As the case of Elizabeth Weston, the lawyer accusing bank Merrill Lynch of victimisation, continues to grip the City, more evidence has emerged about the growing fear employers feel over writing employment references.
According to a survey by specialist law firm Employment Law Advisory Services, most small businesses have stopped writing full references for former staff because of a fear of being sued or taken to an employment tribunal.
It found nine out of 10 small business managers were so afraid of costly litigation that they had stopped writing traditional references for former employees.
One in five said they refused entirely to act as referees for ex-employees, irrespective of whether they had been good workers.
And more than two thirds – 69 per cent – said they would only confirm a former employee's position, history and number of absences.
Weston, 30, received £1m last year after accusing colleagues at Merrill Lynch of sexual harassment.
The lawyer has now brought a second claim against the bank for allegedly trying to sabotage her career through a bad reference.
She argues she had hoped to use the reference to help her begin an MBA course at an American university.
But instead, she claims the reference she received was "vindictive" and motivated by the fact she had sued the bank.
Merrill Lynch has denied the allegation, calling Weston's actions "opportunistic", and arguing that as far as it is concerned, the reference was "fair and factual".
Pam Rogerson, employment law specialist at ELAS, said the fear of litigation was now very much at the forefront of managers' minds when they sat down to write a reference.
"The fear of litigation now is such that managers will not do or write anything which they fear may end up in court," she said.
"The old style of written reference from a former employer used to be a firm's best guide as to a candidate's past character. But that is becoming a thing of the past as small businesses refuse to say anything they fear could come back to haunt them," she added.
