When providing a reference a referee has a duty of care to both the employee in question and the potential new employer who will rely on that reference. However, should a referee have to consider the adequacy and fairness of earlier investigations upon which facts and opinions in the reference are based?
In Hincks v Sense Network Ltd the claimant - Mr Hincks - was the subject of a reference that was critical of his conduct as an IFA. He claimed that elements of the reference were not true and accurate, that overall it gave a misleading impression and that the opinions expressed were based on an internal investigation that was no more than "an inadequate sham". Mr Hincks was of the view that had a fair and reasonable investigation been conducted then the investigator could not have reached the conclusions nor formed the opinions expressed in the reference. He claimed damages for negligent misstatement, arguing that a reasonable reference writer must consider the procedural fairness of an earlier investigation.
When dismissing the claim the Court described Mr Hinck's position as having "formidable difficulties". These difficulties included both whether an assessment of fairness would be possible and, even if it was, the considerable burden meeting such a standard imposed upon the reference writer. The Court was of the view that the standard of care to be exercised by a reasonable reference writer should be expressed in broad terms. It would not be appropriate to prescribe the specific level of care required in every case, as each case will turn on the surrounding facts. The Court did though identify certain common features to the duty of care which were:-
To conduct an objective and rigorous appraisal of the facts and opinion, particularly negative opinion, whether those facts and opinions emerge from earlier investigations or otherwise;
To take reasonable care to be satisfied that the facts set out in the reference are accurate and true and that, where an opinion is expressed, there is proper and legitimate basis for the opinion;
Where an opinion is derived from an earlier investigation, to take reasonable care in considering and reviewing the underlying material so that the reference writer is able to understand the basis of the opinion and be satisfied that there is a proper and legitimate basis for the opinion; and
To take reasonable care to ensure that the reference is fair, in the sense of not being misleading either by reason of what is not included or by implication, nuance or innuendo.
The risk of court action arising following the giving of a reference is not limited to when an employer is critical of the ex employee - a new employer may equally resort to the courts if it is found that a glowing reference is inaccurate.
Whilst this sort of case is rare, both scenarios do highlight the need for employers to consider carefully whether they can justify any opinions that have been given in a reference.