be closed upon him accepting a payment in lieu of notice. Fifteen months later Mr Bartholomew sought employment with Richmond-upon-Thames Social Services who requested a reference from his former employers.
The specific information requested was confirmation of the dates of his employment at Hackney and the posts he had held, the number of days absent for health reasons and Hackney’s view on Mr Bartholomew’s suitability for the new post. The London Borough of Hackney replied that he had been suspended from work at the time of his voluntary severance and disciplinary action for gross misconduct had ceased on his departure. Richmond Social Services subsequently withdrew their offer of employment.
Mr Bartholomew brought a claim for negligence and relied on the Spring case on the grounds that his former employers had breached a duty of care owed by an ex-employer to an ex-employee in respect of references. There was no dispute that the statement in the reference had been true, simply that it had been misleading. The Court of Appeal dismissed Mr Bartholomew’s claim and held that Hackney had not breached the duty of care it owed to him because the reference as a whole was not unfair, inaccurate or false.
In TSB Bank plc v Harris 2000 the employer gave details in a reference of eight separate complaints from customers about the employee. They were required to give this information to any prospective employer by their regulatory body. The problem was that the employee was only aware of two of the complaints and had never been given the opportunity to defend herself against the rest. By listing the complaints and failing to give the employee the opportunity to provide an explanation the employer had effectively destroyed the employee’s chances of a career in the financial services industry and they were therefore in breach of the duty of mutual trust and confidence. All employers should be careful of revealing details from the employee’s personnel file if the individual is unaware of their existence.
The case of Kidd v Axa Equity & Law 2000 also involved the financial services industry. Kidd was employed by Axa Equity & Law (E & L) as a sales representative promoting a particular type of investment package. In addition to an internal investigation of customer complaints against Kidd, the regulatory body LAUTRO were also concerned about the package he was selling and were carrying out a review to ensure he was serving his clients’ best interests.
Kidd applied for a position with another company who requested a reference from E&L in the form of a questionnaire. E&L left blank the questions “Have you any reason to doubt the honesty of the applicant?” and “Does there appear to have been any sustained pattern of the applicant failing to give investors best advice?”. However, they sent a covering letter indicating that as they were currently undertaking an investigation they were unable to answer those questions. Kidd failed to get the job on the basis of the reference and claimed that it was misleading as E&L had omitted to mention his various successes at work and the fact that the complaints and the concerns of LAUTRO were partly with the type of package he was selling and did not necessarily reflect badly on him.
The Court set out a three-stage test which an employee would have to satisfy in order to succeed with a claim against a former employer. He or she would have to show that:
- the information given in the reference was misleading
- this was likely to have a significant effect on the mind of the person receiving the reference to the disadvantage of the employee, and
- the ex-employer was negligent in providing such a reference.
In Kidd’s case they did not feel the failure to answer certain questions was misleading because this had been explained by the covering letter. It was also not misleading to omit to mention that the LAUTRO investigation included consideration of the investment package because his selling practices were also being scrutinised and it was this which any prospective employer would be more concerned with.
In the case of Cox v Sun Alliance Ltd 2000 (SAL), C a branch manager with SAL was suspended from work in November 1989 due to a rift between him and his staff. C entered into negotiations with SAL with a view to reaching a settlement under which he would resign in exchange for a compensation payment. Whilst C was suspended, one of SAL’s tied agents M claimed C had accepted irregular payments. C was interviewed regarding the allegation where he refused to offer an explanation for the payment because SAL refused to provide a copy of M’s statement. No further investigation was undertaken and C resigned his position in March 1990. C received compensation for loss of office and an undertaking by SAL that they would provide a reference.
C secured employment with Hambro Guardian Ltd (HG ltd) in 1990 and they requested a reference from SAL’s personnel services manager J. J informed HG Ltd over the telephone that C had left under the shadow of disciplinary proceedings and that issues relating to financial impropriety were involved. In fact the allegations of impropriety had never been proven or even the subject of a proper investigation. As a result of J’s comments HG ltd asked C to resign. In February 1991 C secured an appointment with Windsor Life ltd (WL ltd) and upon requesting a reference from SAL, J repeated the same information he had disclosed to HG ltd. WL ltd confirmed C’s appointment.
