Professionals in all walks of life are frequently asked to give references in respect of people or organisations. The recent case in the Supreme Court called Durkin v DSG Retail Limited brought to light the dangers of negligent references.
There are effectively two groups of people who might consider taking legal action in respect of such a reference – the recipient of the reference and the subject themselves.
Every law student will be familiar with the case of Hedley Byrne v Heller – decided in 1964 – which established a duty of care is owed to the recipient of a negligent reference. The important point in that case was that the person who received the reference must have relied on the exercise of due care and skill by the person giving the reference. In this case it was a bank. The bank gave a favourable but negligent credit reference about the customer.
The recipient of the reference relied on it and then lost money. The person was entitled to sue for damages for the consequent economic loss. In that case, the bank escaped liability because it made the reference stating it to have been “without responsibility”.
The Durkin decision involved a bank giving a largely negative credit reference which adversely affected the person’s credit. Mr Durkin recovered damages against the bank.
The court held the bank was in breach of its duty of care to Mr Durkin by reporting credit default without making sufficient enquiries as to whether he had indeed defaulted.
An employer owes a duty of care to the employee and the recipient in respect of the content of the reference. It should be true, accurate and fair and if the employer fails to take care in providing a reference, either party may be able to bring a claim for negligence.
They would have to show that the reference was misleading and the employer was negligent in providing it. If incorrect information was given with malice, then the employee may be able to bring a claim for libel against the provider of the reference.
The Data Protection Act 1998 gives an individual various rights relating to data held about him or her. An employer must, on request, provide an employee with any reference that it holds and which have been supplied by a third party. Details identifying the third party can be removed before providing the information. An employer should attempt to gain consent from the person who gave the reference before disclosing the information. Likewise, an employer should gain consent from an employee before disclosing sensitive personal information, which could include details of sickness absences or race.
As with the banks, it is advisable for an employer to include a disclaimer in a reference. That disclaimer, however, is also subject to what is reasonable.
The general rule is that if you give a reference you have a duty to take reasonable care to ensure that it is true, accurate and fair and not misleading.
This effectively means not omitting key information that someone would expect you to disclose. After all, they are relying on you to provide them with information they cannot obtain themselves.