Does a reference writer need to review the fairness of a past investigation?

Employers are under no legal obligation to provide a reference for former staff, however those that do must ensure these are fair and accurate. Whilst in practice most employers take this opportunity to confirm an individual’s start and end date with their organisation, others choose to list any notable disciplinary action that may have been taken. A recent High Court case has looked at the duties of the reference writer when including information from a past investigation in the reference. In Hincks v Sense Network Ltd the employee, who worked as an independent financial advisor, originally began experiencing performance and conduct related issues which eventually led to his dismissal. As a method of combatting the employee’s poor performance, he was formally required to seek pre-approval for all future advice and sales before providing this to clients. Despite this requirement, the employee continued to carry out work, including the completion of transactions on behalf of a client, without gaining the necessary approval. The employer suspended him for non-compliance and, as a result, they had to issue clients with compensation. When the employee was re-introduced to his role he, once again, failed to comply with the pre-approval requirements during an incident in November 2014. An investigation deemed this to be a “repeat breach” with the employer characterising it as “malicious” owing to his attempts to cover up his actions. Following this investigation, a decision was made to dismiss the employee and his subsequent appeal against this decision was rejected. Later a reference request was submitted to the employer. The firm’s compliance director issued a reference which outlined, amongst other things, the employee’s suspension, breaches of the pre-approval process and the opinion that he had “knowingly and deliberately circumvented” the process. The employee made a claim for negligent misstatement, contending that the internal investigation was a sham and the reference writer was under a duty to assess if the original investigation was carried out fairly and reasonably. The High Court dismissed the claim. They judged the employer was correct to base their reference on information gathered from the previous investigation as there was nothing suspicious within the investigation materials that suggested foul play or warranted further analysis. The court added it would be too onerous a task to expect the reference writer to assess all previous investigations to assess their fairness. Instead, only where there are any obvious red flags may the reference writer be reasonably expected to carry out any further investigations. What does this mean for employers: • Employers who provide references are obliged to ensure the reference contains information which is accurate and true; • Any negative statements contained in the reference need to have a proper and legitimate basis, rather than based on a personal opinion; • Employers may have a greater duty to review underlying material if they come across any obvious red flags when including opinions formed following an investigation or disciplinary process. In these circumstances, an assessment may need to be carried out into the fairness of the procedure before including the opinion in the reference.

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