A reference check is when you contact a candidate's former employers or named referees to confirm what they told you and learn how they actually worked. According to SHRM, it is part of past-employment verification, and it helps protect your investment in a new hire. Reference checking best practice means running that check the same way every time: with the candidate's consent, from the right people, using consistent job-related questions.
References are a standard hiring step, but they are a weak predictor on their own. In the Schmidt and Hunter (1998) meta-analysis, reference checks scored a validity of just 0.26 for predicting job performance, well below structured interviews at 0.51 and work sample tests at 0.54. Sackett and colleagues (2022) later revised those 1998 figures downward, so treat them as dated coefficients, but the ranking holds: references stay a weaker predictor than structured interviews. SHRM also documents references that stayed glowing despite serious problems. So treat references as a verification and red-flag tool, not a crystal ball.
This guide explains what a reference check is, when to run one, who to ask, and which questions work. It also answers whether references are legally required, covers the privacy rules that apply, and explains why references can mislead. This is not legal advice, so check the law in your area before you act.
Key takeaways
- A reference check verifies work history and surfaces red flags before you hire (SHRM).
- In the UK, taking up references is usually optional. An employer only has to give one if a contract requires it or the role is regulated by the FCA or PRA (GOV.UK, Acas).
- Run it late, around the offer stage, often as part of a contingent offer (SHRM).
- Tell the candidate before you take a reference. UK GDPR expects you to share privacy information, and legitimate interests is usually the right lawful basis, not consent (ICO).
- Get the candidate's consent first. In the US, third-party screening can trigger FCRA disclosure and written authorisation rules (general guidance, not legal advice).
- Prefer direct managers and ask the same job-related questions for every candidate (SHRM).
- Expect positivity bias. In Schmidt and Hunter (1998), reference checks scored just 0.26 for predicting job performance, well below structured interviews; a 2022 re-analysis (Sackett et al.) revised the exact figures down but kept that ranking.
- Treat reference findings as one input among several, weighed with interviews and other evidence (CIPD).
Why it matters
References do two useful jobs. First, they confirm facts on the CV, such as employment dates, job title, and duties. Second, they can surface red flags before you hire. SHRM notes that reference checks form part of a defence against negligent-hiring claims, where an employer can be held liable for hiring someone it knew, or should have known, was likely to cause harm (general guidance, not legal advice).
Used well, a reference check protects your client and your placement. Used carelessly, it can give false comfort, because references have real limits. The next section explains why.
Why references can be misleading
References can mislead in two directions. They can say too little, or they can say too much.
In the Schmidt and Hunter (1998) meta-analysis, reference checks scored a validity of 0.26 for predicting job performance, well below structured interviews at 0.51 and work sample tests at 0.54. Sackett and colleagues (2022) later revised those 1998 figures downward, but the ranking holds: references stay the weaker predictor.
They say too little because many employers now use a neutral reference policy. To limit the risk of a defamation or misrepresentation claim, they confirm only dates of employment and the positions held. SHRM documents this pattern, which is why a reference is often better for verifying facts than for judging performance.
They say too much because of positivity bias, sometimes called reference inflation. A former manager may want to help someone move on, or may worry about saying anything negative. SHRM has documented glowing references given despite serious problems. So a clean reference is not proof of strong future performance.
More recent work suggests structured reference checks, using the same job-related questions for every candidate, can link more strongly to performance than the unstructured checks in older studies (Taylor and Francis, 2022). The exact strength varies by study, so treat it as a qualitative finding. For the bigger picture, see our guide to what actually predicts job performance and the case for structured over unstructured interviews.
Are reference checks legally required?
For most roles, no. Taking up references is good practice, but it is not a general legal duty on you. And the former employer at the other end does not usually have to give you one either.
GOV.UK is clear that an employer does not usually have to give a work reference. Acas says a reference is only required in limited cases: when the employer has agreed to it in writing, for example in an employment contract or a settlement agreement, or when the role is a financial services job regulated by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA).
Regulated financial services is the main exception to know. For senior manager and certified staff in FCA-regulated firms, the firm must obtain a regulatory reference covering the previous six years, as part of checking the person is fit and proper. That reference has to disclose matters like conduct breaches and disciplinary findings, so someone with a poor record cannot move quietly between firms (FCA, SYSC 22).
Two practical points follow. If you need a reference to be guaranteed, get that commitment in writing up front. And remember the law bites on content, not existence: GOV.UK and Acas both say any reference an employer does give must be fair and accurate, and Acas adds it must not be misleading. References are optional to give, but not optional to get right.
The key ideas
What a reference check is
It is the process of contacting a candidate's former employers or other named referees to confirm details (dates, job title, duties) and to learn about past performance, reliability, and conduct. SHRM treats it as part of past-employment verification and background screening.
