First off, employees have no general right for a reference. The exceptions to this are references agreed in a settlement, or if a condition in the employment contract.
The employer, however, is obliged to respond if a reference is requested by a regulatory body, for example, the Financial Conduct Authority. Beware that a refusal for a reference may be deemed as discrimination.
There is still some degree of expectation that a reference should be provided and the employers rarely refuse. When writing a reference, remember you have a duty of care. The duty is to both your leaving employee and the prospective employer. This means that your reference has to be true, accurate and fair. The safest option will be to provide a brief factually based reference. No doubt you will be presented with a long form from the prospective employer asking a multitude of questions including facts and perhaps your opinion. You are under no obligation to adopt this form and cover all of the questions in your response. It definitely helps if you have a policy on references suggesting a response to a reference request will be provided in a factual format specified in the policy:
Employment commencement and termination dates, a brief description of duties, the reason for leaving as an example. You may be held liable if you make maliciously false or negligently wrong statements. Your reference cannot be misleading. If you provide an overegged reference for an employee whose performance was lacking, perhaps you felt too enthusiastic about parting company, the new employer may seek a redress against you. By all means, if your statement can be backed by the facts, this can be included in the reference. You may feel you have to disclose persistent lateness of your employee, and you will be right to do so if the attendance record backs you up. The duty of care covers not only written references but the information you provide in any communication with the prospective employer. When the prospective employer rings up seeking some clarification on a few points, it may be tempting to reveal more in this ‘off the record’ conversation but this conversation is not and cannot be off the record: anything you state about your employees to their new prospective employers has to be accurate, fair and not misleading.
Sometimes your employee will approach another work colleague for a reference or one of the managers or supervisors due to some personal preference or friendship. There is no problem with them providing a reference as long as they make it clear in their response that the reference they give is a personal one and does not come from the employer.
The leaving employee does not have a right to make you disclose the reference you provide, there is a specific exception within the data protection rules. You will still need to make sure the personal data of your employee are safeguarded, so make sure your response is marked as private and confidential and for the stated recipient only. However, the new employer to whom the reference is sent is not covered by the exception and your leaving employee may get a sight of your reference on request. Your reference is also likely to be disclosed in legal proceedings.