References. They can be tricky to get right and disastrous if you get them wrong.
A recent case involving NHS England and Coventry City Council serves as a warning for employers tempted to avoid liability by using settlement agreements or by agreeing to supplement a written reference with an "off the record" verbal reference.
The case involved a Ms Pnaiser who worked for the Council and who suffered from a disability which caused her to be absent from work for extended periods. She worked in various different roles until she was made redundant in 2013. As part of the redundancy process Ms Pnaiser signed a settlement agreement including an agreed reference which did not make reference to her absences. Ms Pnaiser applied for a job with NHS England and was offered it, subject to receipt of satisfactory references.
The Council duly sent the reference which had been agreed as part of the settlement agreement. However, the Council manager also sent a covering email inviting the NHS manager to phone her if he wanted to discuss the reference in further detail. The NHS manager did so and was verbally informed by the Council manager that she would not recommend Ms Pnaiser for the role and that Ms Pnaiser's extended periods of absence due to a long term health complaint had affected her performance. The offer was withdrawn and Ms Pnaiser sued both the Council and the NHS on the basis that the reference and withdrawal amounted to HR arising from a disability.
The Claimant was initially unsuccessful in her claim. However, she appealed the decision and won her case at the Employment Appeals Tribunal. The EAT found that the Council had discriminated against the Claimant by not recommending her for employment on the basis of her disability. For its part, the NHS had discriminated against her by withdrawing an offer of employment for a disability-related reason.
The key message for employers who find themselves in similar situations is to be cautious about providing a verbal reference to supplement a written reference. Where such a written reference is agreed as part of a settlement agreement, the risk is a great deal higher and an additional verbal reference should be avoided. And risk does not lie with the reference author alone; it is clear that the party who receives the reference can also be liable for claims even if the individual never becomes an employee. The case also highlights that a settlement agreement does not provide immunity from all claims. While they will shield employers from most claims arising from the termination of employment, they cannot protect against future acts of HR.