References
There are number of employment law issues in relation to supplying references and this is an area where employers can be uncertain of both their obligations and their potential liabilities. From an employment law perspective, there is no legal obligation to provide a reference for an ex-employee. As an employer you could decide to make it company policy that you do not give references. However, if you do so, you must ensure that the principle is applied to everyone without exception. If you do not, you may find you will face an employment law claim for discrimination.
In general, most employers do chose to provide references but are wary about potential liability to the new employer or to the ex-employee. The writer of a reference owes a duty of care to both the ex-employee and the potential new employer.