What Employers Often Get Wrong About References & How to Avoid the Risks
Providing employment references can feel like a legal minefield. Many employers default to a “basic reference only” policy to reduce risk, but that approach is not always straightforward in practice.
This article looks at when you can refuse a reference, how far a basic reference policy really protects you, and when it may be appropriate to say more.
Is there a legal obligation to provide a reference?
In most cases, there is no general legal duty to provide a reference for a former employee.
However, there are exceptions. A contractual obligation may arise, for example:
- Where the employment contract promises a reference; or
- Where a settlement agreement includes agreed wording.
There are also specific regulated roles, such as in financial services, where references are required.
Outside of those situations, an employer can usually decline to provide a reference. That said, refusing selectively or inconsistently can create risk, particularly if the refusal could be linked to a protected characteristic or a previous complaint.
Can you refuse to provide a reference?
Yes, but the decision should be handled carefully.
A blanket policy of not providing references at all is generally safer than picking and choosing. Problems tend to arise where:
- References are refused for some employees but not others; or
- The refusal could be seen as retaliatory, for example after a grievance or whistleblowing complaint.
Consistency is key. If you are going to refuse, make sure that approach is applied evenly.
References must be accurate and not misleading
There is a common misconception, among both employers and employees, that you cannot give a negative reference.
That is not correct.
A reference can be positive, neutral or negative. The legal requirement is that it must be true, accurate and fair, in the sense that it does not give a misleading impression.
This works both ways.
Employers often focus on the risk of saying something negative, but there is also a risk in saying something overly positive that cannot be justified. For example, describing someone as an exceptional performer or suggesting they will deliver outstanding results, where that is not supported by the evidence, could potentially expose the former employer to claims if the new employer relies on that statement when making a hiring decision.
In other words, the issue is not whether the reference is “good” or “bad”, but whether it is a fair and accurate reflection of the individual’s employment.
This includes ensuring any statements can be backed up and avoiding selective wording that creates a misleading overall impression.
This is one of the key reasons why many employers adopt a basic reference only approach.
The “basic reference only” policy
Many employers adopt a policy of providing only factual references.
A typical basic reference may include:
- Job title;
- Start and end dates of employment;
- Reason for leaving, for example resignation, dismissal, redundancy;
- A brief description of duties;
- Confirmation of salary;
- Disciplinary record, such as any active warnings.
This approach reduces the risk of claims arising from inaccurate or misleading statements and avoids subjective assessments.
However, it is important that the policy is clearly documented, consistently applied and communicated to managers, so no one goes off script.
A basic reference policy is only effective if it is actually followed in practice.
Employers should be cautious about including information on attendance or absence levels. This can be particularly sensitive, as absence may relate to disability or other protected characteristics, increasing the risk of discrimination claims if not handled carefully.
Do you need employee consent?
Yes, in most cases.
A reference will usually contain personal data, so you need a lawful basis to share it. In practice, consent is often relied upon and many reference requests include a signed authority from the employee.
It is also good practice to build consent into your internal processes. For example, employers often seek written consent when acknowledging a resignation, so that any future reference requests can be dealt with efficiently.
Even where consent is provided, you should still ensure that the information shared is accurate and that you do not disclose more than is necessary.
It is also sensible to have a standard internal process for checking that consent has been obtained before responding.
Do you have to complete reference forms?
No.
Employers are not obliged to complete detailed reference forms sent by prospective employers. You can decline to complete the form and instead provide your standard reference.
This is often the safest approach, particularly where forms ask for subjective ratings, absence records or reasons for leaving.
If you do decide to complete a form, you must ensure the information is accurate and does not give a misleading impression overall.
When should you provide more than a basic reference?
There are situations where a fuller reference may be appropriate, for example:
- Where a settlement agreement includes agreed wording;
- Where the employee worked in a senior role and a more detailed reference is expected;
- Where you have historically provided fuller references and need to remain consistent; or
- Where a regulatory framework requires more detailed disclosure.
If you go beyond a basic reference, the key legal principles are that it must be true, accurate and fair, in the sense that it does not give a misleading impression.
This includes what you leave out as well as what you include.
Managing risk in practice
To reduce exposure, employers should adopt a clear written reference policy, centralise responsibility, avoid informal or off the record references and train managers not to provide personal references on behalf of the business.
It is also worth remembering that liability can arise not just from negative references, but from overly positive ones that turn out to be misleading.
Final thought
References are one of those areas where a simple, consistent approach is usually the safest. A well applied basic reference policy will cover most situations, but employers should still recognise when a more tailored response is required and handle those cases with care.
If you'd like support with how you handle providing or replying to references, please get in touch.