A House of Lords judgment could hit universities and colleges that have sent out negative references containing unsupported opinion.
Michelle Brenton, a graduate from the Polytechnic of Wales, now the University of Glamorgan, last week won an out of court settlement for such a reference.
Mrs Brenton, who graduated with third-class honours in computer programming in 1989, had to wait five years to see her reference. Her lawyer, Steven Britton, said the judgment, Spring v Guardian Assurance, 1994, overturned previous rulings that confidential references were privileged and need not be disclosed to aggrieved employees.
Mrs Brenton sued Mid Glamorgan County Council, which was responsible for the polytechnic at the time, for nearly Pounds 100,000 damages for lost wages after her first prospective employer cancelled her job offer the day before she was due to start. She learned her course leader had written a letter which referred to her "personal attitude and emotional stability".
She said she experienced marital difficulties during her studies and went through a divorce during her final year. She accepted Pounds 25,000 in compensation, with additional legal costs estimated at Pounds 10,000.