Can I get a reference as part of my settlement agreement?
Introduction
A positive reference won’t win you a new job but a bad one could lose you it. That’s because in most cases, prospective employers make a conditional job offer to their preferred candidate before they check the references. However, an offer may be withdrawn if an employer refuses to supply a reference or even worse, gives an unfavourable one.
A neutral reference in 2026 will usually be good enough.
It can come as a surprise, but there’s no legal obligation for an employer to provide a reference – positive or otherwise. So, if you’ve been offered a settlement agreement, it’s sensible to secure a reference as part of the deal. Once this is part of your settlement agreement, your employer will have a legal obligation to provide the agreed reference (bar a few exceptions). And that means you can feel confident once the new job offers roll in.
In this guide, we’ll provide a comprehensive look at references and settlement agreements. We will examine the key considerations you should keep in mind and include expert information about how to secure a reference as part of your deal.
Understanding references and settlement agreements
A settlement agreement is a legal document, which sets out the terms and conditions for an employee leaving the company or for resolving a dispute.
Settlement agreements are typically used to:
- Settle a dispute or legal claim when an employee is not leaving the company. For example, a settlement agreement can be used to settle a dispute about a financial bonus or harassment by a colleague, and box off any claims while the employment relationship continues.
- End an employment relationship. In most cases, this means the employee receives a payment in return for waiving employment claims and for loss of employment.
Settlement agreements may be offered when things aren’t going well. For example, you might be offered a settlement agreement as an alternative to going down a disciplinary procedure or being put on a performance improvement plan (PIP). If you’re leaving your job in a difficult situation you might be particularly worried about asking for a reference.
Does my employer have to give me a reference?
The short answer to this is no. That’s because there is no common law, which requires employers to give a former employee a reference or to respond to a prospective employers request for a reference. However, many employers have a policy of providing a reference, or will agree to provide a standard reference, even when an employee has been offered a settlement agreement.
What constitutes a standard reference?
A standard reference is usually a factual account: it’s short and to the point. It tends to confirm an employee has worked at the company, the dates they worked there and their role. While it can look a bit formal and sparse, this sort of reference has become pretty, well … standard now. So, it shouldn’t cause difficulties, as the new employer will be used to receiving standard references.
“It is now a not uncommon practice for employers to refuse to give anything other than “references” in short form. I am also aware that there are at least some employers who no longer call what they provide references, but use such terms as Certificates of Employment.” His Honour Judge Reid QC, Byrnell -v- (1) BT and (2) Mr Stanbury, Para. 32 1
Securing a more detailed reference
It’s still possible to secure a more detailed reference as part of a settlement agreement. And a settlement agreement might be an opportunity for an employee to effectively write their own employment reference for the employer’s agreement. But a few points to consider:
- In my experience most employers are naturally concerned about the risks they take when giving a reference as they can be can be liable to any new employer.
- Many employers (and HR teams) are therefore reluctant or will refuse to provide anything other than their standard wording.
- There is such as thing as a too good a reference! If the employment reference reads like its been written by the employee’s biggest fan it will look wrong and could be treated cautiously by any new employer.
- Be realistic – and remember the adage: a positive reference likely does not win you a job but a bad one will lose you a job offer. A standard reference will usually be good enough.
An agreed reference can benefit the employer too
If negotiations about the financial terms have reached an impasse, agreeing to provide a reference can unlock the situation and help reach a binding settlement. Put another way a reference does not cost the employer money and can be a a cost-effective and valuable benefit to offer the employee.
By reaching an agreement on the reference wording, the employer can effectively remove the risks of a claim being brought about the reference later, provided it does not breach the settlement agreement terms.
What about if I work in a regulated role or sector?
There are exceptions to employers not being legally obliged to give references. For example, when you work in certain regulated sectors or roles. This includes certain regulated roles in the financial sector. In these cases, employers have a legal obligation to give details to a prospective employer. Schools will usually provide references to a prospective school employer and when they do so have certain obligations to include any concerns about safeguarding.
My settlement agreement offer doesn’t include a reference; can I still get one?
If the agreement makes no mention of a reference, there will be no general legal obligation on your employer to provide one. However, that’s where some low key negotiation comes in. You can request a reference as part of your negotiation to get a fair deal, and ask your employer to include a clause covering that in your settlement agreement. Often, a draft settlement agreement will include the agreed standard reference wording, within a schedule or annexe at the end of the settlement agreement. This is helpful as you will then know the reference is reasonable and won’t harm your future job prospects.
Expert tip – Getting advice from a qualified employment solicitor to ensure you understand the terms of your settlement agreement is a legal requirement. Your solicitor will be able to request a fair and accurate reference as part of your negotiation if one is not included in the first draft.
If a new employer wants to speak to my former employer for more details on my reference, how do I know what they’ll say?
