Employment Law Advocates

A common complaint by employees is that they have been given poor references by their employers after having been dismissed, often as retaliation for bringing claims against them. However, it is difficult to claim compensation for such action at the Employment Tribunal, as illustrated by a recent decision of the Employment Appeal Tribunal, Brown v Careham Hall.

A care worker was dismissed by her employer for gross misconduct, a dismissal that was found to be unfair. The employee successfully mitigated her loss by getting a job quickly but was dismissed by her new employer when it was told about the gross misconduct by her previous employer. Because the new job broke the chain of causation, she could not claim any loss arising after the date of her second dismissal, giving her a very small award.

On appeal, it was argued that the employee could rely upon stigma damages, following the decision of the Court of Appeal in Chagger v Abbey National. The problem with this is that, in discrimination cases, an employee can claim all losses flowing from the discriminatory acts but, in unfair dismissal cases, only losses flowing directly from the dismissal can be claimed. Because giving the negative reference was a separate act, which was not part of the dismissal, no additional compensation could be awarded. This reflects a wider problem that references cannot easily be challenged if they are unreasonable but not discriminatory.

References are actionable in the civil court system, using either the law of libel or negligent misstatement, as was established by the House of Lords in the case of Spring v Guardian Assurance. However, both of these are remedies in tort rather than contract and so do not fall within the Extension of Jurisdiction Order, which would allow tribunals to deal with them. In my view, Parliament should give some serious consideration to remedying this loophole.

In the meantime, my advice for employees is to think about the value of good references to them. If they are quite important, it is often worth settling a case and requesting an agreed reference as part of the package. For employers, such references can represent important bargaining chips, which should not be thrown away idly. It follows from this that it is, as a general rule, a foolish move to issue a bad reference while proceedings are still ongoing.