Is it unlawful for a former employer to give a bad reference?

The Court of Appeal in the Netherlands recently ruled on the question whether a bad reference that an employer gave about a former employee (a teacher) was unlawful. The teacher argued that he had missed out on a new job as a result. The Court of Appeal ruled in favour of the former employer. It found that the former employer had not broken the law by giving the bad reference to the potential new employer.
It should be noted that one of the reasons why the former employer won the case is that the teacher himself had named his former employer as a referee. The parties had furthermore not agreed that certain information must not be provided. Moreover, as a general rule, the information that a former employer gives to a potential new employer must always be as accurate as possible.
Although the former employer therefore did not act unlawfully in this case, situations are conceivable in which an employer would be acting unlawfully (towards a former employee, a potential new employer or a third party). What if, for instance, a potential new employer contacts a former employer on his own initiative? Or if it has been agreed in a settlement agreement that a favourable reference letter and favourable references will be provided? All these questions are reason for us to address the points that should be taken into account when giving or requesting references about former employees or job applicants.

Breach of the GDPR if job applicant has not given consent

Giving and requesting references is a form of screening. By screening a job applicant, a potential new employer can assess his or her reliability and integrity. References therefore provide information on a job applicant and consequently make it possible to directly or indirectly identify a job applicant. References are therefore personal data and the General Data Protection Regulation (GDPR) applies to them.
The principal rule is that references may be requested only if the GDPR requirements are met. Briefly stated, the minimum requirements are that the screening serves a legitimate interest, that it is necessary for the purposes of that interest, and that the job applicant is informed about the screening. There must furthermore be a legal ground for the processing (within the meaning of Article 6 of the GDPR). The Court of Appeal found in that regard that “if a job applicant names his former employer as a referee in a job application procedure, he gives his consent to provide information on him and his performance”.
In other words, the job applicant (the former employee) must give his permission to contact the referee (the former employer) and therefore to request references. Contacting a former employer without that permission having been given may be a violation of the GDPR. Conversely, it could be argued that the former employer would also be in violation of the GDPR if he gave references in the absence of that permission. If you as a former employer are requested to give a reference, you should contact the former employee to check whether he did indeed give your name as a referee or, if not, whether he consents to the provision of information. A former employer is not obligated give a reference when contacted by a potential new employer. Despite the fact that the Court of Appeal is of the opinion that consent is required, it is questionable how this relates to the opinion of the Dutch Data Protection Authority (DDPA), as the DDPA stated that consent is not a legitimate ground for processing personal data if it concerns the relation between a potential employer and job applicant.

Providing incorrect information is unlawful

If it is certain that the potential new employer has permission to contact the referee and that the former employer has permission to give references, the next question is what information may or may not be provided. In principle, only information that is relevant to the position in question may be provided. It furthermore follows from Section 7:656(5) of the Dutch Civil Code that the information given by the former employer must provide as accurate a picture of the job applicant as possible. No false representations may be made. A former employer may be acting unlawfully towards the potential new employer and third parties if he withholds information that may be relevant to the new position. It may also be unlawful or a breach of good employment practice in relation to the former employee for a former employer to provide information on his own initiative that is not relevant to the position. The information must therefore provide a truthful picture of the job applicant, but may not go beyond what is relevant to the position.

Acting in breach of agreements made is unlawful

A former employee may agree with his former employer that certain information must not be provided. Such an agreement is usually recorded in a settlement agreement. The parties might agree, for instance, that a favourable reference letter will be drawn up and that favourable references will be given. When giving a reference, a former employer must bear in mind not only the obligation to provide a correct and truthful picture of the former employee, but also the agreements made with him. To avoid acting unlawfully towards the potential new employer (by providing an incomplete picture) or towards the former employee (by breaching the agreements made), it may be wise not to give any reference at all. A former employer might also state in such a case that agreements made prevent him from providing any further information. That usually says enough and allows the potential new employer to draw his own conclusions.

Conclusion

To avoid acting unlawfully when giving references, insofar as possible, we advise former employers first to check with a former employee whether he has indeed named the former employer as a referee and has therefore given permission for the processing of his personal data. If that permission has been given, it must be established what information may be given to the potential new employer. A correct and truthful picture must then be provided, the information may not go beyond what is relevant to the position, and any agreements made with the former employee must be taken into consideration.

Please contact Danny Vesters should you have any questions on this topic.