It is common practice for employers across all industries to provide references to their former workers' prospective employers, say human resource experts.
But the employee must be informed and his consent secured.
Sensitive information such as salary, address or marital status should also not be divulged, in accordance with the Personal Data Protection Act. Information that is confidential to the company should not be given out as well.
What a reference check should contain is information about a former employee's performance - an appraisal that is often subjective.
In the case of former AXA insurance agent Ramesh Krishnan, AXA suggested to his prospective employer Prudential that he had been involved in serious misconduct.
But the Court of Appeal found that information regarding this "misconduct" was incomplete, and insufficient details were provided.
Mr David Ang, director for corporate services for Human Capital (Singapore), told The Straits Times that when AXA made reference to the purported misconduct, it should have elaborated and given evidence, unless such details compromised the confidentiality of the company.
He added that while former employers can decide what information to include in references, they should ensure that the information given is accurate.
Mr David Leong, managing director of People Worldwide, said reference checks are more commonly conducted on employees in more senior positions.
Typically, prospective employers do not directly obtain references from former employers, but go through recruitment agencies.
Mr Leong said former employers are not legally obligated to give reference checks.
However, specifically for the financial services sector, it is a regulatory requirement for prospective employers such as Prudential to conduct reference checks on employees with former employers, noted an advisory by law firm Baker McKenzie which is not involved in Mr Ramesh's case.
The prospective employers have to obtain a Representative Notification Framework licence from the Monetary Authority of Singapore for new hires. This licence certifies that financial advisers are in good standing.