Summary and implications

If you asked an employer “for how long, after the end of the employment, do you continue to owe duties to an ex-employee?” chances are the answers would range from “a few weeks” to “a few months”. Rarely would an employer think that six years (and two jobs) after the end of the employment, it would be liable to pay an ex-employee damages for loss of earnings. Well, this is exactly what happened to Swindon College. In fact, McKie v Swindon College is a salutary lesson in what employers can say about current and ex-employees – and what they must not.

As you probably know, most employers are under no obligation to provide departing employees with a reference. A notable exception covers employers who are subject to regulatory reference requirements (e.g. in relation to FSA-regulated professions). However, the need for a reference is a fact of life and many employers do provide employment (and other) references. In this briefing, we outline:

  • If you decide to give a reference, the duties you owe to both the subject of and recipient of the reference. In a nutshell, you must take reasonable care to ensure that any reference is true, accurate and fair;
  • The practical steps you may take to ensure compliance with your reference duties. For example, if you provide information about an employee’s absence or attendance records, you must provide a full picture in order to avoid discriminating against the individual, e.g. on grounds of disability; and  
  • The new “McKie-type” obligation, in relation to statements which are not contained within a reference, and how you may minimise the risk of a legal action based on such statements.

Any reference you give about an (ex)employee must be true, accurate and fair

As an employer, when you provide a reference about an (ex)employee, you owe a duty of care both to the employee and to the recipient of the reference. This means that you must take reasonable care to ensure that the information you provide is true, accurate and fair. If you fail to do so, either the recipient of the reference and/or the employee could seek to recover damages from you, on numerous legal grounds.

Case law on the subject has developed rapidly in recent years, and we set out below “the five commandments” on employment references.

Take reasonable care to provide accurate, true and fair information

Many employers choose to provide only basic employment information in a reference, e.g. dates of employment and job title. This is sometimes known as an “American reference”. Evidently, you must make sure you get these minimal details right. It would also be fair to explain that this is your standard reference and should not be viewed adversely by the recipient.  

If you choose to provide a more detailed reference, you must assess the accuracy of the information you include against the “true, fair and accurate” yardstick. For example, the Court of Appeal has held that an employer has complied with its duty of care when it included in a reference details of disciplinary proceedings which were pending when the employee accepted voluntary severance terms. Had the employer failed to include this information, it could have been liable for misrepresenting the facts to the recipient of the reference. While this case is helpful, you must remember that it turns on its facts. In another case, where an employer failed to investigate allegations of misconduct, but nonetheless alluded to them in a reference, it was found to have breached its duty of care to an (ex)employee. As is often the case with employment law, the question is essentially one of fact.

If you are unsure whether to include or omit certain information from a detailed reference, consider the following rough and ready rules of thumb:  

  • Make sure you know the facts and can back up what you are saying;  
  • Remember that you do not need to include every fact; but  
  • Do not create a misleading impression.  

Have policies and procedures in place to ensure you do not negligently, recklessly, knowingly or maliciously provide untrue information

If you do provide such information, you could face legal action for an array of causes, including negligent misstatement, defamation, malicious falsehood etc.  

Do not discriminate or victimise on any of the protective grounds

A reference which includes comments about punctuality, attendance or sickness absence may lead to a claim of less favourable treatment on grounds of disability. Consider carefully whether it is fair and accurate to include the information in the first place and, if you do, whether you need to supplement it with background or additional information to provide a full picture. However, as explained below, do not willingly offer details of an employee’s medical condition without due consideration of data protection legislation. If you usually provide employees with references (or references of a particular type), do not depart from your practice without good reason. For example, do not refuse to provide a reference to an employee who chose not to come back from maternity leave, when you would normally provide a reference to resigning employees.  

Also bear in mind that employees and some ex-employees are protected from victimisation. Broadly speaking, this means you must not refuse to give a reference to an employee (or sometimes an ex-employee) because s/he has previously brought (or was involved in) discrimination proceedings against you or your organisation. Such a refusal could give rise to a separate cause of action by the employee. You can take some, albeit limited, comfort from case law, however. If you are in the midst of a legal dispute with an employee then, depending on the particular facts, you may legitimately refuse to provide a reference if you believe that this would prejudice your case.

Ensure any reference, and the procedures for providing references, complies with the requirements of the Data Protection Act 1998

Invariably, in giving a reference, you will be disclosing personal data about an (ex)employee. In some instances, e.g. if you disclose sickness records or information about attendance and absences, the information will fall within the category of sensitive personal data. The upshot of this is that disclosure must accord with the various data protection principles (e.g. you must obtain an employee’s explicit consent before you can disclose sensitive personal data). It is also advisable to comply with the Information Commissioner’s recommendations on references, including the proposals that you:  

  • Draw up and publicise a clear policy on who can provide a reference, and when;  
  • Do not provide confidential references about an employee unless you are sure that s/he agrees to this course of action.  

Where you agree the content of a reference with an (ex)employee, retain flexibility in case new information comes to light

When entering into a compromise agreement, it is common for the employer and employee to set some agreed wording for a future reference. If this is the case, include a provision which allows you to amend the reference if relevant new information comes to your attention later, such as incidents of gross misconduct. Without such a provision, you would be contractually bound to provide the agreed reference and there would be a potential claim for damages from the new employer as the information provided would not fairly reflect the truth.

Your duty of care can extend to statements other than references: all communications about (ex)employees should be scrutinised

A recent High Court decision extended the scope of employers’ duties in relation to what they say about their employees. In a nutshell, following McKie v Swindon College an employer may be liable for losses suffered by an ex-employee as a result of inaccurate statements which the employer made about the ex-employee, as long as there is sufficient proximity with the employment. Arguably, statements which are made about the employee’s work performance or conduct are likely to satisfy this test. The Court decided that the period of time that had passed did not sever proximity between Mr McKie’s and Swindon College and a duty of care arose.

To put things in context, Swindon College, an ex-employer of Mr McKie, was held liable for Mr McKie’s loss of earnings after he was dismissed from his post with another employer. Mr McKie’s dismissal was caused by the employer receiving an inaccurate email from a Swindon College employee, referring to serious staff relationship problems during Mr McKie’s employment and to “safeguarding” concerns.

Swindon College sought to avoid liability on the basis that the information was not provided in a reference, that Mr McKie’s employment terminated approximately six years before the information was provided and the fact that he has since held two other posts. Whilst the High Court accepted that the comments were not made within a reference, it held that they were untrue and unjustified and that the process adopted by the College in providing them was “slapdash, sloppy [and] failing to comply with any sort of minimum standards of fairness”.

The Court went on to attribute liability to the College, by extending the familiar “duty of care principles” to these facts. As a result, the Court had no doubt that the College owed Mr Mckie a duty of care even though the employment terminated a long time before the statement was made.

Employers, beware what you say about your ex-employee however long ago they might have left the organisation.

Elements of the duty of Care

  • Was it reasonably foreseeable that conduct would cause loss?  
  • Was there a sufficient degree of proximity?  
  • Would it be fair, just and reasonable to impose a duty of care?