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The Law on Employment References

Under UK law, there is no legal obligation on an employer to provide an employee or former employee with an employment reference, thus an employer can legally decline such a request for a reference. The employee has no right under the employment contract to be granted a reference, even though undoubtedly obtaining a reference is an important aspect in getting a job.
However, if an employer does provide a reference, whether written or oral, it must be accurate. Once an employer provides a reference he can be liable in respect of an erroneous reference due to negligence, and he owes a duty of care to those prospective employers who may rely on the truth of such reference.
In giving an employment reference, the employer must take reasonable care not to give misleading information about the employee, that might be so construed by a prospective employer. He must also take reasonable steps to verify the information on which the reference is based.
An employer in providing a reference concerning an employee or former employee owes a duty of care to the employee regarding the preparation of the reference and can be liable to the employee in damages as a result of negligent misstatements. An employee has a remedy in negligence only if he can establish that an inaccurate reference was due to the employers lack of care. There is no action for negligence if the statement is true. Deliberately false statements in references can result in defamation claims and it is possible for an aggrieved employee who fails to secure employment by reason solely of the falsehood of such statement to sue for resulting economic loss.
UK courts in employment cases have recognised that a balance needs to be struck between the duty of care in the preparation of employment references and the need for open and frank communication on matters relevant to the employment record of the employee. The interpretation of employment references can be a fertile ground for litigation and employers must exercise reasonable care in considering whether to provide an employment reference and its substance and form.

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http://www.contractdocs.co.uk is a website selling employment contracts and legal forms online.

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