Canada: Truth Or Lies: Providing Employment References

Last Updated: August 7 2019
Article by Mary Lou Brady

Are you one of the growing numbers of Canadian employers who are reluctant to provide employment references for former employees? Concerned you are going to be sued by a former employee for defamation if your reference is not positive enough? Concerned that you are going to be sued for misrepresentation by the employer who hires a former employee if things don't jive with the reference you provide?

What is Considered to be an Employment Reference?

An employment reference is not the same thing as a confirmation of employment (aka letter of employment/service). The latter generally only confirms such things as length of service, positions held, and key duties or responsibilities in such positions. I refer to this as providing "name, rank and serial number".

An employment reference goes further than this. It also includes positive comments – that is when the employment reference is positive – about the employee's skills, abilities, experiences, attitude, working relationships, attendance, involvement, commitment and/or other contributions to the business, and is designed to assist the employee to find employment elsewhere. When such additional details are not provided, there is often an assumption (either rightly or wrongly) made by the prospective employer that these additional details are being excluded for a reason – that there were problems with the employment relationship and, in particular, that the former employer has nothing positive to say about the employee.

So Why Provide a Reference?

Providing a reference often assists an employee post-termination with their re-employment prospects. The quicker that the employee obtains replacement employment, the less likely that the employee will commence legal action against the former employer for wrongful or constructive dismissal and, even if litigation is commenced, the less damages that the employee will suffer for which the former employer will be liable.

Conversely, the refusal to provide a reference letter has resulted in courts awarding higher damages to terminated employees.

Perhaps the best commentary about this can be found in the 2008 Ontario trial decision of Deplanche v. Leggat Pontiac1. In that case, at the time of termination, the 57-year old former Business Manager had been employed for 2 years, earning annual compensation of approximately $63,000. The employer refused her request for a reference letter, citing that it would be inconsistent to do so after terminating for performance reasons. As a result, she did not apply for other employment in the same geographic area, because she felt that it would be impossible to get hired without a reference. In considering the reference letter issue, the court went on to say:

In assessing the appropriate period of notice, another factor that should be considered is the refusal to provide a letter of reference.

In cases where an employee has been terminated and there is no issue as to cause, in most circumstances the employer and former employee have a common interest in seeing that the former employee is re-employed at the earliest opportunity. In addition to the obvious benefit to the former employee, re-employment ensures that the employer's exposure to damages will be minimized. For this reason, many, if not most, employers are quite willing to provide positive references, even if the reason for termination was performance-related. . . An employer is not obliged to provide outplacement services, nor is an employer obliged to provide a letter of reference. However, an employer will run some risk if it fails to provide either.

. . .

A failure, or refusal, as here, to provide a letter of reference adds another dimension. . . It is expected that people will have references from their previous employers. If they do not, questions will be raised in the minds of prospective employers. An employer . . . must know that a failure to provide a reference will make it more difficult for a terminated employee to secure alternate employment. For this reason, a longer notice period is warranted where a reference is refused. . .

A refusal to provide a reference is relevant in terms of another issue, namely, its effect on the issue of mitigation. It will be more difficult for the employer to argue that the employee has made insufficient efforts to mitigate his or her loss where the employer has made it more difficult for the employee to secure other employment. This is particularly so because it is the employer who bears the onus of proof on the issue of mitigation . . .

I do not accept the employer's submission that it was appropriate for the employer to refuse a reference because the reasons for the dismissal were based on performance. The Plaintiff was not dismissed for cause. No employee is perfect, but references are given as a matter of course. If a reference is not given, the message to prospective employers is clear – the employee should not be hired.

The court then proceeded to award an 8-month notice period to this former Business Manager, taking the refusal to provide a reference letter into consideration.

