A good reference from your current or former employer can be extremely important if you are looking for a new job. In some circumstances the hope of a good reference that will allow you to go further will be a substantial part of the reason for doing a particular job at a particular time.
How can I find out if my employer is giving me a bad reference?
If you are offered a job ‘subject to receipt of satisfactory references’ and the offer is subsequently withdrawn, you can make a shrewd guess that an unsatisfactory reference has been provided.
Any temptation to try ‘mystery shopping’ by getting a friend to request a reference for you is best resisted. (Although tribunals often let snooping by employers pass without comment, there is something of a double standard in operation: they are likely to throw up their hands in horror if an employee uses subterfuge or deception to collect evidence.) A better method is to ask the recipient of the reference for a copy of it. An employer with a rudimentary sense of fairness may feel that if they’ve withdrawn a job offer to you because of a poor reference, you ought at least to be allowed to know what has been said.
If simply asking doesn’t work, you can make a subject access request to the recipient of the reference under the Data Protection Act. (Curiously, the organisation that provided the reference will not be required to disclose it because of a specific exception in the DPA.) Straightforward guidance on how make a subject access request is available from the Information Commissioner’s Office.
What can I do about a bad reference?
There are various possibilities, though their availability will depend on the circumstances:
breach of contract
If you were still employed by the employer who has given you a bad reference at the time they gave it, then if the reference is unfair or misleading you can try arguing that giving it amounted to a breach of your contract of employment. There almost certainly won’t be an express term in your contract about references (though if on recruitment your negotiating position is strong enough to allow you to rewrite your contract, it wouldn’t be a bad thing to include one), so you will have to fall back on the implied term of ‘trust and confidence’ term: see TSB Bank plc v Harris  IRLR 157.
If your employment has ended by the time the reference is given, you won’t be able to rely on the trust and confidence term. In the unlikely event that you have managed to get an express term about references inserted into your contract of employment, you may be able to rely on that, provided the term makes it clear that this is a contractual obligation on your employer that survives the end of the employment relationship.
The only other way you might have a contractual claim is if your employment has terminated or a claim arising out of your employment was settled on agreed terms, including terms as to the reference that will be given. If that is the case, then if you believe that your former employer has acted in breach of the agreement, you can sue for damages in the County Court.
In Spring v Guardian Assurance  ICR 596, the House of Lords confirmed that an employer or former employer owes a duty of care to the subject of a reference. If you can show that your former employer negligently included false or misleading information about you in your reference and you suffered loss as a result, you can sue in the County Court.
If you can show that the reason for the unfavourable reference is that you had previously brought a discrimination claim against your former employer, then the bad reference is an act of discrimination by way of victimisation (see glossary).
Detriment in employment
If you were still employed at the time the reference was given, and you can show that the reason for the bad reference was a protected disclosure one of the things mentioned at sections 43M to 47E of the Employment Rights Act 1996 (things like whistleblowing, and exercising various statutory rights such as the right to time off for jury service, or the right to request flexible working), then you can ask an employment tribunal to award you compensation for an unlawful detriment in employment.
If your former employer maliciously gives out false information about you, you could in theory have a defamation claim. Proving malice is likely to be difficult, and in most cases where you might have a chance of showing malice, you will probably be able to show negligence more easily. A defamation claim in this context will rarely be a good idea.