"You owe a duty of care to the ex-employee in providing a reference to a prospective employer. Your duty is to take reasonable care in the preparation of the reference and you will be liable to the employee in negligence if you fail to do so and the employee suffers loss or damage as a result.
Your obligation is to provide a true, accurate and fair reference. The reference must not give a misleading impression. However, as long as the reference is accurate and does not tend to mislead, there is no obligation on you to set out great detail or to be comprehensive.
Essentially, this means you must be able to substantiate the comments you have made in the reference with hard evidence and you must not give misleading information, whether by the selective provision of information or by the inclusion of information in a manner that would lead a reasonable recipient to draw a false or mistaken inference. For example, you should not allude to an employee's misconduct if you have never carried out an investigation into that misconduct and you do not therefore have reasonable grounds for believing in that misconduct.
Claire Birkinshaw, legal expert, Federation of Small Businesses "