The English playwright Oscar Wilde sardonically commented, “No good deed goes unpunished.”
And this holds for employment references. In two recent Ontario cases, employers have been sued for the references they provided former employees.
No employer is under any legal obligation to provide a former employee with a reference. And no court has the authority to order one. So providing one is the product of a conscious decision.
Why would an employer decide to provide a terminated employee with a reference?
Compassion, for one. The employer may feel badly for the termination and wish to assist the employee in moving on to their next position.
Another reason may be more opportunistic. If the employee is quickly reemployed, the employer has less exposure to a potential claim for wrongful dismissal.
Some employers brandish favourable references as bargaining chips in negotiating smaller severance packages.
Two distinctions need be made.
There are two types of references: One delineates the bare details of the former employee’s employment, i.e. period of employment, position occupied, perhaps salary. The other describes the employee’s strengths and provides positive commentary.
The issue of references only arises in the context of employees terminated without cause. No reference should be provided to any former employee terminated with cause.
Sometimes reference checkers are actually doing so at the behest of the employee, to build up a case and disprove any allegations of cause. Employers should consider, when receiving a reference call, that they might be being set up. For the same reason, tight control should be placed upon who is permitted to provide references. It should usually be a designated person from the HR department to prevent a sympathetic but credulous supervisor providing an undeserved reference to assist a former subordinate.
But even with employees terminated without cause due to performance or attitudinal problems (not amounting to cause), care should be taken.
If the reference is damaging and prevents the employee finding work, the employer is protected from being successfully sued if they honestly believed what they were saying and were not entirely negligent in what they stated.
But it is not only the former employee who may sue. If what they say is untruthful, the new employer may sue if they suffer damages from relying upon what they were told. A reference that is incomplete may also be false if it tells a half truth or leaves out obviously relevant information. If the reference is knowingly dishonest there is no defence.
What is an employer to do if a reference is requested by a former employee or prospective employer? If the former employer intends to provide one, here are my suggestions:
— Tell the truth. Tell the terminated employee in advance what the reference letter will contain. This usually occurs when the termination package is negotiated. If the employee does not agree with its contents, it is best not to provide any reference beyond the bare-bones variety.
— Potentially use it as a negotiating tool. An employer may be able to negotiate better terms with the dismissed employee if an acceptable reference letter is provided. This must be approached with caution. Some courts have awarded additional wrongful dismissal damages if it is found that an employer withheld a deserved positive reference.
— If an agreed-upon reference is provided, it should be in writing and the former employer should ensure that any oral information provided is consistent.
— If there is an oral reference subsequently provided by the employer, it should make contemporaneous notes of the conversation to confirm what was asked and what was stated to the party seeking the reference.
Wanting a positive reference, what should a dismissed employee do? I recommend that the terminated employee prepare a draft that he or she believes the employer will agree to. Obviously list any positive characteristics and the reason for the termination if it does not portray the employee in a poor light.
References can be a powerful motivational tool if your employees know that the quality of their performance will follow them throughout their career.
• Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers. He practises employment law in eight provinces. The most recent of his six books is War Stories from the Workplace: Columns by Howard Levitt.