Recently I have been speaking to several people in the HR and Recruitment fields to try to get an understanding of the use of references in companies today in aide of writing an eBook on the subject of references, to be available through this website. Specifically, how important companies view references as to their hiring process and what they believe the downfalls of using references to be.
From my discussions I learnt that most people seemed to have a general idea of what they believed the law surrounding references to be, but none knew for sure what they were and were not allowed to do in relation to the giving and receiving of references. There is a general feeling that a negative reference could lead to companies being sued by ex employees and as a result many companies are now giving blanket references that detail only dates of service, final salary and job role. David Bloxham, a recruitment professional, put the figure of companies giving such limited references as high as “30 – 40%”
To find out what the law really says, I spoke to Martin Bazen, a commercial lawyer for Clark Holt, who was happy to run me through exactly what the implications of using references are.
Martin tells me that more and more companies are turning to the practise of giving limiting references, which state only a confirmation of that persons job title and salary, because they do not want the headache of a lawsuit. I am told that even if a company feels confident they will win a lawsuit against a former employee, they do not want to have to donate any time or money at all to dealing with ex employees when they could be focusing that time on the business, and the current employees who still matter.
But why give the same reference for everyone? Surely the company could give positive references to those employees who deserve it, thus helping them on their way to finding a new job, and then give the limited references to average or below average employees. Martin tells me this isn’t an option however as ex-employers have a duty to the potential new employer when giving references to detail any information that may be important, unless the former employer’s policy is to give the same reference for everyone. As well as this, the ex employee could claim that they are being singled out if other employees are being given full references and they are not, which could lead again lead to legal action.
So what is required of companies by the law, in terms of references? Martin tells me there is no legal requirement for any company to give a reference for any employee, although it is common practice to do so. However, although there is no legal requirement, companies will generally have to give references for all employees (however limited they might be) or none to avoid being accused of discrimination for not writing one for any particular ex employee. Another point to consider is that most employees’ contracts have an implied term within them, which is the duty of mutual trust and confidence to the employee. This can be interpreted to mean that if the employee needs a reference then you, as the former employee should give it.
Many people believe that negative references cannot be given, and this is true if that negativity comes from opinion. However, the law itself states that negative references can be given, as long as they are truthful and can be backed up by fact. This means that if you keep records of conversations held with and actions taken by your employees then you can give an honest and insightful reference without fear of being sued. However, despite the fact that any legal action taken against them will lead no where, many companies still will not give honest references because even a short law suit that is easily won is still a law suit that takes up some time and money they would rather be using on more fruitful matters. The shame in this is of course that every employee has to suffer as a result, and good employees may lose out on job because of their business’ policy not to give out full references. Blanket reference policies may not harm you as a business, but they can certainly harm the employees that have worked hard for you.
The final thing I want to know from Martin is whether he believes references to be a key part of the recruitment process. He tells me that it is foolish not to ask for a reference, as they can act as a valuable check against what you have been told by the candidate, but he also would not place too much weight on them given the rising practise of limited references giving only final salary, job title, and terms of employment. His advice in asking for references is to go to the last employer but one, as this is far more likely to yield an honest and full reference that could be more helpful to you as a business.
Martin Bazen is a partner at commercial solicitors, Clark Holt. He specialises in general commercial work with a particular emphasis on computer law.