Employee References

First published on Thursday, Jun 04, 2020

Last updated on Monday, Oct 03, 2022

An employee reference is a valuable tool to utilize for departing employees. It is good practice to provide a reference for an employee leaving to assist them with securing a new job, whether they resigned or were terminated. Moreover, employees who have left your company may come back later to request a reference.

It is important that you understand what to include in a reference to avoid potential legal liability.

In this guide, we’ll explain what a reference is, tips on how to write a reference letter, and laws regarding reference letters.

What is an Employee Reference?

An employee reference is a statement of an employee’s work ethic, skills, abilities, and achievements during their time with your company. A reference can be in the form of a written document such as an employee reference letter or can be verbally communicated through a phone call with the new employer.

A reference is typically communicated by a manager or supervisor who directly worked with the employee. The goal is to assist the employee with finding a new job.

Am I Required to Give an Employee Reference?

In Canada, there is no legal obligation under employment standards legislation that requires you to provide an employee reference. However, providing a reference letter is in your best interest, especially for good employees.

On the other hand, it is recommended that you provide a reference letter confirming employment for employees terminated without cause to assist them with finding new work. The sooner the employee finds new employment, the less common law termination pay you will be required to provide. This is commonly referred to as mitigation.

Providing a reference for an employee helps to ensure the working relationship ends on a positive note.

How do I write a Reference Letter?

There are various methods of writing a reference letter. You can draft a character reference letter for an employee that highlights the employee’s abilities, such as working well in a team. Alternatively, you can draft an experience-based reference letter that highlights their accomplishments with the company.

A reference letter should help persuade the reader into hiring the applicant. You should provide reasons and examples as to why the applicant would be a good hire. A reference letter should be professionally written and should be drafted on company letterhead.

The following are a few important points to include in a reference letter for an employee:

  • The purpose of writing the reference letter.
  • Your relationship with the employee.
  • How long the employee worked for your company.
  • The employee’s strengths.
  • Your contact information.

Can you Give Bad Reference for a Former Employee?

Sometimes, an employee may request a reference but there were issues with the employee. Maybe the employee did not work well with others or was persistently missing deadlines.

It is not illegal to give a reference for an employee that is bad or highlights issues as long as the reference is the honest truth and is not malicious.

Prior to drafting any bad reference, you should take into consideration the following:

  • Investigate to determine the truth of the contents of the reference.
  • Determine if there is any malice in drafting the reference.
  • Anticipate how the reader would interpret the bad reference.

Often, a bad reference will lead to an employee not being hired. However, it is strongly recommended that you mix negative and positive points.

Can I be Sued for Giving a Reference?

Many employers do not give references for the fear of being sued by the former employee and in some cases, by the new employer.

One of the main concerns is being sued for defamation when giving bad references. Defamation is a legal doctrine that refers to written or verbal communication that injures a party's reputation before a third party.

For example, an employer provides a reference letter that states the employee is lazy may be considered defamation. Being lazy may suggest that the employee does not like working or meeting their deadlines. Employers do not want to hire lazy workers and therefore, the reputation of the employee may be tarnished.

Bad references are inherently defamatory because they damage the employee’s reputation. As an employer, you have the protection of the ‘truth’ and ‘privilege’ defences available to you.

What is the Protection of Truth Defence?

The truth or justification defence is available for employers if they can prove that the bad reference is true.

For example, if you claim the employee is persistently late, you must show that this true (e.g. prove it via a clocking system).

What is the Protection of Privilege Defence?

The privilege defence is available for employers if the bad reference was not made with malice or reckless disregard. You must show they had an honest belief that led them to write the bad reference.

For example, stating an employee is bad at meeting deadlines is your honest belief and such statement was not made with any malice or reckless disregard from the truth.

Other Concerns with Bad References

Another concern that employers have when giving bad references is that they may be sued for making it harder to secure new employment. Providing a bad reference – although made truthfully and without malice – may persuade employers to not hire that former employee.

The employee may blame you for their inability to secure new employment because of that bad reference. Be aware that providing a good reference when the employee may have been problematic can lead to liability from the new employer.

By misstating or overstating the employee’s skills and abilities, the new employer may sue you for what is called negligent misrepresentation. This is a legal doctrine that the injured party relied on the statements you made which were untrue, inaccurate, or misleading to their own detriment.

While there are some legal risks associated with providing references, albeit rare, companies should always strive to provide them. Employers may choose to provide what is called ‘neutral references’ which simply confirms that the employee worked at the specific company, for how long, and their role.

What Questions Should I ask in a Reference?

If you are in the middle of recruiting new employees, you should always require them to provide references. It is best practice to follow up with all references and ask for more than one reference to get different perspectives on the employee.

When speaking to references verbally, you should always have a list of questions prepared prior to speaking with them. Some questions to ask an employee’s reference may include:

  • How long did the former employee work for you?
  • What were the former employee’s responsibilities?
  • What were the employee’s weaknesses?
  • What additional training could they benefit from?
  • How did the former employee respond to constructive criticism?

You should always keep track of their answers and be alert of any inconsistencies in their references. Inconsistency in references may raise red flags about the truthfulness of the applicant.

Get Advice about Employee References with BrightHR

Employee references are an important tool you can use when an employee exits the company. It can assist former employees with finding new jobs. Moreover, it may also reduce any termination pay if the former employee finds a new job.

It is important that you tell the truth and do not overstate any qualities when drafting employee references in order to protect you from any legal claims.

If you need assistance on how to draft an employee reference, our BrightAdvice service allows you to receive quality advice on any employment issues you may have.

Contact us at 1 888 220 4924 or book a demo today.

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