Job references for former employees who leave under a cloud need to be handled with care, as a recent case shows.

In R Cox v Sun Alliance Life Ltd, an employee was suspended on full pay pending an investigation into alleged misconduct.

There was no evidence of fraud and he was not accused of dishonesty.

He resigned on terms which included a severance payment and an agreement that the employer would provide a bland and favourable résumé of his career if asked for a reference.

The employee got a new job but was sacked when the former employer provided a reference that suggested he had been suspended pending an investigation into alleged dishonesty and would have been dismissed but was allowed to resign.

A county court judge ruled that the employers were liable in negligence and the finding was upheld by the Court of Appeal.

Lord Justice Mummery in the Appeal Court said the employer's duty to take care in providing a reference would normally be satisfied if the reference was fair and accurate.

Unfavourable statements should be confined to matters the employer has investigated and has reasonable grounds for believing to be true.