Giving honest employee references 'a narrow line to tread,' says employment lawyer
A recent decision by the Ontario Superior Court of Justice, Divisional Court is a reminder to employers that seemingly private communication about former employees can be liable for defamation claims.
In 2020, the employer, Paramount Safety Consulting Ltd., sent a letter via email, fax and mail to a third-party staffing agency, explaining why it was terminating an employee the agency had recommended. When the letter was obtained by the employee, he added a defamation claim to his already-in-progress wrongful dismissal claim to defamation.
A small claims court deputy judge dismissed the defamation claim, a decision which the divisional court has now set aside.
Reference letters are prone to defamation claims against employers
How to navigate negative reference letters for underperforming employees is a common concern for HR professionals, says Andrew Monkhouse of Monkhouse Law in Toronto.
It’s an issue that exists on “both ends of the spectrum,” he says, explaining that It’s not only a fear of being too negative in reference letters, but too positive as well.
“A lot of HR professionals are concerned that a too-positive reference might generate a claim against them,” he says. While such claims don’t yet exist, it is a “live concern within the industry,” he adds, “which is why a lot of companies choose to have policies on providing fairly basic reference letters.”
These “biographic confirmations of employment” are rote letters outlining the facts of a former employee’s role without revealing meaningful information. This makes it more difficult for hiring managers to make informed decisions about potential hires, Monkhouse says.
“It is a very narrow line to tread, and unfortunately because of that, we see a lot of companies heading towards providing what we call ‘biographic confirmations of employment’, which unfortunately don't provide a lot of information.”
Defamation recommendations for HR
The question the appeal judge addressed in his decision was whether the communication was “published”; in his decision, he affirmed the Supreme Court of Canada’s test for defamation, laid out in a former case that stated a communication need only be sent to “at least one person other than the plaintiff” in order to be defamatory.
The other two factors deciding defamation according to the Supreme Court are whether the published words lower the reputation of an individual in the eyes of a reasonable person, and if the words clearly refer to that individual.
A typical defence against defamation is qualified privilege, says Monkhouse – a defence applicable to HR professionals due to the nature of their roles. However, qualified privilege does not mean HR has carte blanche to say what they please about an underperforming former employee.
“The standard laws of defamation apply. It's not a special circumstance because it's an employment relationship, you aren't allowed to just say your mind,” he says.
“You should be making sure that any comments that you make about other people are truthful, not malicious, and can be backed up, and that they are fair comments that are not an attack on that person.”
To avoid defamation claim, be objective
The letter in question referenced an earlier phone call between the two parties, the court found, and although private in nature and sent to only one person, passed the Supreme Court test for publication.
For this reason, a valuable rule of thumb for employers is to treat every communication about employees as public, Monkhouse says, as well as remaining truthful and sticking to objective facts.
“When giving references or speaking about past employees, it's important to be truthful and to understand that in certain circumstances, the employee might take issue with what you said,” he says, adding that every piece of information in a reference letter should be backed up with undisputable fact.
“One of the things that HR should consider is that any reference they give might get back to the employee that it's about, so they should consider that when writing it and make sure that they consider that those comments might see the light of day,” he says.
“It's generally better for a past employer if their employees do well. The golden rule – ‘If you don't have something nice to say, it might be better to not say anything’ – might well apply.”
Avoid defamation from reference letters by being balanced
While offering valuable references to other employers is important, Monkhouse says, it is also beneficial to organizations to be balanced in their reviews.
Many large employers err on the side of less-is-more, he says, as it’s in the best interest financially if said employee is quickly re-employed.
“Generally, especially if you terminate an employee, it's often better for the company if that employee gets a new job sooner rather than later,” says Monkhouse.
“It's actually worse financially for a company to try to negatively portray their past employee. Companies should actually, from a legal perspective, want their employees to get a new job, and then they might well owe them less severance or notice pay.”
