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Employers beware: Reference check

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Employers beware: Reference check

THE FACTS The appellant, Mr. Ramesh s/o Krishnan, was an adviser and financial services associate manager engaged by the respondent, his former principal, AXA Life Insurance Singapore Pte Ltd. Disagreements arose between the appellant and the respondent’s management, which resulted in the appellant’s resignation. Shortly after, the appellant applied to join Prudential Assurance Company Singapore Pte Ltd (“Prudential”).Prudential had sent a reference check request to the respondent. The respondent replied providing information on his persistency ratio and compliance issues which reflected negatively on the appellant. Prudential then made the appellant an offer of employment subject to several conditions, including the successful clearance of his reference check and his fulfilment of the requirements under the Monetary Authority of Singapore’s (“MAS”) guidelines. Prudential continued to seek clarification from the respondent on the information provided but to no avail. Prudential withdrew its application and decided not to hire the appellant. The appellant then applied for a job at Tokio Marine Life Insurance Singapore Limited (“Tokio Marine”) but was rejected after a similar reference check was sent by the respondent to Tokio Marine. The appellant sued the respondent on three causes of action, namely, defamation, malicious falsehood, and negligence. All three claims were dismissed. The appellant appealed against the decision on negligence.
 
THE ISSUES The relevant issues before the Court of Appeal were (1) what is the standard of care expected of an employer in its preparation of a reference form for a former employee; and (2) whether there was a breach of that duty.
 
THE DECISION The Court of Appeal in allowing the appeal in part, found that the respondent had breached its duty of care and that damages worth SGD4 million was granted to the appellant by the High Court.
 
Standard of Care The Court of Appeal held that an employer who writes a reference for its employee (former or present) owes a duty of care to the employee in preparing the reference. The Court of Appeal summarised the applicable standard of care expected of a reasonable employer when writing a reference for its employee as follows:-
 
  1. Reasonable care to ensure that the facts and opinions stated in the reference are true.
  2. Reasonable care to ensure that the reference does not give an unfair or misleading overall impression of the employee, even if the discrete pieces of information which it contains are factually correct.
  3. Reasonable care to disclose any information that relates to information which has already been provided, where to withhold such further information would render the information that has been disclosed incomplete, inaccurate or unfair.
  4. Subject to foregoing qualifications, the employer is not required to give a full and comprehensive reference or to include all material facts about the employee.
  5. The employer should not include in the reference, explicitly or implicitly, complaints or other allegations against the employee that the employee had no knowledge of and had not been given an opportunity to explain or defend himself against.
  6. In assessing what constitutes reasonable care, regard shall be had to the gravity of any adverse suggestion or inference contained in the reference.
 
CONCLUSION We have always placed little to no weight in the preparation of references for our former employees. Thus, with this landmark case, employers must now approach with caution when preparing references in order to avoid unjustifiably prejudicing the former employees’ job prospects.

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