It’s harder to control what’s said in a spoken reference than it is on a standard written reference (particularly if you have agreed the wording). And the last thing you want is your new employer calling your old boss on a stressful Friday afternoon or speaking to the person on your team who is a real over-sharer.
Options include adding in wording that means any spoken/oral reference must be no less favourable that the agreed written reference. If you have had a particular issue with a manager or boss, it might be possible to agree a clause confirming the employer will uses its reasonable endeavours to ensure the manager or boss won’t say anything derogatory about you.
Expert tip – By directing your prospective employer to contact the HR team to request a reference, any spoken requests for a reference are more likely to be directed to HR. HR professionals will be fully aware of the risks of giving a negative spoken reference – and the terms of any settlement agreement.
What happens if my employer says derogatory comments about me in a reference?
If you’ve signed a settlement agreement and the employer breaches the terms concerning references, or goes against any other terms in the settlement agreement, for example the confidentiality or NDA clauses, or a non-derogatory comments clause, you may be able to take legal action.
My employer has given me an unfavourable reference because I blew the whistle on illegal practices, what can I do?
Check the settlement agreement
If a bad reference is inaccurate or misleading, and has resulted in a job offer being withdrawn, you may be able to bring a post-termination whistleblowing detriment claim and/or a breach of settlement agreement claim, depending on how the settlement agreement is drafted and when you signed the agreement or any reaffirmation letter. You would need to be able to convince a Judge that the reference was because you made a protected disclosure, i.e. a whistle blowing disclosure.
What are my rights if my employer gives me a bad reference?
Generally speaking, if a reference is given, an employer has a duty of care. Settlement agreements usually make clear that the employer is free to depart from any agreed reference if they receive new information that renders the agreed reference inaccurate, or to comply with their legal and regulatory obligations. If you believe the negative reference is contrary to the settlement agreement terms you may have a breach of contract claims.
The types of potential claims an employer might face when giving references include:
- Negligent misstatement, in relation to an inaccurate or misleading reference 3;
- Malicious falsehood, where a reference was untrue and published maliciously, i.e. they knew it was untrue or they were recklessly indifferent, and the statement caused economic loss.
- Discrimination claims under the Equality Act 2010, for example a post-termination victimisation claim if a negative reference is given because the employee had previously raised a concern of discrimination or harassment4.
- Breach of contract – if a settlement agreement or an express or implied term of the employment contract was breached.
Is an employee entitled to a copy of a reference?
Generally speaking, an employee will not be entitled to a copy of the reference from their current, previous or prospective employer due to an exemption to the usual data access rights in the data protection act 2018. This exemption allows the reference to be withheld from any response to a data subject access request if it was provided for the purpose of education, training or employment, or placement as a volunteer. Paragraph 24, Schedule 2, DPA 2018.
A reference may become disclosable in any legal proceedings, such as a court or tribunal claim, if it was a relevant document and disclosure would likely be helpful to determine the issues in the case.
Should an employer mention outstanding disciplinary concerns in a reference?
If an employee resigned before any disciplinary process concluded, in some cases an employer may wish to still conclude its internal processes and reach an outcome, i.e. whether the allegations are upheld or not. But if no outcome is or can be reached, mentioning the fact the employee was under investigation is a matter of careful judgment by an employer. The employer will have to decide whether it only gives a factual reference or whether it mentions the concerns or investigation. An employer must carefully take into account its legal duties and any regulatory requirements concerning the employee and the recipient of a reference.
I work in a Firm authorised by the Financial Conduct Authority (‘FCA’) or the Prudential Regulation Authority (‘PRA’)
These firms are required to comply with special rules regarding references. These derive from general regulatory rules and the senior managers and certification regime, which only applies to senior manager and certified roles.
FCA authorised firms and references
For some roles in these firms there are special rules requiring a reference to be given and what must be included.
An FCA authorised firm must provide on request to another firm that is considering employing a person into a controlled function, all relevant information of which they are aware (FCA Handbook, SUP 10A.15.15). The prospective firm has a regulatory obligation to take reasonable steps to obtain sufficient information, which will include seeking references from previous employers going back five years. This is part of the prospective employers’ due diligence to assess whether the candidate for such a role is fit and proper for that role.
The FCA handbook also explicitly states that the duties to provide information to the FCA itself applies regardless of “any agreement (for example a ‘COT 3’ Agreement settled by the Advisory, Conciliation and Arbitration Service (ACAS)) or any other arrangements entered into by a firm or its appointed representative and an employee upon termination of the employee’s employment. A firm should not (and should ensure that its appointed representatives do not) enter into any such arrangements or agreements that could conflict with its obligations under this section”. (SUP 10A.15.4)
A similar but slightly more onerous regime applies to senior manager and certified roles at relevant firms such as banks, building societies, credit unions, investment firms and insurance companies authorised by the PRA.
If an employee is employed in a relevant regulatory role and finds themselves subject to a disciplinary investigation or procedure which has, or might give rise to the employer determining they are not a fit and proper person to perform a regulated role, this can have serious adverse consequences on their career and employability.
