Employers in the engineering and construction sectors are under no general legal obligation to give a reference for a current or past employee. It would, however, be a breach of the discrimination legislation for a company to refuse to provide a reference for a current or former employee because he or she had brought a discrimination claim against the company or supported someone else in doing so. On the other hand, a company would not be acting unlawfully if it refused to provide an employee with a reference in order to preserve its position in relation to a discrimination claim that the employee had brought against the company and which was still outstanding.
If a company gives a reference, the employee cannot sue the company for defamation for what it says in it, even if it is inaccurate, provided the company gave the reference in good faith and was not acting with malice. The company is, however, under a duty to the employee to take reasonable care in compiling the reference and in obtaining the information on which it is based. If the company does not take reasonable care and the employee can show that he or she has suffered economic loss as a result, the employee can claim damages from the company for its negligence. For example, the employee might be able to claim for loss of earnings if an inaccurate or misleading reference causes the employee to lose the offer of a job. The company may owe a similar duty of care to the recipient of the reference.
A company should therefore take reasonable steps to ensure not only that any reference it gives is accurate but also that the reference does not give an unfair or misleading impression overall. In order to minimise the risk of being sued for negligence, the company may also wish to make clear to the employee and to the recipient of the reference that it does not accept liability for any inaccurate or misleading information in the reference, though the value of the reference would obviously be reduced by a disclaimer of this type.
The information contained in a reference is personal data. This means that the reference, and any copy of it that the company retains on an employee's file, must be compiled, held and released in a way that meets the requirements of the Data Protection Act 1998 (data protection ). In order to fulfil the data protection principles, a reference must be accurate, it must be relevant and not contain unnecessary information, it must be held securely, and it must not be retained longer than is necessary.
The company also needs to confirm with the employee that he or she consents to the reference being compiled and sent, and to a copy being retained on file. This is particularly important where the reference contains sensitive personal data such as details of the employee's sickness absence record. It would be advisable to ask the employee to provide his or her consent in writing. The employee should also be asked to confirm whether he or she consents to references being provided to future employers or others after he or she has left the company.
A reference that the company gives on a confidential basis is exempt from the subject access provisions in the data protection legislation, so the company is entitled, if it wishes, to refuse to allow the employee to see it.
The data protection principles relating to references that a company receives in the course of recruitment are covered elsewhere in this Guide (taking up references ).