Writing references: do we need to investigate old disciplinary issues?
It is crucial to ensure, whenever a more detailed reference is provided, that this is well thought out and a consistent approach is taken.
Employers generally have no obligation (save in specific sectors such as finance) to provide a reference for their employees or former employees. However, not doing so when other employees have been provided with references, can lead to allegations of discrimination. When a reference is provided, an employer owes a duty to both the subject of the reference and the recipient to take reasonable care to ensure that the reference is true and accurate, and is not misleading. A failure to do so can lead to claims from either the employee or the recipient (including a potential civil claim for negligent misstatement on the grounds that the inaccurate content of the reference has caused loss or damage).
However, in the case of Hincks v Sense Network Ltd, the High Court held that this duty of care did not extend to carrying out detailed enquiries into whether a previous disciplinary investigation was procedurally fair. Rather, when a reference includes an opinion that is based on a previous disciplinary investigation, the obligation on the reference writer is more limited; to make sure they understand the basis for the opinion and satisfy themselves that there was a proper and legitimate basis for it.
The Claimant, Mr Hincks, was employed as an Independent Financial advisor. Concerns about the advice he had given to clients led his employer to suspend his authority to provide advice and sell financial products and require him to obtain pre-approval for all such activities (although he could carry out background research and preparatory work without authorisation). However, he subsequently carried out a number of activities, including selling an investment to a client, in breach of this pre-approval process. An investigation was carried out, and the investigator found that Mr Hincks’ breach of the pre-approval process had been ‘malicious’ and that he had attempted to conceal the breach from colleagues. His authorisation to provide advice and transact sales was terminated and his appeal against this sanction was rejected.
When Mr Hincks subsequently sought a reference from his employer, it contained references to the suspension and termination of his authority and stated that he had “knowingly and deliberately circumvented” the safeguards put in place by his employer. In bringing a claim for negligent misstatement, Mr Hincks argued that, as the reference writer was relying on the earlier investigation and its conclusions, they were under a duty to make sure that that investigation was reasonably conducted and procedurally fair. He viewed the earlier investigation as “an inadequate sham” and it had led to him receiving a reference that was not true or accurate.
The High Court dismissed Mr Hincks’ claim. It held that there were “formidable difficulties” with requiring a reference writer to look into the procedural fairness of previous investigations. It acknowledged that, in practical terms, such an investigation might not be possible and that the reference writer might have access to very limited relevant information about the previous investigation, or indeed no information at all. Documents might well have been destroyed and staff involved in the original investigation might have left. The High Court held that, even if this type of inquiry was possible, it would impose a “very considerable” burden on the reference writer.
A reference writer is nevertheless required to conduct an “objective and rigorous appraisal of facts and opinion” which emerge from previous investigations and to satisfy themselves that there was a “proper and legitimate basis” for the opinion. Unless there is a “red flag” such as an obvious error or another reason to suspect that the previous investigation might be flawed, the reference writer is not obliged to dig deeper into the detail of how the previous investigation was conducted.
What does this mean for me?
Like many employers, you may well choose to keep references to minimum factual details, unless regulatory requirements in your sector dictate otherwise. However, it is crucial to ensure, whenever a more detailed reference is provided, that this is well thought out and a consistent approach is taken.
This Judgment is reassuring for employers, but importantly does not mean that previous investigations can be taken at face value in every case. Especially where there has been a negative outcome, there is still a responsibility on reference writers to look back at, and think about, previous investigations.
This is the case, even where a previous disciplinary investigation was never concluded. Often, an employee may resign pending disciplinary action to ensure a clean disciplinary record. In these circumstances, if information is provided about the reason for employment ending, it may be misleading to simply state that the employee resigned without giving some context to this. The Courts have confirmed that a former employer will not be in breach of its duty of care to an employee if it provides a reference giving details of disciplinary proceedings which were pending against the employee when they left its employment (as long as it is clear about the status of the proceedings). There is a risk if you do not provide this detail you will fail in your duty to the prospective employer to provide a reference that is not unfair or misleading. However, if you include details of allegations which were not fully explored, you also take the risk of a negligent misstatement claim from the aggrieved employee, particularly where you have not carried out an objective and rigorous appraisal of the process undertaken prior to the resignation.
When you are providing a reference that goes beyond the basic factual details it is good practice to ask someone else to look over the reference and give a second opinion. They may pick up on something you had not intended to say or which could be subject to a different interpretation.
Claire Hollins (email@example.com) is an Associate in the Employment, Pensions and Immigration team and is based in Birmingham.
Josh Conroy (firstname.lastname@example.org) is an Associate and litigation specialist and is based in Manchester.
Weightmans LLP can advise on all aspects of employment law, including the risks inherent in providing a detailed employee reference and how to mitigate the risk of an employment claim. If your organisation finds itself facing a claim for negligent misstatement in the civil courts, our highly experienced specialist civil litigators are available to assist. If you have any questions, please do not hesitate to contact Claire or Josh, or speak your usual Weightmans advisor.