How to avoid any problems with a reference when you’re offered a settlement agreement
Practical steps
Find out what your company policy is on references. This may be in the company’s employee handbook or your employment contract. This gives you a starting point for what to expect.
Check your draft settlement agreement
See whether there is a clause covering references, and any schedule or annex at the end of the agreement containing the proposed reference wording. If you are not sure or unhappy about the way references are dealt with in the settlement agreement, ask your employment solicitor to specifically cover off this point with you, and make sure you’re happy with it, before you sign a settlement agreement.
Talk to a qualified employment solicitor about a reference before you sign a settlement agreement
While there’s no legal obligation for an employer to give a reference, a settlement agreement is not binding unless you have received independent legal advice from a qualified employment solicitor. Including a clause about a reference will form a key part of the negotiation process if your employer has not offered one. Along with ensuring you are getting the best financial deal, your employment solicitor can help secure you a reference before you sign the deal.
FAQs
What reference can I expect if I work in a school?
If you apply for a job in an academy or maintained school In England the governors of your previous school must confirm, if asked, whether you were the subject of capability proceedings in the last two years, and provide certain details, including any outcome.
Are schools and colleges required to seek a reference?
Schools and colleges are required to comply with strict statutory guidance and this means they must seek a detailed reference before interview from the candidates’ current employer from a senior person with authority to give references. A To Whom It May Concern reference probably won’t be acceptable.
Would an employee be able to bring a defamation claim if a previous employer gave an untrue negative reference?
An employee could have a defamation claim if an employer gives an untrue or misleading negative reference, which results in a conditional job offer being withdrawn. A example of a High Court case is Smith v Surridge [2023] EWHC 351 (KB). The Judge found on the facts that the previous employer had made a defamatory statement when saying “there were some safeguarding issues during their time at Stanborough School”. While the school argued in context that meant there had been allegations, the Judge determined the phrase meant they did something that gave rise to a safeguarding issue, namely something that either caused harm to a child, or placed a child at risk of harm.
Can a reference be based on opinions rather than facts?
While a reference may legitimately express opinions about an employee, it should take reasonable care in considering the evidence from which that opinion derives, to ensure any opinion has a proper basis and is not misleading . An employer must take particular care not to mislead by by reason of what is not included or by implication, nuance or innuendo. [Hincks v Sense Network Ltd [2018] EWHC 533 (QB)].
Does a reference have to necessarily be full and comprehensive?
Generally speaking, a reference does not necessarily need to be full and comprehensive but it must be accurate and fair. To be fair, it must not be misleading. An employer should take reasonable care to be satisfied that the facts set out in the reference are accurate and true and that, where an opinion was expressed, there was a proper and legitimate basis for the opinion. although each case will turn on its own particular facts.
Can an employer in a reference confirm that allegations were raised against an employee?
If an employer confirms the employee was under investigation but in reality those allegations were not investigated at all or were not investigated properly, an employer may be at risk of a claim. In Jackson v Liverpool City Council [2011] IRLR 1009 the employer gave a reference confirming allegations had been made but those allegations had not been investigated. The court decided such a reference was true, accurate and fair. However, in Cox v Sun Alliance Life Ltd [2001] IRLR 448 the employer’s reference was negligently given as it had wrongly suggested it had a reasonable basis, following upon a reasonable investigation, for dismissing the employee for dishonesty amounting to corruption. In truth the charges had not been put to the employee or properly investigated or made the subject of formal disciplinary proceedings.
Is a negative reference, which has been given without reasonable care, a breach of the employment contract?
In cases where the reference is provided while the employee is still employed, it may be a breach of the implied terms of an employment contract to take reasonable care when preparing a reference. A repudiatory breach of the employment contract by the employer would give rise to a potential claim of constructive dismissal.
About the Author
John Hassells is an employment solicitor and Head of Legal at settlementagreement.co.uk. John acts for senior executives and employees in relation to settlement agreements and related legal issues. Before setting up his own law firm, John was an employment solicitor at one of the UK’s top law firms in the UK, and a partner and Head of Employment for a leading commercial law firm. John is a qualified solicitor, acting for individuals as a consultant solicitor through a fully authorised and regulated law firm. With over 20 years’ experience advising employees and employers on employment law matters, employment disputes and settlement agreements, John takes a leading role is producing and reviewing our legal content. John is member of the Employment Lawyers Association, regularly delivers employment law training and provides media comment on developments in employment law.
Legal Disclaimer
The contents of this article are intended to be be for general information purposes only and do not amount to (nor are they intended to be) legal, tax or financial advice or a complete or authoritative statement of the law nor should they be treated as such. No warranty or promise is given, express or implied, as to accuracy of the information on this page and no liability is accepted for any error or omission. You should instruct a specialist employment solicitor to advise you on your particular situation and not act or rely on the information on this page.
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