When to do it
Run it late in the process, after interviews and around the offer stage. SHRM positions reference and past-employment checks as a final-stage verification step on candidates you are serious about, often as part of a contingent (conditional) offer.
Who to ask and how many
Prefer former direct managers, who can speak to real performance and conduct. CIPD guidance says two professional references are usually enough, one being the current or most recent employer. SHRM's toolkit leans toward at least three and prioritises direct supervisors. Verify dates and title with the previous employer's HR team.
The value and its limits
References confirm facts and can flag concerns. But they are often overly positive, a pattern known as reference inflation. SHRM documents favourable references given despite serious issues, and the Schmidt and Hunter (1998) meta-analysis ranked unstructured reference checks among lower-validity predictors. Treat references as one input, not the whole decision.
Structured checks can help more
Reference checking tends to be more useful when it is structured, with consistent, job-related questions for every candidate. More recent research suggests structured checks can link more strongly to work performance than the unstructured checks in older meta-analyses (Taylor and Francis, 2022). The exact strength varies by study, so treat this as a qualitative finding, not a fixed number.
Legal and data protection (general guidance)
This is general guidance, not legal advice. Check local law before you act. In the UK, taking up references is usually optional: GOV.UK says an employer does not have to give one unless a contract requires it or the role is regulated by the FCA or PRA. If a reference is given, Acas says it must be accurate, fair, and not misleading, and the ICO treats references as personal data under the UK GDPR and the Data Protection Act 2018. In the US, the EEOC says checks should apply the same standards to everyone and be job-related, and the FCRA adds disclosure and consent rules when a third-party agency is used.
How to run a reference check
Step 1: Get consent and explain the process
Run the check with the candidate's knowledge and consent. The EEOC and FTC note that in the US, when a third-party screening company performs the check, it can count as a "consumer report" under the FCRA, which requires a stand-alone written disclosure and the applicant's written authorisation before the report is obtained. This is general guidance, not legal advice; check local law.
Step 2: Collect the right referees
Ask for former direct managers, not just peers or personal contacts. CIPD suggests two professional references, one being the current or most recent employer. SHRM leans toward at least three and prioritises supervisors. A candidate offering only personal references can be a red flag.
Step 3: Verify the facts
Confirm employment dates and job title with the previous employer's HR team. SHRM notes that many companies use a neutral reference policy and confirm only dates and positions held, which is one reason references are often more useful for verification than for rich performance detail.
Step 4: Ask the same job-related questions
Use one consistent, job-related question set for every candidate. SHRM advises that questions must be specifically job-related, and you should not ask a reference anything you would not ask the candidate directly or put on an application. CIPD recommends a standard template request form to keep checks consistent.
Step 5: Document responses and weigh red flags
Write down what each referee says. Watch for vague or hesitant answers, a refusal to say they would rehire the person, or inconsistencies with the CV. These are common red flags.
Step 6: Treat it as one input
Combine the reference findings with interviews and other evidence. CIPD recommends treating references as one input among several, not the sole basis for the decision.
Reference-check questions that work
Use the same job-related set for every candidate. Keep the questions open so the referee can give detail.
- Can you confirm the dates this person worked with you and their job title?
- What were their main responsibilities in the role?
- How would you describe their performance and reliability?
- What were their key strengths, and what areas could they develop?
- How did they work with other people on the team?
- What was their reason for leaving?
- Were there any concerns about their conduct or attendance?
- If you had the chance, would you rehire this person?
Do this
- Get the candidate's consent before you contact anyone.
- Prefer former direct managers who can speak to real performance.
- Verify dates and job title with the previous employer's HR team.
- Ask the same job-related questions for every candidate (SHRM).
- Use a standard template request form to keep checks consistent (CIPD).
- Document each referee's answers as you go.
- Treat references as one input among several, not the whole decision.
- Watch for red flags like a refusal to confirm a rehire.
Common mistakes to avoid
Skipping consent
Running a check without the candidate's knowledge. The EEOC and FTC note that in the US, third-party screening can trigger FCRA disclosure and written authorisation rules. This is general guidance, not legal advice.
Trusting glowing references at face value
References are often overly positive. SHRM documents favourable references given despite serious issues, so a clean reference is not proof of strong future performance.
Asking inconsistent or off-limits questions
Asking different questions per candidate, or about protected characteristics. SHRM says questions must be job-related, and the EEOC says checks should apply the same standards to everyone (general guidance, not legal advice).
Accepting only personal references
Relying on character references rather than professional ones. A candidate offering only personal references, or refusing to name a former manager, is a common red flag.
