Legal hot water in giving a bad reference

by Elizabeth Barnard03 Sep 2012

In cases where an employee’s contract was terminated for performance issues, it is unlikely HR would then provide a positive reference when contacted by any future employers.

Yet, according to one workplace lawyer, providing a so-called ‘kiss-of-death’ style reference may be a ticket to legal hot water, including possible accusations of defamation, misrepresentation or an invasion of privacy. “Intentionally providing inaccurate information about someone or withholding critical information about an employee could land you in trouble with a claim for misrepresentation from the new employer with the potential to seek compensation for damages,” Peter Ferraro, senior associate for Harmers Workplace Lawyers said.

A central concern for HR is in the disclosure of private information, and there is a fine line between providing too much or not enough information about a candidate’s skills, previous experience and their ability to do the job. Whilst many referees feel compelled to provide a glowing reference for a previous employee, Ferraro recommended that if employers or HR are going to provide a reference, sticking to the basic facts is sometimes the safer option. “Former employees are under no legal obligation to provide a reference; simply confirming the details of a person’s employment is perfectly acceptable,” Ferraro said. In cases where HR may wish to provide a character reference, it should be done cautiously as there is potential to be held liable for defamation if an unfavourable reference meant someone didn’t get a job.

In addition, intentionally providing inaccurate information about someone or withholding critical information about an employee could be legally problematic if a future employer claimed compensation for having a candidate misrepresented to them. “My advice to employers regarding their duties and obligations is, if in doubt about a particular employee, don’t provide a written reference,” Ferraro said.

In turn, many organisations now have a ‘no written reference’ policy, instead only providing a statement of employment certificate, which places an even greater importance on the validity of verbal references.

When employers are asked to be a referee:

  • Provide factual and truthful information and avoid disclosing personal details about the candidate’s details that may hinder their chances of securing a role
  • Don’t talk up a poor performer for the sake of placing them elsewhere
  • If you can’t answer the questions honestly, or you don’t want to be negative, don’t answer the questions at all
  • Instead of providing a character reference, this could be handled by saying “I know Sharon in a professional capacity and to my knowledge she did her job properly.”

Advice for receiving references when hiring:

  • Treat feedback received about any potential employee as only a component of the assessment process and ensure that you verify factual information such as education qualifications
  • Resist the urge to ask around about a potential employee – this could be seen as an invasion of their privacy
  • Ensure you have the candidate’s approval before proceeding with reference checking.


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  • by Sebastian Harvey 4/09/2012 10:54:28 PM

    The 'asking around' issue is interesting. Which part of the Privacy Act would this be breaching? The practice is fraught with problems, including the reliability of the evidence and the source. I'd be as concerned for the anonymous referee providing information and not knowing that the information could be used in a selection decision. However, I can think of ways that the discreet inquiry could be managed tactfully in the initial contact and fairly through judicious follow-up. Would this still be unlawful? If so, what do recruitment head-hunters think about it?

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