Key Takeaways
- A reference clause in a settlement agreement must state if a reference will be provided, exactly what it will say, and whether it applies to both written and verbal requests.
- You have the right to negotiate the content, format, and scope of the reference clause, ensuring it’s factual, accurate, and contains no negative wording.
- It is best practice to attach the agreed reference as an annex or schedule to the settlement agreement, so future employers receive only what has been pre-approved.
- The reference typically includes your job title, dates of employment, and whether your departure was for reasons like redundancy, but excludes reasons for dismissal or negative opinions.
- Our solicitors help secure fair, enforceable reference terms and ensure your employer meets all legal obligations under the reference clause.
- Breaching a reference clause can entitle you to legal remedies, making clear wording and enforceability essential.
- Settlement Agreement Lawyers offer free, same-day remote appointments nationwide with SRA regulated solicitors. Our employer-funded service ensures expert advice with no cost to you.
- Over 1,400 five-star reviews across Trustpilot and Google reflect our commitment to expert, employee-friendly advice.
What should be included in a reference clause in my settlement agreement?
A settlement agreement reference clause should state whether a reference will be provided, its exact wording, and if it applies to both written and verbal requests—ideally with the agreed text attached as an annex. Securing this clarity protects your future job prospects and ensures only authorised, accurate information is shared with new employers.
UK law requires you to take independent legal advice before signing a settlement agreement, including its reference clause. In almost all cases, your employer will pay your legal fees, so there is no cost to you. For tailored guidance, call our solicitors on 0800 054 1144 or book your settlement agreement advice online.
What should be included in a reference clause in my settlement agreement?
Your reference clause should clearly set out:
- The agreed reference wording (very often attached as an annex or schedule).
- Whether it is a basic, neutral, or detailed reference.
- Who will provide it (department or named contact).
- The period for which the employer is obliged to provide the reference.
- Whether both written and verbal (telephone) reference queries are covered.
An agreed wording should state only factual, accurate information to avoid misleading new employers. Including an annexed draft prevents misunderstanding or unauthorised additions.
For more on your options, see our Settlement Agreement Advice page.
What is a reference clause in a settlement agreement?
A reference clause in a settlement agreement is a legally binding promise from your employer about the reference they will give a future employer. It outlines the exact content and how requests should be handled, surpassing your basic legal entitlements (since, in law, employers are not obligated to give references).
Usually, the clause annexes a template or draft text. It may also specify who can respond and limit what can be said during verbal reference requests. For regulated professions, extra reference terms may be required.
For further information, refer to the ACAS guidance on settlement agreements.
Why is independent legal advice required for a settlement agreement reference clause?
Independent legal advice (ILA) is mandatory for any valid settlement agreement—including its reference clause. This is set out at s.203 Employment Rights Act 1996. A settlement agreement is only legally effective if you have received advice from a qualified, SRA-regulated solicitor on its terms and effects.
Our solicitor’s certificate covers both your waiver of statutory rights (such as unfair dismissal) and your understanding and agreement to the reference clause. Your employer pays the cost, so it’s free for you.
For more about how ILA works, visit our Book ILA online page.
What terms should a settlement agreement reference clause contain?
A robust reference clause should include:
- Exact reference wording in an annex or schedule.
- A statement that only this wording will be used for all written reference requests.
- Who will provide the reference (HR, line manager, etc.).
- How long the reference obligation lasts (e.g., 2–5 years).
- Confirmation on whether both written and telephone references are covered.
- Wording limiting the employer from including negative or subjective comments.
This approach removes ambiguity and upholds your reputation. For regulated sectors, additional compliance wording can be included.
For redundancy-specific guidance, see our Redundancy section.
Is an annexed or scheduled reference wording necessary?
Yes—attaching the agreed reference wording is best practice. It guarantees what your employer must say, eliminating scope for unintended disclosures or vague promises.
For further advice, visit the ACAS references guidance.
Should the reference clause cover both written and verbal references?
Absolutely. Many employers contact referees by phone to probe beyond the written reference. Your clause can require all verbal responses to match the agreed text or require HR to decline additional comment.
Our Performance, Capability & Disciplinary Exits page offers more on this scenario.
What information should my reference clause include?
A reference clause should clearly define what information will (and will not) be disclosed:
Job title, dates of employment, and reason for leaving
These factual details (start/end date, job title, neutral reason for leaving) are basic but crucial. Errors can delay job offers and raise concerns.
To calculate redundancy payments, try our Redundancy Calculator.
Omission of negative comments or dismissal reasons
The clause should prohibit mention of ongoing investigations, grievances, or dismissal reasons—unless required by law.
If you need to claim for harassment or discrimination, ensure no details are passed to future employers.
Factual, neutral, or structured reference options
You can choose:
- Basic reference: job title and dates.
- Neutral: as above, plus a non-negative statement.
- Structured/detailed: adds achievements or responsibilities (best for regulated/professional roles), but must remain factual.
If you want to secure a strong, enforceable reference clause or need our solicitors to negotiate terms, call 0800 054 1144 or book your settlement agreement advice online for a free, same-day appointment.
Can I negotiate the content of my settlement agreement reference?