Other examples include:

  • The 2018 BC trial decision of Greenlees v. Starline Windows Ltd.2, where the court awarded a 6-month notice period to a 43-year old Outside Sales Rep who had been employed for only 6 months and earned approximately $58,000 annually. One of the factors taken into consideration by the court in awarding this disproportionately high notice period was the employer's refusal to provide a reference letter, which hampered his job search.
  • The 2019 Ontario Court of Appeal decision of Ruston v. Keddco Mfg.3, where one of the issues on appeal was the appropriateness of a 19-month notice period that the trial court had awarded to a 54-year old President with 11 years of service. The trial court considered various factors in awarding this notice period, including the employer's failure to provide a reference letter, making it less likely for the former employee to find replacement employment. The Ontario Court of Appeal concluded that a 19-month notice period was appropriate and supported by thorough reasons well-grounded in the evidence before the trial judge.

When Not to Provide a Reference?

When an employee has been terminated for cause or in circumstances that reflect poorly on the employee, it is common to enter into an agreement – often part of a Separation Package – that restricts what the employer will and will not say about the former employee to prospective employers. In such cases, it is important for the employer to stick to what has been agreed upon. If this means only confirming "name, rank and serial number", then this is what the employer needs to do. No reference, good or bad, would be provided.

Absent such an agreement, I generally tell employers that, if they have nothing good to say about a former employee, it is better to say nothing at all and, in those situations, to keep comments to "name, rank and serial number". I caution employers to avoid answering the popular "would you rehire him?" question when the answer is no.

That said, I go on to say that, in my experience, it is rare that an employer cannot find something truthful that is positive to say about a former employee. The employee may not have been a perfect employee and the employer may not "rehire" him if the opportunity arose, but this does not mean that everything about the employee was bad. The employee may be a fine employee under different circumstances somewhere else.

Can You be Sued for Giving a Reference?

Of course you can.

That said, it is highly unlikely that you actually will be sued for providing a reference. Canada is not a litigious nation like our friends south of the border. After practicing employment law for more than 20 years, I cannot think of one single situation where legal action was commenced against any of my employer clients for providing references. It is much more likely – as set out above – that not providing a reference will be the basis of a claim for increased damages as part of a wrongful dismissal action.

Even if sued, if you provide an honest reference that is substantially true and provided without any malicious intent, then you should have a defence, even if the reference was negative.

In the recent trial decision of Papp v Stokes4, Papp brought a claim for wrongful dismissal and defamation against his former employer. Papp's employment was terminated on December 19, 2013 and, the next day, his supervisor agreed to provide a reference for future job applications. However, between December 2013 and May 2014, the supervisor learned negative information about Papp – in particular, that he did not work effectively with others.

In May 2014, Papp applied for a new position and put the supervisor down as a reference. When contacted by the prospective employer to answer a questionnaire, the supervisor indicated that the organization had been displeased with Papp's quality of work and that he did not work effectively in teams. The job application was rejected on the basis of this reference.

The trial judge concluded that the supervisor's statements were defamatory because the three elements necessary to prove defamation were established; namely, (1) the statements would tend to lower Papp's reputation in the eyes of a reasonable person; (2) the words in fact referred to Papp; and (3) the words were published, meaning that they were communicated to at least one person other than Papp. However, the employer successfully raised defences to the defamation claim.

First, truth is a defence to defamation, and the trial judge concluded on the evidence that the statements were substantially true. Second, the trial judge held that the statements were protected by qualified privilege. Qualified privilege is a defence to defamation that applies in limited circumstances to rebut the presumption that apparently defamatory words were spoken with malice. Qualified privilege is only available to a defendant if the words were spoken without malice – a condition that the trial judge considered satisfied in the circumstances.

In March 2018, the Divisional Court upheld the trial decision on appeal.5

The primary takeaway for employers is that providing honest references should not attract liability for defamation – so long as the reference is substantially true and is provided without any malicious intent.

If you have questions about, or need any assistance with respect to, providing employment references, you are encouraged to reach out to any member of Siskinds' Labour & Employment Group for advice and direction.

These materials were prepared, in part, with the assistance of Liam Ledgerwood's blog post, Verbal References: The Truth Shall Set You Free.

Footnotes

1 2008 CanLII 15897 (ON SC), 2008 OJ No 1420 (QL).

2 2018 BCSC 1457 (CanLII).

3 2019 ONCA 125 (CanLII).

4 2017 ONSC 2357.

5 Papp v Stokesl, 2018 ONSC 1598 (Div Ct).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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