Reference Checks – Part 2: Legalities and Effectiveness

In Part 1 we addressed the problems with reference checks, what to cover when doing them and the methods that could be used. This article, Part 2, focusses on the legalities and effectiveness of reference checking.
Section 14 of the Constitution – the Right to Privacy in the Bill of Rights – has relevance to both employers and employment agencies, when it comes to reference checking.
Because of this section, employers and employment agents are advised to obtain written permission before taking a reference from a current or previous employer. Employers would be well advised to verify, before accepting a curriculum vitae, that the recruitment officer or consultant has permission from the applicant, to release their confidential information to the employer or client.
Can employer be held liable?
Employers may refuse to give reference checks, provided they comply with Section 42 of the Basic Conditions of Employment Act.  This requires that employers issue a certificate of service, stating the name of the employer and employee, position held, dates of employment and salary earned, upon termination of the contract.  Should a previous employer refuse to give a reference he cannot be held legally responsible for any financial loss suffered by the new employer as a result of his refusal to give a reference. The law does not regard it the duty of the previous employer to protect the interest of the new employer.
Should the previous employer however, agrees to give a reference, he/she could be held liable for financial loss suffered as a result if withholding information likely to have had a material influence on whether the candidate would have been offered the position or not.  Say, for example, the previous employer is aware that the candidate had been treated for alcohol abuse and continued drinking after undergoing treatment.  The previous employer would be well advised to inform a prospective employer who is considering the applicant for a position requiring driving a heavy-duty vehicle on public roads.
Bad reference
The referee is entitled to give negative comment on the candidate.  It must, however, be true and relative to job performance in the position the candidate is being considered for.  Disclosing that the candidate being considered for a position as production manager, had an affair with a married member of staff, is not material to job performance.
It is sound business practice to do references and to be prepared to give references.  Employers who refuse to do so, cannot expect others to oblige them when they feel the need to obtain a reference check.  In certain instances, giving an objective reference check assists with the career development of an ex-employee, since it may provide information as to how to effectively manage the candidate.