If you have been offered a settlement agreement, you may be thinking about what your employer will say about you when you apply for a new job. A reference can be very important, particularly if your employment is ending in difficult circumstances.
One of the benefits of a settlement agreement is that it can include an agreed reference. This can give you greater certainty about what your employer will say to future employers.
Here are 10 things you should consider.
1. Your employer does not usually have to provide a reference
In most cases, an employer is not legally required to provide a reference. This means that, unless there is a contractual obligation or a regulatory requirement, your employer may be entitled to refuse to give one.
2. A factual reference may be the safest option
Many employers will only provide a short factual reference confirming your job title, start date and end date. Although this may feel limited, it can avoid the risk of negative or disputed comments being made about you.
3. A more detailed reference needs careful thought
If your employer is willing to provide a fuller reference, it may refer to matters such as your performance, disciplinary record, honesty, timekeeping, absence record and reason for leaving. You should be careful about agreeing to wording that could harm your prospects of future employment. The exact wording can be agreed as part of the settlement agreement negotiations.
4. The reference must be true, accurate and fair
If your employer provides a reference, it owes a duty of care both to you and to the prospective employer. The reference should not be misleading, inaccurate or unfair.
5. Ask for the reference to be agreed in the settlement agreement
It is often sensible to agree the wording of the reference as part of the settlement agreement. The agreed reference can be attached as a schedule or appendix to the agreement, so that both sides know exactly what will be said.
6. Make sure the reference matches the circumstances of your departure
If the settlement agreement says that your employment is ending by mutual agreement or redundancy, the reference should not contradict that. Inconsistent wording could create problems when you apply for a new role.
7. Consider what will be said orally as well as in writing
A written agreed reference is helpful, but you should also consider whether managers or HR staff might speak to future employers by phone. You may want the settlement agreement to say that no oral reference will be given, or that any oral reference must be consistent with the agreed written reference.
8. Protect yourself if sickness absence or disability is relevant
If your situation involves sickness absence, disability, or performance issues linked to a health condition, it is especially important to check the wording of any agreed reference. You will want to make sure that the reference does not include unnecessary or negative comments that could damage your prospects of finding a new job or raise discrimination concerns.
9. Personal references are different
A former colleague or manager may be willing to give you a personal reference. This is different from a reference given on behalf of the employer. A personal reference should usually make clear that it is given in a personal capacity and not on behalf of the business. It won’t form part of the agreed settlement agreement because it’s usually a private arrangement between you and the colleague.
10. Get advice before signing
Once you sign a settlement agreement, it can be difficult to change the agreed wording later. Before signing, make sure you get legal advice on the settlement agreement to ensure the reference protects your position and supports your ability to move on to a new job.
If you have been offered a settlement agreement and would like advice on the proposed reference, please feel free to get in touch.
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We will explain your options, answer your initial questions, and guide you through the next steps. If you instruct us, your employer will usually contribute towards your legal fees, often covering the full cost of our advice.
