References: case study 2

Caroline Noblet of Squire Sanders Hammonds concludes a series of articles on references with a second case study. The case study looks at a situation in which an employer wants to withdraw a job offer that it has made to a potential employee because it receives an unsatisfactory reference. It also receives a request for a copy of the reference from the subject of that reference. 

Rapidresponse Ltd provides helpdesk support to third-party clients and is looking to expand its front-line team. It has identified a suitable candidate, Nigel, for the post of client support assistant. The company makes him a job offer that is conditional on it receiving a satisfactory reference from his former employer, Firstline Ltd.  However, the reference that it receives from Firstline is unsatisfactory. In particular, it states that Nigel had an "above average level of sickness absence". Rapidresponse is concerned that, if Nigel's high level of absence is repeated in his new role, the standard of service that it provides to its clients will be disrupted. The manager of the front-line team wants to withdraw Nigel's job offer.

Can Rapidresponse Ltd withdraw the job offer it has made to Nigel?

Fortunately for Rapidresponse, it made the job offer to Nigel subject to it receiving a satisfactory reference. This makes it easier for it to withdraw the job offer, without incurring a cost, than if it had not done so. In principle, it can withdraw the job offer without having to pay Nigel for a period of notice if the reference is not satisfactory.

It is for Rapidresponse to decide whether or not the reference is "satisfactory" (Wishart v NACAB [1990] IRLR 393 CA). However, it needs to tread carefully before it withdraws the job offer, as Firstline's response, referring to Nigel's frequent absences, may indicate a disability issue. This could lead to a claim of disability discrimination under the Equality Act 2010 if Rapidresponse withdraws the job offer because of this.

Rapidresponse should write to Firstline to obtain further information about Nigel's absences and to establish the extent of the problem (for example what Firstline means by an "above average" level of sickness absence). Rapidresponse could enquire about the frequency and duration of the absences and whether or not they were due to a particular medical condition. Section 60 of the Equality Act 2010 prohibits employers from asking questions relating to disability and health before they make a job offer, so Rapidresponse should not have made enquiries about Nigel's sickness absence before it offered him the job. The offer can be conditional or unconditional. Rapidresponse should retain and use information it receives from Firstline only to establish whether or not it is reasonable for it to withdraw its job offer to Nigel and not use it subsequently for absence monitoring purposes if Nigel's employment with it proceeds. It would also be advisable for it to refer health-related information to its occupational health specialists for further guidance before it makes a final decision.

Had Rapidresponse Ltd made the job offer to Nigel on an unconditional basis, would it still be able to withdraw it?

If Rapidresponse had not made its job offer conditional on satisfactory references, it could still withdraw the offer (subject to the same disability discrimination considerations as above) but it would be in breach of contract and would owe Nigel notice pay and any other amount that it would have had to pay him under the contract if he had started work for the company and then been given notice straight away.

If Rapidresponse failed to pay Nigel notice and any other payments due under the contract, he could bring a claim for damages against it. His ability to find an alternative position (which would mitigate his loss) would be taken into account in the court's assessment of damages.

The courts will not imply a term that a job offer is conditional, if the employer fails to include it. Therefore, to avoid a successful claim for damages, employers should ensure that all job offers are conditional on the receipt of satisfactory references.

Having considered the information that it has received from Firstline, Rapidresponse decides to write to Nigel to withdraw the job offer because of the unsatisfactory reference. Nigel is furious and threatens legal action against Rapidresponse Ltd. Not surprisingly, he asks Rapidresponse for a copy of the reference from Firstline. Is Rapidresponse obliged to provide Nigel with a copy of the reference?

As references involve the provision of personal information, they are subject to the Data Protection Act 1998 (see Data protection issues in References: giving references in this series).

As a general principle, individuals are entitled to be provided with copies of references provided by third parties such as a former employer, and Nigel would be entitled to be provided with a copy of his reference from Firstline by Rapidresponse. Rapidresponse is unlikely to know how much information in the reference Nigel already knows. The Information Commissioner's Office (ICO) Data protection good practice note - subject access and employment references (PDF format, 28.37K) (on the ICO website) provides guidance on when reference information should be disclosed to the subject of the reference. Firstline should have marked the reference as "private and confidential - for the addressee only" (see References: giving references for the rationale behind marking reference responses as confidential). The guidance in the practice note suggests that Rapidresponse will need to consider whether or not the information in the reference is actually confidential and how much of it was already known to Nigel. The practice note also suggests that Rapidresponse should contact Firstline to find out if it objects to it providing a copy of the reference to Nigel. Even if Firstline does object, Rapidresponse may still need to provide Nigel with the information if it is reasonable in all the circumstances for it to do so. Rapidresponse should weigh up Firstline's interest in having its comments treated confidentially against Nigel's interest in seeing what has been said about him. The practice note suggests a number of factors that employers should take into account when undertaking this weighing-up exercise. These include the potential or actual effect of the reference on the subject of the reference and any risks to the reference provider (for example, if there were a realistic threat of violence or intimidation to the person at Firstline who provided the reference).

If Rapidresponse decides that it is not reasonable in all the circumstances to provide the information without Firstline's consent, it could consider responding to Nigel's request for a copy of the reference in another way, for example by providing him with a summary of the contents of the reference. Nigel should be aware of his own sickness record with Firstline and the statement that it was "above average" is a statement of fact, so it is likely to be reasonable for Rapidresponse to disclose the reference regardless of Firstline's views.

Would Firstline Ltd have to supply a copy of the reference to Nigel if he requests one?

No. Confidential references written by an employer in relation to employment, training or education are covered by a specific exemption (in para.1 of sch.7 to the Data Protection Act 1998) to the general right of access to personal data under the Act. Therefore, Firstline does not have to provide a copy of the reference to Nigel. However, the ICO practice note suggests that employers that have written a reference could choose to provide a copy of it on the basis that it is reasonable to do so if the reference is "wholly or largely factual in nature, or if the individual is aware of an appraisal of their work or ability". Assuming that Firstline had made Nigel aware that his sickness absence level was above average, this would seem to fit this scenario but there is no active obligation on Firstline to disclose the reference.

Next week's topic of the week article will be the first in a new series on social media and employment and will be published on 1 August.

Caroline Noblet is a partner at Squire Sanders Hammonds (caroline.noblet@ssd.com).

Further information on Squire Sanders Hammonds can be accessed at www.ssd.com.