It used to be the case that an employer could claim legal “privilege” concerning the contents of a reference on the basis that the purpose of a reference is to provide a “no holds barred” assessment of the individual concerned. In recent years that protection has been eroded so that the provider of the reference can be held liable and required to pay compensation to both the subject of and the recipient of the reference if the opinions expressed do not stand up to scrutiny.
In Bartholomew -v- London Borough of Hackney (1999), a decision I remember well, the claimant alleged race discrimination and his claim was settled and he took voluntary severance. He was facing allegations of financial irregularities. He applied for another job and the former employer said that he took voluntary severance when he was facing disciplinary proceedings for alleged gross misconduct. The job offer was withdrawn and he sued for negligence. Mr Bartholomew lost because the former employer had a duty to the prospective employer to provide a reference which was in substance true, accurate and fair and did not give a misleading overall impression of the individual concerned. There existed a duty to the prospective employer and this meant that the old idea of protection when providing a reference was vulnerable.
This was a big change and it more or less inevitably followed that the duty to a prospective employer applied equally to a former employee. This was duly confirmed in the key decision in Spring -v- Guardian Assurance which was a decision of the House of Lords and confirmed that the employee also had a potential claim for economic loss resulting from negligent misstatement.
The new authorities were tested in Cox -v- Sun Alliance Life Limited. Mr Cox was employed in a sector in which favourable references are more or less a precondition to employment. On the termination of his employment he agreed terms in a COT3 (via ACAS) which included a broadly complimentary reference. However, Sun Alliance provided a further reference which suggested that that he was suspended and would have been dismissed were he not allowed to resign. The case went to the Court of Appeal which found that the employer had relied in giving the reference on investigations which were not concluded. Accordingly the employer was negligent in reaching conclusions which were expressed in the reference.
This potential liability has now been extended to the sphere of compensation for victimisation as a result of the decision of the President of the Employment Appeal Tribunal in Bullimore -v- Pothecary Witham Well and another. Ms Bullimore appealed against the award of compensation awarded to her following a successful claim against her former employer. She maintained that, following settlement of her claim, she was offered another job but this was converted to being subject to a six months’ probationary period after the former employer referred to a poor relationship with the firm and her claim.
There were technical issues but the upshot was that the provider of the reference was liable for compensation resulting from victimisation based on discrimination.
All our subscribers are advised about and assisted with the problems which can arise from providing references. This comes with the service and the problems which can be encountered as outlined above are therefore eliminated before they even arise.