I have been offered a settlement agreement, do I have the right to a reference?
Christopher Graham, Partner at Watson Burton solicitors, answers:
Not usually, no – but you should certainly ask for a reference as part and parcel of your settlement agreement.
Although there are some exceptions, in most types of employment, the employee has no right to ask for a reference or expect that a reference will be provided. Surprising as this may seem, employment is largely governed by the law of contract. Although employment also involves obligations of good faith, unless the employer has agreed to provide a reference they cannot be forced to do so. This may seem odd, particularly given that most employers will make an offer of employment subject to a satisfactory reference when hiring. In most cases however, this is the position.
There have been recent developments in the law of discrimination. Under the Equality Act 2010, an employer’s refusal or indeed provision of a poor reference can involve unlawful discrimination. However the employee would need to establish that any unlawful treatment was on the grounds of one of the protected characteristics, e.g. race, age, disability, etc. Even if the employee is able to do so, it will usually be too late to deal with the problem of an offer of employment being withdrawn for these reasons. As with many other areas of life, prevention is better than cure.
There is no reason why an employee invited to enter into a settlement agreement should not request a reference. It is far from unusual to do so and quite commonplace to agree the terms. It is even quite possible to negotiate an agreement obliging the employer to respond to any further enquiry in a manner consistent with the agreed form of employment reference. This can be a considerable benefit to the employee and providing some care is taken with regard to both the nature and timing of the request, providing an agreed reference costs the employer nothing. As an attractive benefit to the employee however, it can be used to good effect to conclude a settlement agreement.
As to the nature of the request, employees do need to recognise that there is some disincentive to the employer in providing a reference at all. Unless its terms are true, accurate and fair, the original employer can be liable to any new employer, usually for negligent misstatement. This has the effect of restricting what most employers are prepared to say. Indeed, because of the developments in the law of discrimination, many large employers now simply have a policy of always providing the same type of reference to everyone, including the same, basic details.
It is still possible to negotiate a more detailed employment reference. After all, if this document is incorporated into a settlement agreement, it will prevent the employer from facing claims for unlawful discrimination. However, it is in the interests of the employees to recognise what usual practice involves. Any employment reference that reads like a testimonial looks wrong and is unlikely to be treated seriously by any new employer.
As to the timing of the request, negotiations usually involve dealing with financial terms of settlement first. Anyone accustomed to negotiating will tell you that, whilst a request for a reference should never come as a complete surprise, a reminder coupled with a well-prepared draft reference can resolve any impasse. If the employer is not prepared to offer any more money, this is a cost-effective and valuable benefit to offer the employee.
It may seem rather strange to suggest that an employee should engage in negotiations by effectively writing their own employment reference. In practice however this is not as unusual as it seems and can in fact often provide the best outcome for all concerned.
IMPORTANT: The contents of this page are for guidance only and do not constitute legal advice. You should consult a solicitor without delay if you require legal advice on a particular employment matter.