It is best just to give a factual reference, with the dates of employment and the position of the employee. If you give more information, however, make sure that the reference is fair and accurate, and not misleading.
You are not required by law to give any reference at all. However, a refusal to give a reference (for example, where the employee has raised issues of sex discrimination during employment) could in itself give rise to a claim for victimisation. The Court of Appeal has recently ruled that an employer who refused a reference to a 'whistleblower' was guilty of just such illegal victimisation.
You owe a duty of care to the ex-employee, to ensure that the reference is not prepared carelessly or negligently. However, you also owe a duty of care to the prospective employer. You could have a liability to either party, if they suffered loss because the reference was misleading or inaccurate.
