The Obligation Of An Employer To Give A Work Reference By Michael Dugeri

Employers quite frequently do seek legal advice on their
obligation to give work/employment reference to their employees.
While there is no general legal duty to give an employee (or former
employee) any reference – positive or negative, recent case law
suggests that there is an implied term in contracts of employment
imposing a duty on the employer to provide fair and accurate
work/employment reference for their employees. There is a potential
liability for an employer who provides unfair or misleading
reference, which can cause harm to the employee.

In the case of Kelvin Nwaigwe v. Fidelity Bank
Plc (unreported Suit No. NICN/LA/85/2014) the
National Industrial Court examined the implied obligation of an
employer to give work reference. The Claimant sued his former
employer claiming inter alia, a right to work reference.
Due to the paucity of local authorities in this area of labour law,
the Court turned to the law and practice in similar jurisdictions
such as the UK for guidance, and held thus:

‘I am persuaded by the force of these UK case law
authorities that in appropriate cases there is an implied term in
contracts of employment imposing a duty on the employer to provide
work reference in respect of its employee, whether former or
existing. The defendant in the instant case is a Bank and hence a
financial institution. This means that the defendant has an
obligation to give a work reference to, or in respect of, the
claimant, which work reference must be true, accurate, fair and not
misleading to a future employer; and I so find and hold.’

Under common law, there was no absolute obligation on employers
to provide reference to an employee but case law in the UK has
developed a number of exceptions to the common law position. It
would now appear that, in certain circumstances, an employee can
require an employer to give a reference. UK case law suggests that
it may be appropriate in some cases to imply a term into a contract
of employment that the employer will provide the employee with a
reference at the request of a prospective employer. The basis for
this implied term was aptly stated in the case of Malik
v. Bank of Credit and Commerce International
SA (BCCI) (1997) UKHL 23 where the House of
Lords held that Employers must take care not to damage their
employees’ future employment prospects, by harsh and oppressive
behaviour or by any other form of conduct which is unacceptable
today as falling below the standards set by the implied trust and
confidence term.

For clarity and context, some of the UK case laws that were
applied in the Nwaigwe case are examined
as follows:

In Spring v. Guardian Assurance (1995)
2 AC 296, the plaintiff was dismissed from office by the defendant
(an insurance company and hence a financial institution). He got
another job which required a work reference from the defendant. The
work reference given by the defendant was not favourable, described
by the trial judge, Judge Lever QC, as the “kiss of death”. In
consequence, the plaintiff lost the new job and so brought an
action against his former employer on several grounds including
negligent misstatement, malicious falsehood and breach of contract,
but not defamation. An action in defamation (but not for the tort
of negligence) would have entitled the defendant to the defence of
qualified privilege. The House of Lords held that an employer who
gives a reference in respect of a former employee owed that
employee a duty to take reasonable care in its preparation and
would be liable to him in negligence if he failed to do so and the
employee thereby suffered economic damage. The House of Lords also
held that an implied term of the contract existed between the
plaintiff and the defendant to ensure that reasonable care was
taken in the compiling and giving of the work reference, and that
the defendant was in breach of that implied term.

Lord Slynn in the House of Lords commented that, even if there
is no universal duty on an employer to give a reference, it would
seem that contracts may exist when it is necessary to imply such a
duty. Lord Woolf (as he then was) then attempted to specify the
circumstances which would enable such a term to be implied. Those
circumstances are:

1. the existence of the contract of employment or of
   services;
2. the fact that the contract relates to an engagement of a class
   where it is normal practice to require a reference from a previous
   employer before employment is offered; and
3. the fact that the employee cannot be expected to enter into a
   class of employment, except on the basis that the employer will on
   the request of another employer, made not less than a reasonable
   time after the termination of the previous employment, provide a
   full and frank reference to the employer.

In another UK case, Bartholomew v. Hackney London
Borough and Anor (1999) IRLR246, the Court of Appeal
held that in giving a reference to a former employee, a former
employer owes a duty of care to the former employee to provide a
reference which is true, accurate and fair; fairness determined by
having regard to the whole of the reference and the surrounding
context, as a number of discrete statements, though factually
accurate in themselves, could nevertheless read as a whole give an
unfair or potentially unfair impression to a recipient of the
reference. However, it is not necessary that a reference in every
case be full and comprehensive.

In TSB Bank Plc v. Harris (2000) IRLR
157, a reference provided to a potential employer for an existing
employee which disclosed customer complaints unknown to the
employee, was found to be a breach of the employer’s duty and was
held to be a breach of trust and confidence to disclose complaints
to others, if the employee was not given an opportunity to answer
them.

And in Cox & Cross v. Sun Alliance Life
Ltd (2001) IRLR 448, the Court of Appeal made it
clear that the question of whether an employer who provides a
reference for a former employee is in breach of the duty to take
reasonable care to ensure that the reference is accurate and fair
will usually involve making reasonable inquiry into the factual
basis of the statements in the reference. The take away from this
case is that it is advisable for employers to confine unfavourable
statements on employees to those matters into which they have made
reasonable investigation and have reasonable grounds to believe are
true; and where an investigation is discontinued, unfavourable
comments should be confined to matters that were investigated
before the employee’s departure.

As though taking a cue from other jurisdictions such as the UK,
the Courts in Nigeria (as in the in the
Uwaigwe), have held that an employer is
indeed obligated in law to provide an employee with a reference. An
employer owes a duty of care against negligent misstatement i.e.
not to mislead or misrepresent to the person (usually a potential
employer or the employee) to whom the reference is provided. It is
submitted that this approach accords more with best practice in
labour and employment law.

In conclusion, sometimes it is best for employers to adopt the
position of just providing a statement of service confirming an
employee’s length of service and not commenting further. This is
known as the “no comment” reference. The other option is to provide
a “full disclosure” reference where the employer provides all the
relevant details of the employee, including appraisals and
potentials, while leaving it to the potential employer to draw its
conclusions. An employer cannot be held liable for defamation in
providing this type of reference as long as it is made without
malice and the information is based on credible evidence. However,
it is safer to provide information based on performance appraisals
that were counter-signed by the former employee. This will prevent
potential liability for negligent misstatements.