Can an employer give a bad reference? 5 FAQs about employment reference letters answered by lawyers

In this blog, our legal experts answer five frequently asked questions about employment reference letters to help you ensure your references are fair, accurate, and compliant with relevant laws and best practices.

1. Can an employer give a bad reference?

Yes, an employer can provide a bad reference, but it must be fair, accurate, and based on facts. If you’re going to give a negative reference, then all information provided to the new employer should be supported by solid evidence. The content of the employment reference letter cannot be misleading or defamatory.

A reference reflects an employee’s time at your organisation, so it’s essential to ensure it accurately represents their performance. If a reference contains unfair or inaccurate information, the employee could potentially bring a claim against you for negligent misstatement or defamation, leading to legal and financial consequences for your business. Therefore, it’s important to ensure that any employee reference letters you provide are fair, accurate, and truthful.

Top tip: To avoid legal issues, ensure that any negative feedback is based on specific, documented examples, and avoid subjective claims. For example, rather than providing an employment reference letter that states “Jenny was a poor employee,” you should ensure information is fair and backed by evidence, such as “Jenny struggled to meet performance targets, as shown by unmet KPIs in each quarter last year.”

2. Do I have to give a reference for an ex-employee?

No, employers are not legally required to provide a reference unless it’s stated in writing (e.g. in an employment contract or agreed as part of a settlement agreement), or as required by regulatory bodies for specific sectors, such as the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA) for certain jobs.

Additionally, a company’s internal reference policies may limit what can be included or specify who can provide the reference, so it’s important to check these first before giving or withholding an employee reference letter.

3. What should an employment reference letter include?

There's no strict formula for an employment reference letter, however, it should be factual and as a minimum, give a brief overview of the employee's time at the company.

A employee reference letter can include:

• a factual reference; and/or

• a character reference - which is information about the individual's personal characteristics and traits.

Key elements of a basic employment reference letter include:

• Employment dates: Clearly state the period the employee worked with you.

• Job title and responsibilities: Mention the role(s) held and the main duties performed.

For a more detailed reference, you can also include:

• Performance summary: If you decide to include feedback on the employee's performance in the reference, ensure all information given is based on factual evidence. Avoid subjective opinions unless they are backed by clear examples.

• Skills and experience: Outline the employee's relevant skills and experience.

• Disciplinary records: If necessary, you may wish to mention any current, relevant disciplinary records that are known to the employee, but it is important to be mindful of discrimination laws. Do not include absences related to disability or parental leave. For more information, read the guidance on the Acas website.

If your business has an internal reference policy, follow it to maintain consistency and minimise legal risks, particularly when discussing negative aspects of performance in an employment reference letter.

4. Can an employer be sued for a bad reference?

Yes, employers can be sued if the reference is inaccurate or defamatory. An employer must ensure that their reference is true, accurate, and fair. If an employee believes the reference harmed their reputation or job prospects, they could make a claim against their former employer for negligent misstatement or defamation.

Legally, employers must take reasonable care to ensure the facts outlined in the employment reference letter are accurate and that any opinions are supported by evidence. Therefore, before giving a reference, make sure you can justify any opinions or statements made. For this reason, many employers prefer to keep references brief and objective.

5. Can I use a template for an employment reference letter?

Yes, using an employment reference letter template is an excellent way to ensure you include all necessary details while sticking to the facts. With our lawyer-drafted and maintained template, you can easily create and send your own employment reference letter with Docue in minutes.

By following the guidelines provided in the above answers and using a trusted template, you can confidently provide references for former employees at the click of a button. You'll feel confident knowing you’ve taken the right steps to protect your business while offering an honest and accurate assessment.

Using Docue to create your own employment reference letter

If you want to streamline the process of writing employment reference letters, Docue’s employment reference letter template can help. It’s designed to make creating professional employment references easy and quick. With this template, you can ensure you’re providing accurate and fair references that align with best practices - saving you time while safeguarding your business.

Once you have created your employee reference letter, you can sign it electronically and then store it using Docue’s smart storage feature, Docue Drive. It's simple, intuitive and straight-forward.

If you’re ready to streamline your HR and contracting processes, sign up today.