A settlement agreement can give you a clean break from an employer, but a poor reference can follow you into your next role. Knowing how to protect employment references before you sign is therefore just as important as checking the compensation figure, notice pay and confidentiality clauses. A reference is often negotiable, and the right wording can provide valuable reassurance while you look for a new position.
For many employees, the concern is not simply whether their employer will provide a reference. It is whether the reference will accurately reflect their work, avoid unnecessary detail about the circumstances of their departure and be given consistently if a prospective employer calls months later.
Why an agreed reference matters
In the UK, an employer is not usually under a general legal duty to provide a reference, although there are exceptions in regulated sectors and where a contractual policy applies. If an employer does provide one, it must be fair, accurate and not misleading. That does not automatically mean it must be positive or detailed.
Many employers now use a basic factual reference as standard. This commonly confirms your job title and dates of employment, and may also confirm salary. A factual reference can be a sensible outcome where there is disagreement about performance or the reasons for departure. It limits scope for subjective comments and gives both sides certainty.
However, basic does not always mean sufficient. If you held a senior role, managed people, delivered measurable results or are applying in a sector where credentials matter, you may reasonably want a fuller agreed reference. The aim is not to force praise that an employer does not genuinely stand behind. It is to agree wording that is truthful, professional and appropriate to the role you performed.
How to protect employment references in the agreement
The strongest protection is to include the exact reference in the settlement agreement itself, usually as an appendix or schedule. Do not rely on a verbal assurance that someone will “say the right thing”. People leave, managers change and memories of a difficult process can fade or differ.
The agreement should state that the employer will provide the agreed reference in response to written requests from prospective employers. It should also say who is authorised to issue it, such as HR or a named senior contact. This reduces the risk of an informal response from a former manager undermining the agreed position.
A useful clause often covers three points: the wording of the reference, the circumstances in which it will be supplied, and the employer’s commitment not to provide a materially different reference. The precise drafting depends on the situation. An employer may need flexibility where it has legal, regulatory or safeguarding duties, for example. But broad wording that allows the business to add whatever it wishes later offers little real protection.
Agree the wording, not just the principle
Ask to see the reference in full before signing. Phrases such as “a suitable reference will be provided” are too vague. A settlement agreement is intended to create certainty, so the reference should be equally clear.
Check the practical details carefully. Are your name, job title and employment dates correct? Does the description of your role reflect your actual seniority? If the reference confirms duties, reporting lines, achievements or reason for leaving, make sure each statement is accurate and balanced.
Where the termination is connected to redundancy, it may be appropriate for the reference to say that your employment ended by reason of redundancy. This can be helpful because redundancy is not a dismissal for misconduct or poor performance. Equally, some employees prefer a neutral reference that gives dates and title only. The better approach depends on the role you are seeking and the facts of your departure.
Avoid agreeing wording that says you resigned if that is not true, or that your employment ended by mutual agreement if the broader context makes that misleading. A prospective employer may ask follow-up questions, and consistency matters. The reference should support an honest explanation rather than create one you have to defend later.
Deal with informal and verbal references
A carefully drafted written reference can be weakened if a hiring manager telephones your old manager and receives a different account. This is particularly relevant for senior employees, close-knit industries and roles where recruitment often happens through professional networks.
You can ask for the agreement to require that all reference requests are directed to a central HR contact and answered using the agreed wording. Some employers will not agree to control every informal conversation, especially where colleagues know one another personally. Even then, it is worth raising the issue and seeking a clear internal instruction that managers should not provide employment references outside the agreed process.
There is a trade-off. A very restrictive clause may be difficult for an employer to accept and may be hard to police in a small business. The practical goal is to prevent an official, contradictory reference rather than to attempt to regulate every private conversation. If there is a particular individual whose comments concern you, explain this during negotiations so a tailored solution can be considered.
Check related clauses before you sign
The reference does not sit in isolation. Other terms in the settlement agreement can affect how your exit is understood and discussed.
First, review any announcement clause. This may set out what the employer will tell colleagues, clients or suppliers about your departure. It should not conflict with the agreed reference. If the announcement says one thing and the reference says another, that can create avoidable questions.
Second, consider confidentiality and non-disparagement wording. Confidentiality usually protects the terms and circumstances of the agreement, but it should not prevent you from giving a truthful, agreed explanation of your departure to future employers. Similarly, a mutual non-disparagement clause may help reduce the prospect of damaging comments, but it is not a substitute for an agreed reference.
Third, check whether the agreement contains a warranty about your future employment or job search. Such clauses are less common, but you should understand whether you are making commitments that could affect your ability to discuss your departure openly and accurately.
Finally, if you are subject to regulatory obligations, disciplinary findings, safeguarding matters or professional-body requirements, a reference clause needs particular care. An employer cannot contract out of legal duties to disclose relevant information. Independent advice is especially valuable where the wording seeks to preserve those obligations while still protecting you from unnecessary disclosure.
Prepare for a prospective employer’s questions
An agreed reference gives you a foundation, but it does not remove the need to explain your move confidently. Keep your account short, factual and consistent with the agreement. For example, if your role was made redundant, you can say that the business restructured and you are now looking for a role that better uses your experience.
You do not normally need to provide a prospective employer with a copy of your settlement agreement. In fact, confidentiality terms may prevent this. You can provide the agreed reference if appropriate, or give the contact details specified in the agreement.
It can also help to collect supporting evidence before your employment ends, where permitted. This might include copies of published work, performance feedback, training records or non-confidential examples of achievements. Do not take confidential documents, client data or information belonging to your employer. The boundary matters, particularly where restrictive covenants and confidentiality obligations continue after termination.
What if the employer later gives a different reference?
Keep a signed copy of your settlement agreement and the agreed reference. If you discover that an employer has issued a reference that materially differs from the agreed wording, obtain evidence if possible, such as a copy from the recipient or a written account of what was said.
The first step is often to raise the issue promptly with the employer, referring to the relevant clause and asking it to correct the position. A breach of an agreed reference term may give rise to a contractual claim, but the appropriate response will depend on the wording, the evidence available and the harm caused. If a job offer has been affected, early legal advice can help you assess the practical options.
Getting the reference right before the agreement is final
Settlement agreements are negotiated documents. If the proposed reference is too limited, inaccurate or silent on an issue that matters to your future career, this is the time to raise it. Once the agreement is signed, improving the wording can be much harder.
An independent adviser can review whether the reference clause is clear, enforceable and consistent with the rest of the agreement. At Arcos Settlement Agreements, the focus is on giving plain-English advice on the terms that shape your next step, including references, compensation and ongoing obligations.
A well-handled exit should leave you able to speak about your employment with confidence. Before you agree to settle, make sure the reference supports that future rather than placing another obstacle in its way.