Appeal tribunal finds both former and prospective employers liable

A recent EAT decision in the case Pnaiser v NHS England and Coventry City Council is a reminder of the liabilities employers may face when they act in response to inaccurate or damaging references received from a job candidate’s former employer.

An employer giving an inaccurate reference ‎negligently (without giving due care to its preparation), either in writing or orally, can give rise to a damages claim if it leads to an ex-employee being dismissed by a new employer or a job offer being withdrawn (see Spring v Guardian Assurance). A claim can also be brought for malicious falsehood in more extreme circumstances. Verbal references present the same risks as written ones, and adverse references referring to sickness absence may lead to disability discrimination claims.

To avoid such risks - and claims from prospective employers if the employer does not disclose relevant information – it is now common practice to give references that only provide basic employment details, such as name, role, dates of employment and (if appropriate) the reason for the termination.

In this case, the claimant was disabled. She had been promoted, and received positive appraisals, but her employment had been terminated after several sickness absences under a settlement agreement which included an agreed reference. Having provided the agreed written reference, her former line manager subsequently confirmed in a telephone conversation that Pnaiser had had significant time off work. Then, having been informed of the nature of the claimant’s prospective new role, the line manager indicated she would not recommend the employee for that job, suggesting that she might struggle with pressure.

The job offer was withdrawn and Pnaiser brought claims against both her former and prospective employers for disability ‎discrimination that she had been treated unfavourably because of something arising from her disability and which could not be justified as a ‘proportionate means of achieving a legitimate aim’.

At the tribunal hearing the line manager admitted to mentioning the claimant’s sickness absences but did not accept that the oral reference she gave was negative overall. The tribunal did not consider that the line manager's assessment of Pnaiser’s suitability for the new role was necessarily linked to her sickness absence and was not convinced she had a discriminatory motive in acting as she did. So Pnaiser’s claim failed.

But her appeal succeeded, the EAT finding unlawful disability discrimination against both employers. The EAT said the tribunal was wrong to reject the claim on the basis the employee had not been able to establish a case which at first sight indicated that discrimination could have occurred, because effectively this meant her claim could only succeed if she could show the only inference possible from the employer's conduct ‎was discrimination.

The EAT said the tribunal had not considered what impact the claimant's prior sickness absences had on the line manager's assessment of her suitability for the role: there were facts from which it could be inferred that the line manager's comments were made partly as a result of those absences. The ‘burden of proof’ to show discrimination had not taken place should then have shifted to the employers. They could not, on the basis of the tribunal's factual findings, show the claimant's disability-related absence played no part in the line manager's assessment of her suitability for the new role and the new employer's decision to withdraw its job offer.

This case demonstrates starkly the risks for employers that agree references and then deviate from their agreed terms, ‎and the liability employers can incur if an adverse reference is given without justification. Even if an employee’s disability is not the only reason for an adverse reference, the employee may still have a claim. A prospective employer receiving a reference making adverse comments or disclosures related to a candidate’s sickness absence may need to consider what further investigations are necessary before a decision is made to withdraw a job offer, and to assess the risk of a potential disability discrimination claim as a result.

Charles Wynn-Evans is a partner and head of the employment practice at Dechert LLP

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