Getting a Good Reference as Part of Your Settlement Agreement

Why a Reference Matters More Than You Think

When you move to new employment, future employers will contact your previous employer for a reference. A negative or lukewarm reference can cost you job offers, promotions, or more senior roles. The damage from a poor reference can exceed the cost of a settlement dispute many times over.

Yet many people focus on the settlement payment and overlook the reference. They assume they'll get a standard reference or they don't think the reference matters much. Both are mistakes.

A strong, positive reference that emphasises your skills, professionalism, and achievements is worth substantial money in career terms. It'll open doors that a lukewarm or negative reference would close. This is why reference terms should be a key part of your settlement negotiations.

What You're Entitled To

First, understand your legal position. Employers are entitled to give factual references—they must tell the truth about your employment. But:

• They cannot give false references
• They cannot give references that are deliberately misleading
• They cannot give unfair characterisations that damage your job prospects unjustly
• They cannot use a reference as retaliation (especially for whistleblowing or discrimination complaints)

However, proving a reference was unfair or retaliatory is difficult after the fact. It's much better to agree on the reference as part of the settlement.

Types of Reference Arrangements

There are several approaches to securing a good reference as part of your settlement:

Written Reference: A written reference document signed by the employer that you receive and can provide to new employers. Example:

"We confirm that [name] worked as [role] from [date] to [date]. During this time, [name] demonstrated strong technical skills, reliability, and professional communication. We recommend [name] for future employment."

This is valuable because you control what new employers see. It removes uncertainty about what will be said about you.

Verbal Reference Protocol: An agreement about what the employer will say if contacted by references. For example:

"If contacted for a reference, [employer] will confirm employment dates, job title, and confirm that [employee] performed satisfactorily in the role."

This gives you assurance without providing a written document.

Joint Reference: A mutually agreed statement that both you and the employer endorse. Example:

"Following mutual agreement, [name] and [employer] have separated on professional terms. [Name] has [years] of experience in [field] with demonstrable expertise in [areas]. Contact details are [details] for references."

This is often the gold standard—it's positive, controlled, and doesn't require either party to contact the other.

Negotiating the Reference

When negotiating your settlement, reference terms should be a priority item:

Start Early: Don't wait until final agreement to discuss the reference. Raise it early in negotiations. It signals that you care about protecting your career prospects, which is reasonable.

Be Specific: Don't accept vague promises about a "fair reference." Insist on specific wording. Your solicitor should propose draft reference language that the employer can approve or amend.

Focus on Positives: The reference shouldn't just be factual and neutral. Push for genuinely positive language about your strengths, skills, and contributions. For example:

• "Demonstrated strong technical expertise in [area]"
• "Reliable and professional in all interactions"
• "Excellent team player with strong communication skills"
• "Made significant contributions to [projects]"

Reference Examples: If the dispute involved conduct concerns, you might still secure a positive reference focusing on legitimate strengths. For example, if there was a personality clash, the reference might focus on technical skills rather than team dynamics.

Contact Details for References: Specify who will provide references. A designated contact prevents confusion and ensures consistency. Agree on what that person will say.

What Should Be in Your Reference Clause

A well-drafted reference clause in your settlement should specify:

• Whether it's a written or verbal reference (or both)
• Exactly what will be said (ideally with draft wording)
• Who will provide the reference (named person or role)
• How long the reference is valid for (usually indefinitely)
• How the reference will be delivered (email, phone, standard form template)
• Whether future starters will be asked to provide the same reference

Example clause:

"The Company will provide a reference to any prospective employer as follows: '[Name] worked for the Company from [date] to [date] as [role]. [He/She] demonstrated strong technical expertise, reliability, and professionalism throughout [his/her] employment. We recommend [Name] for future employment.' This reference will be provided within five business days of any request."

Dealing With Problem References

What if the employment relationship was genuinely problematic? Can you still get a positive reference?

Often, yes. A positive reference focuses on genuine strengths without requiring the employer to endorse everything about your employment. For example:

• A reference might acknowledge your technical skills even if there were communication issues
• It might confirm your reliability and attendance even if there were performance concerns in other areas
• It might acknowledge your role and duration even if there were disputes about how you handled responsibilities

The key is to negotiate language that's truthful from the employer's perspective but doesn't damage your prospects. Good negotiation often finds this middle ground.

What You Cannot Require in a Reference

Be realistic about what you can negotiate:

• You cannot require the employer to lie or be misleading
• You cannot require a reference that contradicts the employment record
• You cannot require the employer to endorse performance that was genuinely poor
• You cannot require the employer to give a reference that's false on fundamental points

What you can do is negotiate to focus the reference on areas of genuine strength and avoid or minimise areas of weakness.

Protecting Yourself After Settlement

Once you've agreed on reference terms, you need to ensure the employer actually provides them as agreed:

Keep the Settlement Copy: Keep a copy of the reference clause from your settlement agreement. When requesting a reference, include it.

Request in Writing: When seeking a reference, request it in writing and reference the settlement agreement. This creates a paper trail.

Provide Instructions: If there's a specific person or contact who should provide the reference, remind the new employer or the contact of this.

If the Employer Breaches: If the employer provides a different reference than agreed, this is a breach of the settlement agreement. You have grounds to challenge it. Your solicitor can write to the employer demanding compliance.

Prospective Employers: If you've negotiated a joint reference or a reference you control, share it directly with prospective employers. This removes the employer's discretion entirely.

Consider Waiving the Reference Entirely

In some cases, the best approach is to waive any reference from the former employer entirely. Instead, you might:

• Agree that you'll tell future employers to contact [alternative person] instead
• Use a written reference from a colleague or client instead
• Include in your settlement agreement that you can represent that references are available but won't necessarily name the employer

This approach can be valuable if the employer-employee relationship was so damaged that any reference from them would be problematic.

The Strategic Value of References

In valuing your settlement, think of a good reference as being worth real money. If it helps you get a job faster, earn a higher salary, or access better career progression, it's worth substantial financial value. Factor this into your negotiation strategy.

Sometimes you might accept a slightly lower financial settlement in exchange for a genuinely strong reference. The reference might deliver more career value than the extra cash.

Conversely, if securing a reference means accepting an inadequate settlement, resist. You can work around a poor reference through alternative arrangements or employment strategies.