C brought a claim against SAL ltd on the grounds that SAL had acted negligently in providing a reference, which had caused him difficulties in securing employment. C also brought a breach of contract claim that the references provided were in breach of the termination agreement.
The Court of Appeal in reaching a decision held that before an employer provides an unfavourable reference, an employer should believe that the information is true, have reasonable grounds for that belief and have carried out as much investigation into the matter as was reasonable in the circumstances. The Court of Appeal went on to add that in order to avoid claims in respect of an agreed reference, the parties should ensure that the exact working of the reference is agreed and recorded in writing.
What are regulatory references?
In March 2016, the Senior Managers Regimes (SMR) introduced a requirement for those working in the financial services sector to obtain and be provided with a regulatory reference. The rule was introduced to regulate the conduct of individuals in order to avoid employees moving from one firm to another in an attempt to disguise their negative conduct history. The implementation of this requirement was delayed and came into force on 7 March 2017.
Which type of firms does it apply to?
Regulatory references must be provided to and obtained by banks, building societies, credit unions, PRA-designated investment firms, insurance firms to which Solvency II applies and other non-directive firms.
What type of candidates does the SMR apply to?
The regime applies to candidates that seek to undertake senior management functions, significant harm functions, notified non-executive director positions, credit union non-executive director positions or key function holder positions.
What are the requirements of the regulatory reference?
The regulatory reference must cover an individual’s prior six years’ employment. The following information must be included in the reference:
- Whether the individual performed a significant harm function or was an approved person;
- Whether the individual had a specific role such as a notified non-executive director, a credit union non-executive director or a key function holder (other than a controlled function), along with details about the position and the dates during which the individual held the position;
- Any other roles or role that the individual fulfilled for the employer;
- Whether the individual was fit and proper to perform the function of the role they were in (in these cases, regard must be made to any qualifications, training, competence levels and personal characteristics that the candidate has);
- Whether the individual faced any disciplinary action, relating to an action, a failure to act or a circumstance that amounted to a breach of any individual conduct requirements (or alternatively if the individual was a key function holder, a notified non-executive director or a credit union non-executive director, a breach of requirements the individual must observe under the PRA rules). Disciplinary action includes: a formal written warning, a suspension, dismissal, or the reduction or recovery of their remuneration.
It is worth noting that firms do not have to disclose any information that has not been properly verified.
Time-frame for hiring firms
Hiring firms must take reasonable steps to obtain regulatory references from all past employers in the last six years.
Time frame for updating regulatory references
Employers are obligated to update a reference after March 2017 if any information comes to their attention within six years from:
- the date the reference was requested; or
- between the date of the request for a reference and the date the employer gave the reference.
In cases concerning serious misconduct, employers should update the reference at any time (i.e. there is no time limit with regard to serious misconduct).
The SMR and the Conduct Regulations
Under Regulation 22 of the Conduct Regulations, there is a duty for employment businesses to take up references on work-seekers when they supply them into roles in which they will be working with vulnerable persons. For both employment business and employment agencies, obtaining a reference is not strictly required under the Conduct Regulations however recruiters need to ensure that the candidates that they supply or introduce to clients have the appropriate experience, training, qualifications and any authorisation which the client considers necessary or, which are required by law or by any professional body (under Regulation 19). Similarly, under Regulation 20, an employment agency and employment business may not introduce or supply a work-seeker unless it has taken reasonably practicable steps to ensure that the client/work-seeker are aware of the requirements imposed by law, or by any professional body which must be satisfied to work in the position.
Thus, taking into account both the SMR and the Conduct Regulations, if a employment business or employment agency is supplying or introducing a work-seeker into any of the roles or functions listed above (see ‘what type of candidates does the SMR apply to?’ above) then it should ensure that the candidate has a regulatory reference (from all past employers in the last six years) for the client, particularly if the client is a bank, building society, credit union or insurance firm.
The FCA have provided a template for regulatory references here which sets out the information that needs to be included in a regulatory reference.
Disclaimer
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