References After Settlement: Getting It Right in the Agreement

A poor reference can cost you far more than additional settlement money. Negotiating reference terms should be a priority in any settlement agreement.

Employer's Duty of Care

Employers must provide references that are:

• True and accurate
• Not misleading
• Fair and reasonable
• Based on facts

However, a legally compliant reference can still harm your job prospects. That's why settlement agreements should specify exact reference wording.

Types of References

1. Basic/Factual Reference

Confirms only:

• Job title
• Employment dates
• Salary
• Absence record (sometimes)

Limitation: Prospective employers may view a basic-only reference suspiciously, wondering what's being hidden.

2. Structured Reference

The gold standard for settlement agreements. Includes:

• Overview of role and responsibilities
• Key achievements
• Skills and qualities
• Reason for leaving (agreed wording)
• Positive closing statement

"We always draft specific reference wording to include in settlement agreements. This prevents future disputes and ensures you receive a fair reference."

Agreeing Reference Terms

What to Negotiate:

1. Exact wording: Draft the full reference text and include it as a schedule to the settlement agreement.
2. Who provides it: Specify which person/department will handle reference requests.
3. Verbal references: Address what will be said in phone references, not just written ones.
4. LinkedIn and public statements: Consider social media and public commentary.
5. Enforcement: Include breach provisions if the agreed reference isn't provided.

Reason for Leaving

Common agreed wordings include:

• "Position made redundant"
• "Left by mutual agreement"
• "Resigned to pursue other opportunities"
• "Role restructured"

Never agree to "dismissed" or "terminated" without qualification.

Sample Reference Wording

Here's a template we often use:

"[Name] was employed as [job title] from [date] to [date]. During their employment, they were responsible for [key responsibilities]. [Name] demonstrated strong [skills/qualities] and made significant contributions to [achievements]. Their position was made redundant due to organisational restructuring. We would have no hesitation in recommending [Name] for similar roles."

Enforcing Reference Terms

If your employer breaches agreed reference terms:

• You may be able to sue for breach of contract
• You might claim for losses (e.g., lost job opportunities)
• An injunction could force compliance

Contact our team to ensure your settlement agreement includes robust, helpful reference provisions.