Employer Reference Letters: What Are You Afraid Of?

When it comes to writing reference letters, the current employer mindset seems to be “If you can’t say something nice, don’t say nothing at all” – also known as Thumper’s Rule. Some employment lawyers have echoed this advice.

It seems that an almost paralyzing fear of the (more imagined than real?) repercussions of giving a former employee a negative reference has led many employers to adopt the practice of writing neutral reference letters, which merely confirm that the ex-employee worked for the employer in a particular role, for a particular time period.

But is this practice really warranted? What are employers so afraid of?

In an effort to debunk the myth of the bad reference letter, we consider below the current state of the common law on employer reference letters, and offer our own “two cents” on the issue.

In Canada:

  • There is no legal obligation for an employer to provide a reference letter, of any kind.
  • However, if a court finds that an employer’s refusal to provide a reference amounted to “bad faith” conduct which caused the employee harm, this may entitle the employee to aggravated or punitive damages.
  • In some cases, a court may also increase an employee’s notice period if the lack of a reference letter negatively affected the employee’s efforts to find a new job. Some courts have specifically included the failure to provide anything more than a “perfunctory” reference letter as a factor to consider in increasing the notice period.
  • An employer offering to provide a letter of reference conditional on the employee’s resignation has been held to be conduct which may warrant punitive damages.

Given the possible downside to withholding a reference, what stops many employers from providing a reference letter?

Some of the (legal) concerns we’ve heard include:

  • If an employer misstates an employee’s abilities, it could be sued by the new employer for negligent misrepresentation.
  • An employee could sue its former employer for statements that impaired the employee’s job prospects.
  • Other possible employee claims against its ex-employer could include defamation or privacy violations.
ref letter 3

In response we say…could this be a tempest in a teapot? While we will concede that the above are potential risks of providing post-employment references, they are not only remote (we are unaware of any Canadian case involving a misrepresentation claim by a future employer against a former one), but easily managed. And, as the case law summarized above suggests, the risks of refusing to provide a reference are much greater.
So, mindful of all of the above, what’s a responsible employer to do? Here are some tips for those of you wishing to maintain reference writing as part of good business practice:

  • Establish a policy regarding the type of letters you will provide to former employees, communicate this policy to employees, and apply it consistently.
  • Offer to write a letter for the departing employee, and get his or her consent to do so.
  • Make sure the letter is true, accurate, and written in good faith. Where possible, quote the employee’s performance reviews.
  • Do not create a false impression of the employee’s performance by including only positive information if negative information exists.
  • Give one person or department within your organization responsibility for providing reference letters and responding to follow-up calls from prospective employers. The responsible person should also rely on the written reference when providing a verbal reference.

Have questions about a reference letter? Contact us!

Want to hear more about the pros and cons of reference letters? Watch Simon’s video, Reference Letters: Yay or Nay? below!

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