Imagine the situation. An employee who has given your business all sorts of problems in the past through his incompetence has finally resigned. As far as you're concerned, he's off to wreak havoc on somebody else's business.
All concerned breathe a collective sigh of relief - the managing director is delighted to have got rid of somebody who was never much use anyway, and the HR department has avoided having to begin a capability or disciplinary procedure.
The under-achieving employee is forgotten very quickly. Until, that is, an "urgent" fax arrives reading "The above person has provided your company as a referee. Please complete the boxes below…"
What should I include in a reference?
What you put in a reference for ex-employees must be thought through carefully to avoid any possible legal problems. If you genuinely have nothing but praise then there's nothing to worry about. But if they've left under a cloud then you must be very wary what you put.
For example, any rumours or unsubstantiated accusations could be seen as defamation. If an employee left and then bought a race or sexual discrimination case against you, mentioning this on a reference could be seen as victimising the employee for bringing the claim.
What should I be looking out for?
Here is a checklist of points for employers to consider when giving references:
What's the cost of getting it wrong?
If an ex-employee has difficulties finding a new job because of the employer's negligence in providing an accurate reference, the employer will be liable in damages for the employee's losses during that period of unemployment.
This could be expensive, especially in the case of senior employees.
Aren't references simply more trouble than they are worth?
Employers can be forgiven for thinking this. But it's worth bearing in mind that references can be a powerful tool when negotiating severances or settlement of employment tribunal claims.
For example, an employee who is the subject of disciplinary proceedings will often see the writing on the wall and tender his resignation in return for a reference which doesn't refer to those proceedings.
By giving careful consideration to the above points before providing a reference, employers can protect themselves from the possibility of that reference then being used against them.