Duty of Care when Providing a Reference

David Dixey, specialist employment lawyer at Holmes & Hills discusses a recent High Court case of Hincks v Sense Network Limited examined the duty of care owed by an employer when providing a reference.

The law in this area is well established, but the case did provide some further clarification.

Mr Hincks was an independent financial advisor. A reference prepared for him by his former employer Sense Network Limited referred to an internal investigation which had been critical of Mr Hincks conduct in relation to giving advice and certain transactions. Mr Hincks brought a claim for negligent misstatement on the basis that the reference was misleading.

On the facts of this particular case Mr Hincks’ claim failed and the Court concluded that the reference was factually accurate and therefore not actionable. However, some useful guidance was provided with regard to the duty owed to an employer in this situation:

Common features of the duty of care (particularly where the reference is likely to include negative content) are:

1. To conduct a rigorous appraisal of the facts and opinion, particularly negative opinion;
   
2. To take reasonable care that the facts set out in the reference were accurate and true;
   
3. Where statements made in the reference were derived from an earlier investigation, to take reasonable care to consider and review underlying material (notes, minutes etc. from previous investigations);
   
4. To take reasonable care so as to ensure that a reference was not misleading by reason of what is not included or by implication, nuance or innuendo.

A core complaint of Mr Hincks was that the previous investigation was unfair and consequently the conclusions reached inaccurate.

However, in providing its clarification the Court ruled against extending the duty of care to include examining the procedural fairness of the investigation. It was noted that this would cause “formidable difficulties” if reference writers were obliged to enquire into the fairness of such investigations in every case. This might be required where the relevant material identified a “red flag” pointing to the need for further enquiry into the veracity of the earlier investigation.

Conclusions of a specialist employment lawyer 

• In the vast majority of cases employers may decide to have a policy to provide a neutral fact based reference limited to job description and dates of employment;
•  Where references involving opinion are provided extra care must be taken to ensure they are true accurate and fair;
• References containing negative opinions should be prepared only after the reference writer can be satisfied (having considered historical documents) that there is an objective basis for holding the opinions.

Contact David Dixey on 01376 320456 should you require employment law advice in relation to this or any other matter.