Employment law – Job references
Does my employer have to supply me or my new employer with a reference?
If you want to leave your job you’ll probably want a reference. It is good practice for your employer to provide a reference, but they are not legally obliged to do so, except in some regulated industries like financial services (see below).
Assuming you do get a reference, what will be in it?
Almost 75% of references these days are factual- namely your name, dates of employment, and job title. Sometimes, the reason for dismissal is included. As factual references are so common, it is unlikely that any negative inference by your new employers will be drawn from its limited nature.
You can always ask your ex- employer for a fuller reference, and in some circumstances, you may be able to obtain a separate reference form the individual line manager that you worked with.
If your employer does give you a reference, they are under a legal duty to make sure they are accurate and not misleading to your future employer. This means that if, for example, you were subject to disciplinary action from your old employer, this could form part of the reference.
Can my employer give me a bad reference?
Yes, as long as they genuinely consider it to be true and accurate, and have reasonable grounds for that belief.
What are my rights if my employer gives an incorrect job reference?
Am I entitled to see a copy of my reference?
Your old employer is entitled under present data protection laws, to refuse to provide you with a confidential reference that has been written about you (whether you request a copy or not). This also applies to your new employer, who similarly does not have to provide you with a copy of the reference it has received about you.
The reason for this is that although, as an employee, you have the right under the General Data Protection Regulation to access information that your employer holds about you, there is a specific exemption in relation to the provision of references. You can still, of course, put in a request, as your employer may not be aware of the fact that they can refuse to provide a copy. It may also be that your old or new employer may simply choose to supply a copy of your reference anyway. The point is that they cannot be forced to do so.
What are the practical pitfalls I need to be aware of?
If you have had long periods of absences due to illness, you will not want this reflected on your reference, so it is best to find out what your employer’s policy is on the provision of references, and ensure that sickness records are not included.
You also need to make sure that your employer is setting out your correct job title in the reference. There have been many instances where this is not accurately reflected, especially where you have been promoted over the years or changes roles.
You may also not be happy for the reason of your termination of employment to be stated on the reference- for example if you were made redundant, as a result of performance issues or because of ill-health. It is best for this to be addressed before or at the time of your departure and where a direct relationship still exists between you and your employer enabling the reference to be modified.
Finally, you need to make sure you are aware of who your new employer needs to apply to for your reference. This is usually the HR department, but not every company has one and it is always better to be prepared and have an individual name to pass on if necessary.
FCA Regulated References
What is a regulatory reference?
Authorised firms (regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) need to conduct appropriate due diligence on candidates, including acquiring references from the candidates previous employer(s), as part of the firm’s assessment of a candidate’s fitness and propriety.
The regulatory references regime implemented by the FCA and the PRA set out in FCA came into force on 7 March 2017.
The new rules apply to all firms covered by the Senior Manager and Certification Regime (SMCR) and the Senior Insurance Managers Regime (SIMR), namely banks, certain dual-regulated investment firms, and insurers. Individuals requiring a regulatory reference include, among others, senior management functions under the Senior Manager’s Regime, Significant harm functions under the certification regime and PRA senior insurance management functions under the SIMR.
The idea behind the rules is to prevent individuals with poor conduct records from moving undetected between financial institutions.
Firms and insurers covered by these regulations must use a template when providing a regulatory reference as set out in both the FCA Handbook Annex 1 to SYSC 22.and PRA Rulebook Fitness and Propriety Part of the PRA Rulebook, 7.1.
What information should your former employer provide?
If your former employer is regulated, they should provide a reference that goes back 6 years. Regulated firms providing references are required to disclose all information considered to be relevant in determining whether a candidate is “fit and proper”.
This applies retrospectively in that former employers who are financial services firms must update references given in the past 6 years if they becomes aware of information (even after an employee has left) that would have caused them to draft the reference differently, where that difference is significant in terms of the individual’s fitness and propriety. This is, therefore, a continuing obligation.
This requirement applies regardless of whether a candidate’s past employer is an authorised firm or not. If this is the case, the hiring firm is required to make reasonable efforts to secure a reference as part of their assessment of fitness and propriety.
The information that your employer must provide must relate to at the very least:
- any outstanding liabilities of that the candidate from commission payments;
- any relevant outstanding or upheld complaint against the candidate from an eligible complainant;
- any information relating to the fitness and propriety of the candidate (section 5 of the application for approval-Long Form A); and
- the main assessment criteria of the Fit and Proper Test (FIT 2). This includes “whether the person is or has been the subject of any proceedings of a disciplinary or criminal nature, or has been notified of any potential proceedings or of any investigation which might lead to those proceedings”. This therefore includes formal written warnings, suspensions (including suspension pending an internal investigation), dismissals, and any sanction involving a reduction in or recovery of remuneration.
How does the FCA assesses fitness and propriety?
The FCA must be satisfied that the individual:
- will be open and honest in his dealings and is able to comply with the requirements imposed on him (honesty, integrity and reputation);
- has the necessary skills to carry on the function he is to perform (competency and capability); and
- is financially sound (financial soundness).
What if I resign part way through a disciplinary process?
Disciplinary action for the purpose of the regulations relates to the issuing of a formal warning, the suspension or dismissal of an individual or the reduction or recovery of any remuneration. Suspensions purely for the purposes of investigating a matter are not required to be disclosed under this rule, because suspensions in those circumstances are not “disciplinary action”.
Employers subject to the scheme are not therefore necessarily required to include in a reference the fact that an ex-employee left while disciplinary proceedings were pending, however, it can do if it wishes to. Guidance for firms in relation to the giving of references can be found here https://www.handbook.fca.org.uk/handbook/SYSC/22/5.html
Can I still have assurances about my reference if I am accused of misconduct and I dispute this and can a reference be agreed as part of a settlement agreement?
The new obligations under the regime mean that the obligations on employers to provide regulated references are much more onerous and in situations where previously a standard factual reference may have been sufficient, now there is a requirement to disclose.
The new regime prevents firms from entering into any arrangement or agreement with an employee that limits an employer’s ability to disclose information about an employee’s conduct. This, understandably, impacts on what might be agreed under a settlement agreement.
It is standard practice for any settlement agreement to include an agreed reference, however, regulated employers will not be able to fetter their ability to disclose any information required under the FCA and PRA. Options in a settlement agreement scenario could include:
- a warranty that an employer is not aware of any facts or circumstances which affect the fitness or propriety of the individual as at the date of the agreement (which gives them flexibility to disclose these at a later date if they come to light), or
- a clause that provides for a standard factual reference to be provided where there is no need for a regulatory reference, and for a reference to be supplied in accordance with the regulatory reference rules in the event this is required.