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Employee References

The High Court in the case of Hincks v Sense Network Limited has held that an employer was not negligent when it provided a negative reference.

Background

The Claimant was an independent financial advisor who was looking for work. His prospective employers received a reference from his previous employer which contained negative comments and opinions about him. The reference referred to the Claimant’s suspension for non-compliance with internal procedures which led to clients being compensated and a transaction that the Claimant had conducted in breach of a pre-approval process. The reference went on to state that on conclusion of an internal investigation it was found that the Claimant had “knowingly and deliberately circumvented” the pre-approval process.

The Claimant argued that the reference was misleading and that the opinions expressed were based on the internal investigation which he viewed as an “inadequate sham”. He argued that where a reference contained negative opinions that were founded on an investigation, the referee must be satisfied that the investigation was procedurally fair and reasonably concluded.

He brought a claim of negligent misstatement for the loss of earnings that had resulted from the negative reference.

The Law

A referee owes a common law duty of care to the subject and recipient of the reference and must exercise reasonable skill and care in providing a reference that is accurate and true.

A referee in breach of this duty could be liable for negligent misstatement.

Decision

The High Court dismissed the claim. The Judge noted there were “formidable difficulties” with the Claimant’s argument that the reference writer would need to be satisfied that opinions founded on an investigation were reasonable as in some instances many years may have passed between an investigation and when an employer receives a reference request. The reference writer may therefore have limited information at the time of writing the reference.

The High Court held that the standard expected to be exercised by a reasonable reference writer should be expressed in broad terms and some features of the duty were identified:

  • To conduct an objective and rigorous appraisal of facts and opinion, particularly negative opinion.
  • To take reasonable care and be satisfied that the facts set out in the reference are accurate and true and that where an opinion is expressed, there is a proper and legitimate basis for that opinion.
  • To take reasonable care to ensure that a reference is fair and not misleading either by reason of what is not included or by implication, nuance or innuendo.

Comment

Although this claim was dismissed, employers must exercise care when providing references. Most employers now take a cautious approach and only provide factual references which confirm job title and employment dates. It is also advisable for employers to include disclaimer of liability in any reference provided.

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