Using references as the only signal
Basing the decision mostly on references. The Schmidt and Hunter (1998) meta-analysis ranked unstructured reference checks among lower-validity predictors, so they should sit alongside interviews and other evidence.
Privacy and GDPR when checking references
A reference check handles personal data, so privacy rules apply. This is general guidance, not legal advice, and the rules differ by country.
In the UK, the ICO treats a reference as personal data under the UK GDPR and the Data Protection Act 2018. You need a lawful basis to process it, and the candidate should know the check is happening. If a candidate later makes a subject access request, a confidential employment reference has a specific exemption from disclosure under the Data Protection Act 2018. You still have to judge each request on its own facts, though, rather than treat that exemption as automatic.
What to tell the candidate before you take a reference
Tell the candidate the check is happening, and give them privacy information first. Under Article 13 of the UK GDPR, when you collect someone's data you have to explain what you are collecting, why, your lawful basis for it, who you will share it with, how long you will keep it, and their rights. The ICO's recruitment guidance says you should let candidates know about the checks you will run on their information. A short privacy notice at the point they apply is the simplest way to cover this.
Pick the right lawful basis too. The ICO advises against leaning on consent in a hiring context, because the power imbalance between you and a candidate means consent is rarely freely given. For verifying history and taking references before an offer, legitimate interests is usually the better fit. Set out whichever basis you use in that privacy notice so the candidate can see it.
Acas adds that any reference an employer gives must be accurate, fair, and not misleading, and should avoid anything that could be used in a discriminatory way. Keep your own notes factual for the same reason.
In the US, the EEOC says background and reference checks should apply the same standards to everyone and stay job-related. When a third-party screening agency runs the check, the FCRA requires a stand-alone written disclosure and the applicant's written authorisation before the report is obtained.
For a deeper look at handling candidate data in recruitment, see our guide to GDPR and candidate CVs.
Frequently asked questions
When should you do a reference check?
Run a reference check late in the process, after interviews and around the offer stage. SHRM positions it as a final-stage verification step, often part of a contingent offer, on candidates you are serious about hiring.
How many references should you ask for?
Most recruiters ask for two to three. CIPD says two professional references are usually enough, one being the current or most recent employer. SHRM's toolkit leans toward at least three and prioritises direct supervisors.
Who is the best person to give a reference?
A former direct manager or supervisor is usually best, because they can speak to actual job performance, duties, and conduct. For dates and job title, the previous employer's HR team is often the most reliable source (SHRM).
Do you need the candidate's permission for a reference check?
Yes, you should run the check with the candidate's knowledge and consent. The EEOC and FTC note that in the US, when a third-party agency performs the check, the FCRA requires a written disclosure and the applicant's written authorisation first. This is general guidance, not legal advice, so check local law.
Are reference checks legally required?
For most roles, no. GOV.UK says an employer does not usually have to give a work reference. Acas says a reference is only required if it was agreed in writing, for example in a contract, or the role is a financial services job regulated by the FCA or PRA. FCA-regulated firms must obtain a regulatory reference covering the previous six years for senior and certified staff. This is general guidance, not legal advice.
What must you tell a candidate before taking a reference?
Tell them the check is happening and give them privacy information. Under Article 13 of the UK GDPR that means what data you collect, why, your lawful basis, who you share it with, how long you keep it, and their rights. The ICO advises using legitimate interests rather than consent as the lawful basis in a hiring context. This is general guidance, not legal advice.
Are reference checks accurate?
Not always. References confirm basic facts well, but they are a weak predictor of future performance. In the Schmidt and Hunter (1998) meta-analysis, reference checks scored 0.26 for predicting job performance, below structured interviews at 0.51 and work sample tests at 0.54. Sackett and colleagues (2022) later revised those 1998 figures downward, but references still rank below structured interviews. SHRM also documents references that stayed positive despite serious problems, a pattern called reference inflation.
Why do references often sound too positive?
This is reference inflation, or positivity bias. Referees may simply want to help a departing employee or stay cautious about what they say. SHRM documents favourable references given despite serious issues, which is why references work better as a verification and red-flag tool than as a predictor.
Are references covered by data protection law?
In the UK and EU, yes. The ICO notes references are personal data under the UK GDPR and the Data Protection Act 2018, with a specific exemption for confidential employment references. This is general guidance, not legal advice, so check the rules in your area.
The bottom line
A reference check is a steady, practical step, not a magic predictor. Used well, it confirms the facts on a CV and surfaces red flags before you hire. Used carelessly, it can mislead you with overly positive feedback. The fix is a consistent process: get consent, prefer direct managers, ask the same job-related questions, verify the facts with HR, and weigh what you learn alongside interviews and other evidence.
