How Can An Employer Give An Opinionated Reference?

The High Court has clarified the scope of an employer's duty when giving a reference in respect of a former employee.

The law provides that an employer must exercise reasonable skill and care to provide a reference which is true, accurate and fair. If it fails to do so, then the former employee may have a claim against the ex-employer for negligent misstatement. The High Court has ruled on how far the employer's duty extends.

This case concerned Mr Hincks, an independent financial advisor, who was employed by CIFS but had authority to conducted FCA-regulated activities as the appointed representative for Sense Network. Following Sense Network's internal investigation into alleged breaches of its pre-approval processes, it terminated Mr Hincks' authority on the basis that he had committed repeat breaches and had been "malicious" in doing so. Mr Hincks' conduct meant that Sense Network had to offer over £12,000 in compensation to its clients. Mr Hincks later sought a reference from Sense Network. The reference provided referred to the allegations, the investigation, the compensation paid to clients, and Sense Network's conclusion that he had "knowingly and deliberately circumvented" the pre-approval process.

Mr Hincks brought a claim for negligent misstatement, arguing that Sense Network's reference had not been true and accurate. He said that the investigation had been an "inadequate sham", and that it had been negligent of Sense Network to report its...