References – Cautionary Tales for Employers

References – Cautionary Tales for Employers

References – Cautionary Tales for Employers 1200 810 Adam Hugill
Reading Time: 4 minutes

Adam Hugill discusses employment references, highlighting different perspectives between employer and employee as well as hopes in the content of reference letters. He talks about the importance of duty of care and the UK case of Spring v. Guardian Assurance, stressing the need for employers to set up a reference policy in order to avoid potential disagreements and litigation.

SHOW NOTES
00:33 Duty of Care – Potential Employer
01:23 Duty of Care – Former Employees
02:02 Right to Access – References
02:27 Advice to Employers
03:45 Telephone References


TRANSCRIPT
References – Cautionary Tales for Employers

Reference letters nowadays tend to be very simple and limited to confirming job titles and last dates of employment.

Many employees, especially, but not exclusively, more junior employees consider such references to be inadequate and want their employer to write something more positive, describing their achievements and contributions.

Employers should exercise extreme caution if they are asked to provide more detailed reference letters to former employees and should be aware of the possible legal implications may raise from such reference letters.

Duty of Care – Potential Employer

Employers owe a duty of care to potential future employers.  If an employer gives a positive and glowing reference, then it is likely that the potential employer will rely on it when making its hiring decision.

A potential employer that relies on a glowing reference may be able to sue the former employer or – in the case of a ‘personal’ reference, the writer of the reference – for damages, if the information contained in the reference is inaccurate or misleading.

For example, if a former employer provides a reference saying that a former employee has particular knowledge or skills it may encourage a potential employer to hire that individual.  If it turns out that the employee does not have such knowledge or skills, then the new employer would have suffered a detriment by hiring the individual, and it would have recourse for any resulting loss against the company or individual that provided the reference.

Duty of Care – Former Employees

Former employees may have legal recourse against an employer that provides an inaccurate reference.

The United Kingdom’s House of Lords held in the 1995 judgment of Spring v. Guardian Assurance that a former employer owes a duty of care to provide accurate information when writing an employee’s reference.

In that case the House of Lords held that an inaccurate, bad reference, could be a breach of duty in tort for negligence.  In such a case the potential employee would not have to prove “actual loss” of employment, only that they lost a “reasonable chance” of employment due to the inaccurate reference.

Right to Access – References

References are often provided by a former employer directly to a potential new employer.  Neither party should, however, assume that the reference is confidential and won’t be seen by the employee.

The Personal Data (Privacy) Ordinance (Cap. 486) allows anyone to request and obtain copies of data for which they are the “data subject”.  In other words, that directly concerns them.  This would certainly include a written reference.

Advice to Employers

Employers should develop and circulate a policy for dealing with references.  This should include:

  • identifying who within the organisation can issue a formal reference;
  • the type of reference that may be provided; and
  • whether or not ‘personal’ references are allowed.

Often the key purpose of a reference is to confirm the accuracy of statements made in a candidate’s CV or job application.  This can be achieved by simply confirming the employee’s job title and dates of employment.

While the majority of references are limited to such simple factual information, it would still be advisable for the reference letter to state that it is employer’s reference policy to limit the content of references to such factual information so as to avoid any argument that a failure to say more may create a negative connotation.

If an employer (or individual) wants to provide a more detailed personal reference, including opinions about an employee’s skills and performance, the writer must ensure that everything written in the reference is true and verifiable.

If personal references are permitted, the employer may want to limit their use to only being permitted to support an employee’s application for certain professional qualifications or admission to professional bodies rather than to support alternative employment.

In any event, any policy that does allow for personal reference should strictly require the writer to marked them as expressing their own personal opinion and not the opinion of the employer.

Telephone References

Hong Kong is a small place and, within certain industries, it is often expected that everyone knows everyone.

It is not uncommon for a hiring manager to reach out to a potential candidate’s former manager “informally” to find out the truth about a potential hire.  Such practices should not, however, be encouraged.

During such a telephone call it is more than likely that instead of information being exchanged, it will be one person’s opinion about the employee.  Opinions are very difficult to justify objectively. As mentioned earlier, if someone relies on that opinion, either positively or negatively, to hire or decline a candidate, there may be legal consequences.

While I refer to telephone references, where to parties know each other, more often than not, the reference will be via WhatsApp chat or similar.  Such conversations are often very informal and are notorious for misinterpretation – especially when emojis are used.

Neither party to a telephone call or chat of this kind should assume that it is off the record or won’t come to the attention of the employee. Even if the communication is entirely verbal, often one or both parties will make some form of note that it has taken place, not necessarily with a full attendance note or memo (which would actually be more helpful if things go wrong), but more usually with a quick email / WhatsApp to HR or the hiring manager giving a thumbs up or thumbs down to the candidate.

 

This video is for informational purposes only. Its contents do not constitute legal or professional advice.

Adam Hugill

Adam advises on a wide range of contentious and non-contentious legal and commercial issues, with a special emphasis on employment law in Hong Kong and the Asia Pacific region.

All articles by : Adam Hugill
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