Letters of Reference are an Invaluable Tool

Date: 2006
Author: Daniel A. Lublin
Publication: Metro
For many of my recently dismissed clients, a good letter of reference is invaluable to finding new employment. In fact, when I represent employees, I customarily request a supportive letter of reference in my initial negotiations with a company and, many times, I take an active part in drafting the reference to my client’s satisfaction.
Alternatively, when acting for employers, I generally advise them to offer a letter of reference at the outset of a termination.
Legally speaking, though, there is usually no law requiring an employer to provide a commendation of performance. Practically speaking, however, a reference letter given to a departed employee could reduce an employer’s exposure in a wrongful dismissal action – and reduce the damages the ex-employee is entitled to by an equivalent amount. This is because in a wrongful dismissal lawsuit, any replacement income that the employee earns will offset any potential damages for lost severance pay.
So with these reasons for providing a reference in mind, why is it so often the case that employers are wary to vouch for former employees, much less put their compliments in writing? The answer is that for a host of reasons, employers can actually encourage liability rather than diminish it. These include:
Risk of a contradiction: An organization’s claim that there was just cause or performance issues leading to dismissal may conflict with a favourable reference. Courts have held that an employer’s praise of an employee to other employers is inconsistent with its claims the employee was deficient.
Misrepresentation: In a situation in which a former employer overstates or misstates the abilities of the employee, and the new employer relies on those misstatements, the former employer could be sued for the false representation.
Slippery slope: One recent British Columbia judge ruled that there is no obligation to provide an employee with a positive letter of reference because the risk of increased damages could lead to a rise in misleading references.
But do the same rules apply to an employee with a stellar performance in their most recent employment? Not really. If the employee can establish that she was unable to locate another job as a result of the employer’s refusal or unreasonable reluctance to provide a positive written or oral reference, or if a letter was promised and not provided, courts have been willing to increase the damages awarded.
Recently, the Supreme Court of Canada confirmed that former employees can sue ex-employers for statements that impair an individual’s employment prospects. Therefore, I try to confine employers by demanding that all oral references be consistent with the contents of the written letter.