The law around references given to prospective employers by ex-employers is changing. This paper is an update of what the law is now.
Why do employers give references?
There are a number of reasons for employers to give references for departing employees. Employers want to stay on the good side of a productive employee who is moving to other employment, because that employee may, at some point in the future, come back. Employers may want to reward an employee who has done good work. Employers may give a reference because it is the "right thing" to do.
There may be less altruistic reasons. An employer may provide a glowing reference for a less than productive employees to assist in getting rid of a problem employee or to allow him/her to mitigate a potential damage claim. Occasionally, a reference may be part of a termination agreement.
Why do employers look for references?
Most prudent employers would not hire someone without checking with prior employers. The best predictor of future performance is past performance. The employer wants to know the track record of the employee, and not only about their competency, but also about their punctuality, personality, and reliability.
Risks of giving - and not giving – references
Should an employer give a reference? There is no positive obligation on an employer to provide a reference for an ex-employee. On the other hand, the failure of an employer to give a reference has been found to be a factor courts will consider when determining the period of reasonable notice in a wrongful dismissal case. The lack of a reference may mean a longer period of notice is awarded, although that factor may not be articulated by the Court.
In the past, failing to give a reference has also been a basis for awarding additional damages. In light of the Keays decision of the Supreme Court of Canada from 2008, this may still serve as grounds for additional damages, although an ex-employee will have to prove that the failure to give a reference directly resulted in additional damages.
There are also risks in giving references. Whatever reference is given, and however it is given, it must be truthful. There have been cases where an employer has been sued for giving a false reference. There have also been cases where writers of 'bad' references were found to have defamed the person for whom the reference was written.
How Privacy legislation affects the writing of references
In Alberta, private sector employers are free to provide and give references without obtaining consent of the employee in question. That said, employers are still limited to only providing (or soliciting) information which is directly related to the employment relationship, and which is reasonable for the purposes of determining eligibility for employment.
For employers in the public sector, or federally regulated employers (including most employers in the three northern territories), the rules with respect to references are different. Generally, consent is required from the employee before providing or seeking a reference. As with private sector employers, even when an employee has consented to an employer providing or seeking a reference, the shared information should be limited to information directly related to the employment relationship.
This difference between private and public/federally regulated employers sometimes affects the ability of an employer in the private sector to obtain a reference from a prospective employee's prior employer. As such, it is a good practice to get consent to seek references from all prospective employees during the application process. That way, employers will not need to take time to later seek consents if they are required.
Privacy legislation may also affect whether a reference is confidential. A reference is personal information of the subject of the reference. If the referee does not specifically identify that the reference is intended to be confidential, it is possible that the employee may be entitled to access any written version or written notes of it. In some circumstances, it is possible that even explicitly confidential references may be available to the employee.
It is important to remember that any personal information which is collected should be destroyed when it is no longer required. As such, you should consider destroying collected reference information once any limitation period for an employee seeking to challenge the refusal to hire has expired.
If an employer is going to give references, it should have a policy, or standardized reference process. A policy helps to ensure consistency. A policy may also help an employer avoid liability in a case where a reference is given by someone not authorized to do so, and which is not in keeping with the employer's policy.
A policy should specify who will give references, and prohibit others from giving any references, whether orally or in writing. The policy should specify what should and should not be included in a reference. First and foremost, references must be accurate. References should be limited to employment-related information – they should not comment on other issues, such as an employee's marital status, age or level of physical or mental fitness unless directly related to work performance.
The policy should also require that copies of references, both written ones and notes of verbal ones, be retained at least until any limitation period for challenge of the hiring process has expired. In the event that an ex-employee challenges a reference, or later requests a copy of the reference that was given, having a written record of what the reference was will be needed. After that, however, it may be prudent to destroy the references.
Employers should also require, as a practice, consent from job applicants to seek out references. This consent may be required to satisfy legal requirements concerning the collection of personal information. That consent, which may be included in a job application form, should also give the applicant the option of allowing the employer to seek references in addition to those that the applicant may list.
Finally, as employees may be able to access personal information obtained through the reference process, all employers should be thoughtful and careful in providing references. Although truthfulness was always important when providing a reference, it is even more important now in the age of access to personal information.
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.