Yes, you can and should negotiate the exact wording. Employers often propose a basic reference, but you do not have to accept this—especially if more tailored wording helps your prospects. Our solicitors can negotiate adjustments, including who signs the reference and precise text for both written and verbal requests.
See real outcomes on our client success stories page.
Tips for redundancy, mutual exit, or disputes
Tailor your negotiation:
- Redundancy: Insist on “redundancy” stated as the reason for leaving, with no reference to performance.
- Mutual exit: Clause should confirm your departure was agreed—no disputes mentioned.
- Disciplinary/dispute: Secure a neutral, factual reference with no mention of allegations.
Example negotiation requests
Consider requesting annexed wording along the lines of: “We confirm that [Name] was employed as [Job Title] from [Start Date] to [End Date], leaving by agreement. We are happy to confirm their reliability.” Attach this as a schedule and define who may provide the reference.
What are the legal risks and employer obligations with reference clauses?
A reference clause is legally enforceable. If breached (by failing to give the agreed reference or giving extra information), you may be able to claim damages for breach of contract.
Risk of discrimination or regulatory breaches
A reference must not discriminate (e.g., under the Equality Act 2010). In regulated sectors, omitting required facts or making misleading statements could also breach regulatory rules.
Learn more about your rights on our Discrimination page.
Employer’s duty of care when providing references
Employers owe you and prospective employers a duty of care—references should be accurate, true and not misleading, as described in ACAS’s official guidance.
Enforcement and remedies
If a reference clause is breached you can:
- Seek informal resolution (a solicitor’s letter often suffices).
- Claim damages for proven loss if a job offer is lost.
- In rare cases, apply to court for an injunction compelling a correct reference.
If you’re worried your employer may breach your reference clause, call 0800 054 1144 or book your settlement agreement advice online for free, expert help.
Step-by-step process for securing and enforcing a reference clause
How to secure a reference clause
- Ask your employer in writing for an agreed reference as part of your settlement.
- Request draft wording and review for accuracy.
- Ask our solicitors to suggest or review wording.
- Amend as needed—clarify positive statements, check facts.
- Have the agreed text attached as an annex, cross-referenced in the agreement.
Ensuring enforceability
The reference wording should be:
- Clearly annexed or scheduled.
- Referenced in the main agreement (“see Annex A”).
- Approved and signed by both parties.
What if the employer breaches the clause?
If breached, the agreement is enforceable:
- Our solicitors can send a formal reminder.
- If you lose work due to the breach, you may claim damages.
- Rarely, the court may order your former employer to issue the agreed reference.
For more advice, see our Unfair Dismissal and Whistleblowing & Protected Disclosures pages.
Why Choose Settlement Agreement Lawyers?
Our solicitors are settlement agreement specialists for England & Wales. With hundreds of reference clauses negotiated annually, we ensure every agreement is not just legally compliant but optimised for your career and future reputation.
We offer rapid, remote appointments (same-day as standard), and your employer pays—our service is always free to employees. We have unbeatable experience in redundancy, resignation, disciplinary and constructive dismissal exits, as well as regulated and senior roles. You also benefit from guidance grounded in real results—see our outcomes via client success stories.
Frequently Asked Questions About What should be included in a reference clause in my settlement agreement?
Is my employer legally required to give a reference under a settlement agreement?
No, unless a reference clause is agreed in your settlement agreement, employers are not legally obliged to provide a reference. If included, it becomes a binding contractual term.
Can I request specific positive comments in my reference clause?
Yes, you can ask for factual, positive statements provided they are accurate and not misleading. Employers will often agree to confirm reliability or teamwork. Our solicitors can help negotiate the strongest permissible wording.
Does the reference clause need to cover both written and telephone requests?
Yes, you should insist that the agreed wording applies to all reference requests, both written and verbal. This ensures consistency and prevents unintentional negative disclosure during informal calls.
What if my employer gives a different reference from the annexed wording?
Providing a different reference breaches your settlement agreement. You can seek enforcement—starting with a solicitor’s letter and, where necessary, pursuing damages if you have actually lost out on a job as a result.
How long will my former employer be required to give a reference?
The reference clause should state the duration (e.g., 2–5 years). If not stated, no timeframe is guaranteed, so always agree this point during negotiation.
Can the agreed reference state the reason for my exit, such as redundancy?
Yes, and you should request this if relevant (for example, to clarify that your departure was due to redundancy rather than performance concerns). The reference must reflect agreed, accurate wording.
Who pays the legal fees for settlement agreement advice?
Your employer is required to pay for your independent legal advice, so the process is free for you as the employee. This applies to the review and negotiation of your reference clause as well.
Can I change the reference clause wording after signing the agreement?
No, once signed, the agreed wording is binding. That’s why review by our solicitors is so important before signing; any amendments must be negotiated in advance.
A strong, detailed reference clause in your settlement agreement protects your future job chances and reputation. Our solicitors help you craft, negotiate, and enforce the wording your future employers will see, ensuring your departure stays confidential and positive. With same-day remote appointments and all fees paid by your employer, expert legal support costs you nothing. For tailored advice on your reference clause, call Settlement Agreement Lawyers now on 0800 054 1144 or book your settlement agreement advice online for a no-obligation, same-day appointment.
