Settlement Agreements and References

In all walks of life sometimes personalities clash and people need to move on. It is no different in an employment context and parting on good terms with an agreed reference as part of a signed settlement agreement is frequently used to achieve this. However, what happens when one party wants to renege on the agreement and send out a further reference including an absence record and details of an uncompleted and unproven gross misconduct disciplinary allegation?

Generally speaking, an employer when providing a reference should ensure that it is accurate and not misleading remembering that it owes those duties to both the departing employee as well as the prospective future employer.

In a recent case of AB v A Chief Constable a senior police officer who was subject to serious allegations of wrong doing resigned from the police force. Upon agreement with his employer, the police force provided a template standard reference on behalf of the former employee. This limited reference provided no information as to the police officer’s former written warnings, absences or on going investigation and impending hearing for gross misconduct. The police thereafter proposed to send a further reference detailing the level of absence and referring to the misconduct allegations.

Assurances had been given to the employee that they would provide a standard form reference. This created a legitimate expectation of a procedural benefit rendering the police force unable to renege on this expectation as it would be unfair to do so. This legitimate expectation was considered to override any public law duty of honesty and integrity which the police force has as public body. The High Court decided that as a result of the agreement reached with the employee to provide a standard reference the force could not renege on that and not therefore issue the second more complete reference.

References by their very nature will involve the processing of personal data so will be subject to the Data Protection Act 1998 (“DPA”). Any data must be processed in accordance with the 8 data protection principles established in the DPA. These principles include fair and lawful processing, which will entitle the individual to be informed how his data will be processed. If sensitive personal data is going to be processed, the individual’s express consent is required. Sensitive personal data would include information pertaining to the health record of the individual. The employee did not provide consent and brought a claim to block the sending of the second reference.

Employers must also keep in mind that any reference must be balanced by the public law duty of the employer to provide fair and accurate references.

The important message that comes out of this case is that once an employer agrees to give an agreed reference it will be very difficult for them to depart from that agreement. Before therefore entering into such an agreement employers should be clear in their own mind that they are entirely happy with that reference.

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