References: the recruitment process

Caroline Noblet of Squire Sanders Hammonds continues a series of articles on references with a look at how references fit into the recruitment process. Employers should take care to ensure that reference requests reflect their requirements and that they make job offers conditional on satisfactory references. 

Introduction

It is common practice for employers to request references in respect of potential new employees. A reference enables the prospective employer to confirm key details about the job applicant's prior employment history. References are an important part of the pre-employment due diligence process. This is particularly relevant in light of the Bribery Act 2010 (see below), which came into force on 1 July 2011. It is also important in relation to the protection of vulnerable groups, such as children, with whom the job applicant may work, if he or she is appointed.

When should references be sought?

It is important that employers inform job applicants that references will be sought as part of the recruitment process and that referees will be approached only with the candidate's consent. Employers could include a statement to this effect in the job application form or during the course of the selection interview process.

Employers should adopt a policy of obtaining references for all prospective employees (normally at the point of an offer being accepted). Employers that are selective in whom they ask for references risk incurring discrimination claims.

Once the successful candidate has been identified, the job offer should be made conditional on the employer receiving references that are satisfactory. This condition should be confirmed in writing as part of the job offer letter. According to the Court of Appeal in Wishart v NACAB [1990] IRLR 393 CA, it is for the employer to decide whether or not a reference is "satisfactory". It is advisable for employers to include wording to the effect that the employer reserves the right to withdraw the job offer, or if the employment has already commenced, terminate it without notice, if it receives an unsatisfactory reference (see below).

Reference request content and form

The content of a reference request should reflect the requirement (established by case law) that the information contained in references should be true and accurate, fair and not misleading (see References: giving references in this series for more details). Therefore, a reference request should be limited to a request for information about factual matters such as the dates employment started and ended, the job title, descriptions of the duties and responsibilities and attendance record. Questions that relate to sickness absence or health matters should be carefully worded to reduce the risk of a claim of disability discrimination from the subject of the reference if he or she is not appointed (for example, they should cover only a reasonable period of time). Employers should also exercise care in how they deal with information that relates to sickness absence, in case that sickness absence is disability related. The recruiting employer should seek further information from the candidate concerned before withdrawing the job offer if the answers provided suggest the existence of a potential disability issue. Employers should also note that, subject to certain exceptions, s.60 of the Equality Act 2010 provides that questions relating to disability and health cannot be asked until the employer has made a job offer (whether conditional or unconditional). In effect, reference requests seeking this sort of detail cannot safely be made until this late stage in the recruitment process. (See Questions about health during recruitment: overview for more details.)

Employers that are making reference requests in relation to positions in regulated sectors, for example the financial services sector, may need to ensure that requests are in a specific format, to meet the particular regulatory body's requirements.

Recruiting employers should make reference requests in writing and retain both the request and the response with other recruitment documentation. If an employer makes an oral request for a reference, perhaps because of a short timescale between the conditional job offer and the employment commencing, it should make and retain a detailed note of the questions that it asked and the responses that it received.

References and the Bribery Act 2010

Under s.7 of the Bribery Act 2010 (which came into force on 1 July 2011), it is a criminal offence, punishable on conviction by an unlimited fine, for a commercial organisation to fail to prevent acts of bribery. (See Bribery Act 2010: overview for more details of the Act's provisions.) A commercial organisation will be liable for bribery acts by a person "associated" with it. The government guidance that accompanies the Act (Bribery Act 2010: Guidance about commercial organisations preventing bribery (PDF format, 0.38MB) (on the Ministry of Justice website)) states that a commercial organisation's employees are presumed to be persons "associated" with the organisation for the purposes of the Act.

Employers will have a defence against potential liability if they can show that they had "adequate procedures" in place to prevent associated persons committing acts of bribery. The guidance suggests that, to help to establish those procedures, organisations incorporate into their "recruitment and human resources procedures an appropriate level of due diligence to mitigate the risks of bribery being undertaken by employees which is proportionate to the risk associated with the post in question". It goes on to say that "due diligence is unlikely to be needed in relation to lower risk posts". Therefore, in relation to roles for which the risk of bribery is high, for example procurement or overseas representative roles, it may be appropriate for potential employers to ask, in their reference requests, whether or not the prospective employee has been accused of, or disciplined for, bribery or other financial irregularity.

What if the current/former employer refuses to give a reference?

There is no general legal obligation on employers to provide a reference (see References: giving references) but it is so common to do so that a refusal by an employer would have to be grounds for some suspicion. If a former employer chooses not to give a reference, the requesting employer should ask why, and ensure that its response is documented. An employer's refusal to respond to a reference request could result in the requesting employer deciding not to continue with the recruitment of that particular candidate or, with his or her permission, approaching an alternative referee.

What if a reference is unsatisfactory?

If a reference is unsatisfactory and the employee has not started work, the job offer can be withdrawn provided that the job offer made it clear that it was conditional on the receipt of satisfactory references. If the employee has already commenced employment and the job offer provided that the employer could immediately terminate the employment if references were not satisfactory, it can dismiss the employee without notice.

If the job offer did not state that the offer was conditional on satisfactory references, the employer would usually need to give notice in accordance with the employee's contract of employment. There is unlikely to be a risk of an unfair dismissal claim against the dismissing employer in these circumstances as the employee will not normally have accrued the requisite one year's continuous service to bring a claim. However, the employer would need to ensure that the decision not to proceed with the appointment or to dismiss the employee was not related to one of the protected characteristics (for example age or disability) under the Equality Act 2010, as there is no minimum continuous service requirement for discrimination claims.

In the event that the reference includes information that is inconsistent with that provided by the candidate, the Employment practices data protection code (PDF format, 12MB) (on the Information Commissioner's Office (ICO) website) suggests that the employer should put the discrepancy to him or her for an explanation before it makes a final decision.

Data protection issues

As references involve the provision of personal information, they are subject to the Data Protection Act 1998. Further, information that relates to an employee's sickness record or reasons for periods of absence can constitute "sensitive personal data" (see Data protection issues in the previous article in this series).

Employers that have requested references as part of the recruitment process may be asked by the prospective - or if employment has already commenced, existing - employee concerned to disclose information contained in a reference, through a data subject access request.

As a general principle, employees are entitled to be provided with copies of references provided by third parties such as a former employer. The exception to the right of access that applies to access requests made to an employer or ex-employer that supplied the reference in question does not apply to the recipient of the reference, although the identity of the referee can be withheld. However, the ICO's Data protection good practice note - subject access and employment references (PDF format, 28.37K) (on the ICO website) sets out a number of factors that employers should take into account when considering requests to disclose information contained in references provided by third parties. For example, employers should consider the actual or potential effect on the individual of disclosing the reference information, and the wishes of the giver of the reference, for example whether or not an express assurance of confidentiality was given to the referee.

Next week's topic of the week article will be a case study around references and will be published on 18 July.

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.