Taking on staff: Employee references

While not a legal requirement – references can give you peace of mind when hiring staff for your start-up. Here’s what you need to know...

Though seeking references are not legally required when considering an employee for your start-up, it is common practice and can provide added reassurance that you have made the right decision.

Under normal circumstances, you would want to seek references from their most recent employer, but if you are recruiting someone in their first job or who has had a long career break, this may not be possible. In this scenario, alternative referees might be someone the candidate has worked with in a voluntary capacity, a college or university tutor, or someone in the community who can give them a character reference. Bear in mind, though, that personal referees have been chosen by the candidate and are not entirely reliable.

You need to ask a candidate’s permission when you are intending to take up a reference with their current employer. Consider that their current company may not be aware that they are looking to change jobs, so this needs to be handled with some sensitivity. It is quite common – and indeed acceptable – for a candidate to ask that you don’t take up a reference with their current employer unless a firm job offer is made.

You can make your job offer conditional on receiving a satisfactory reference. If you do this, your contract with the employee does not come into force until the reference is received. A word of caution here: if you let the employee start work before references have been received, the new recruit will have the same rights as any other employee.

How to seek a reference

You could provide a standard form for the previous employer to fill in, or simply ask them to write an “open” letter with the information you have asked for. Make sure you mark your request “private and confidential”.

The kinds of questions you might ask could include the following: how long has the candidate worked for their current employer; what were the main responsibilities of their job; how did they perform in the role; were they reliable, and are there any reasons why they should not be employed.

You need to be aware that previous employers are perfectly within their rights to refuse to give a reference. In practice, most will provide one – but you may find they are very cautious in their replies. This is because in our increasingly litigious society some companies have found themselves getting their fingers burned when disgruntled former employees have taken them to court.

If former employers do provide a reference, they are obliged to provide information that is fair and accurate and does not include subjective information as to the applicant’s suitability for the job being offered. If a reference gives you cause for concern or you feel that you need further information, then you can telephone the referee to seek clarification. If you do this, it’s best to make an appointment for the call in advance.

Be aware that employees do have the right – under certain circumstances – to ask to see references that have been written about them. The employer who supplied the reference is not legally obliged to share it, but as the employer receiving the reference, you may be obliged to supply a copy.

Any information you obtain about candidates during the recruitment process should be held in a way that meets the requirements of the Data Protection Act. Individuals have a right to a copy of information held about them which is covered by the Act. There are a few issues to bear in mind when considering this kind of request. Some of the information provided in a reference, such as dates of employment and number of days taken off sick will be known already to the candidate, so there is no good reason to withhold them. If, however, you suspect that there are details in the reference that the candidate may not have been previously aware of you should contact the referee and ask if they have any objection to the information being shared.

You should consider whether it is possible to conceal the identity of the referee, although often an individual will have a good idea who has written the reference. If it is not reasonable in all of the circumstances to provide the information without the referee’s consent, you should consider whether you can respond helpfully anyway (for example, by providing a summary of the content of the reference). This may protect the identity of the referee, while providing the individual with an overview of what the reference says about them.

You can find further details about your rights and responsibilities with regard to references on the ICO’s website and for more information on hiring employees take a look at our dedicated channel here.

Taking on Staff, published by Crimson Publishing, is available to buy now

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