References in a settlement agreement

Why it needs to be in the agreement

Outside regulated sectors, an employer has no legal obligation to provide a reference at all. If one is given, the employer owes you a duty to take reasonable care that it is true, accurate and fair, and owes the recipient a duty not to mislead. The agreement turns a discretionary favour into a contractual promise.

What to agree

1. The wordingAttached as a schedule, on headed paper, dated and signed.
2. Who gives itA named person or role, usually HR, so enquiries do not go to a manager you fell out with.
3. Verbal enquiriesA commitment that telephone and informal enquiries will be answered consistently with the written reference and no less favourably.
4. TimingThat it will be provided within a set number of days of any request.
5. Reason for leavingAgreed wording, if a reason is given at all.
6. No time limitOr a long one. You may need it again in five years.

Factual or detailed

A factual reference confirms dates of employment and job title, sometimes salary. It is safe and uncontroversial. If the employer's policy is to give factual references only, ask that the reference says so, so the brevity is not read as a warning.

A detailed reference comments on your skills, performance and character. It is worth pressing for if you had a good record and your sector expects one. Draft it yourself and send it with your counter-offer. Employers often accept a fair draft with few changes.

What a reference cannot do

It cannot be untrue or leave a misleading overall impression. An employer will not agree to say you were an outstanding performer if you were in a capability process, and you should not ask. The practical compromise is a reference that is accurate, positive where it can be and silent where it cannot.

Most agreements let the employer depart from the agreed wording if it later discovers facts that would have changed it. That is reasonable, but ask for it to be limited to serious matters discovered after signing.

Regulated sectors

In financial services, firms must provide a regulatory reference under FCA and PRA rules covering the previous six years, including any findings that a person breached conduct rules or was not fit and proper. A settlement agreement cannot restrict that duty. If you work in a regulated role, any disciplinary findings matter more than the reference wording, so consider whether to settle before a process concludes.

Similar duties to disclose arise in education and healthcare where safeguarding or professional regulation is involved.

Beyond the reference

• Internal announcement. Agree what colleagues are told and when.
• External statement. For senior or client-facing roles.
• LinkedIn and social media. Both sides should stick to the agreed line.
• Non-derogatory comments. A mutual clause backs up the reference. See the clauses explained.

If the reference is not honoured

If a job offer is withdrawn and you suspect the reference, ask the new employer what was said. You can also make a data subject access request to the recipient. A reference that departs from the agreed wording is a breach of contract, and an inaccurate one may give you a negligence claim. See after you sign.

About this guide. This page is general information, not legal advice, and reflects the law and published government plans on the date shown above. Frederick George is a legal referral service, not a law firm. For advice on your own circumstances we will introduce you to an SRA-regulated solicitor.