Keep the legal and data-protection points in mind as general guidance from sources like GOV.UK, Acas, the FCA, the ICO, the EEOC, and SHRM, and check the law in your area before you act. None of this is legal advice. Done this way, a reference check becomes a reliable, fair part of your hiring process rather than a box you tick at the end.
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Related reading: the recruitment process in 7 stages, structured vs unstructured interviews, and GDPR for candidate CVs.
Sources
- SHRM, Conducting Background Investigations and Reference Checks (Toolkit) (Accessed 2026): A reference check is part of past-employment verification and background investigation, used to protect the employer's investment in a new hire and as a defense against negligent-hiring claims; effective reference questions must be specifically job-related and consistent.
- SHRM, Past Employment Checks Are Critical to the Hiring Process (Accessed 2026): Reference and past-employment checks are positioned as a final-stage verification step, around the offer stage and often as part of a contingent offer, on candidates the employer is seriously interested in hiring.
- SHRM, Job References Can Be Misleading (Accessed 2026): Many companies use a neutral reference policy and confirm only dates of employment and positions held, which is why references are often more useful as a verification and red-flag tool; references can also be overly positive (reference inflation) despite serious underlying issues.
- SHRM, Don't Skip Reference Checking, Even if It Seems Pro Forma (Accessed 2026): Negligent hiring is a cause of action in which an employer can be liable for hiring someone it knew, or should have known, was likely to harm others; due-diligence checks are a key defense.
- CIPD, Pre-employment checks: Guide for organisations (Accessed 2026): Typically two professional references are sufficient, one being the current or most recent employer; CIPD recommends a standard template reference request form for consistency and treating findings as one input among several.
- Schmidt & Hunter (1998), The Validity and Utility of Selection Methods in Personnel Psychology, Psychological Bulletin 124 (1998): In the influential Schmidt and Hunter (1998) meta-analysis of selection methods, reference checks showed a validity of 0.26 for predicting future job performance, well below structured interviews (0.51) and work sample tests (0.54).
- Taylor & Francis (Int. Journal of HRM), The evaluation of personnel selection methods by HR practitioners (2022): More recent research suggests structured reference checks can show stronger relationships with work performance than the unstructured checks reviewed in earlier meta-analyses; the exact strength varies by study and should be treated as a qualitative finding.
- Sackett, Zhang, Berry & Lievens (2022), Journal of Applied Psychology 107(11) (2022): A 2022 re-analysis found earlier meta-analyses over-corrected for range restriction and overstated validity; after correction the exact 1998 coefficients dropped, though most higher-ranking methods still rank higher, so treat the older figures as dated and lead with the ranking.
- Acas (UK), What employers can say in a reference (Accessed 2026): General guidance, not legal advice. In the UK, if an employer gives a reference it must be accurate, fair, and not misleading, and should avoid information that could be used in a discriminatory way.
- ICO (UK), Subject access request Q and As for employers (Accessed 2026): General guidance, not legal advice. In the UK and EU, references are personal data under the UK GDPR and the Data Protection Act 2018; individuals have a right of access, though confidential employment references are subject to a specific exemption from disclosure.
- U.S. EEOC / FTC, Background Checks: What Employers Need to Know (Accessed 2026): General guidance, not legal advice. In the US, the EEOC says background and reference checks should apply the same standards to everyone and be job-related; and when a third-party agency is used, the FCRA requires a stand-alone written disclosure and the applicant's written authorization before the report is obtained.
- GOV.UK, References from employers (Accessed 2026): General guidance, not legal advice. An employer does not usually have to give a work reference, but if they do it must be fair and accurate; they are required to give one where there is a written agreement or the role is in a regulated industry such as financial services.
- Acas (UK), Providing a job reference (Accessed 2026): General guidance, not legal advice. An employer only has to give a reference if it agreed to in writing (for example in a contract or settlement agreement) or the role is a financial services job regulated by the FCA or PRA; references should be requested after a conditional offer and with the applicant's permission.
- FCA (UK), The Senior Managers Regime (Accessed 2026): General guidance, not legal advice. FCA-regulated firms must obtain a regulatory reference covering the previous six years for senior manager and certified staff as part of assessing fitness and propriety (SYSC 22), disclosing matters such as conduct breaches and disciplinary findings.
- ICO (UK), Employment practices and data protection: recruitment and selection (Accessed 2026): General guidance, not legal advice. Under Article 13 of the UK GDPR you must give candidates privacy information when you collect their data (purpose, lawful basis, sharing, retention, rights); the ICO advises using legitimate interests rather than consent in a hiring context because of the power imbalance, and says candidates should be informed about checks on their information.