Reference Letters

Published: 09th April 2009
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When an employee is terminated from a job, employers often debate about whether or not to provide the employee with a positive letter of reference. The reasons for refusing to provide reference letters usually involve some combination of fear and revenge towards the terminated employee. This article attempts to educate and encourage employers to do the right thing and provide each terminated employee with a letter of reference.



Listed below are my top four reasons why employers should provide a positive letter of reference to their terminated employees. I have also included a list of items that employers may consider putting into a positive letter of reference, even if the employee was terminated for just cause. The lists are not exhaustive. Each employee or employer should seek a formal legal opinion from Gary Bennett which takes into account their specific circumstances prior to implementing a strategy based on the information below.



My top four reasons why employers should provide positive reference letters



1. Positive reference letters can limit your financial exposure for wrongful dismissal.



One of the best ways to limit the damages that may be owing to a terminated employee is to help that employee to obtain a new job as soon as possible. Even if the employee sues the employer for wrongful dismissal, the damages will be limited to the set off between the reasonable notice pay owing and the income from the employee's new job. If reference letters help former employees to become re-employed, then employers should provide them willingly and as quickly as possible.



2. Positive reference letters are a good investment.



Very few things in life are free. A positive letter of reference does not cost an employer any money, but it can save a company tens of thousands of dollars if it helps an employee to become re-employed months sooner. A business strategy that is free but saves tens of thousands of dollars makes good economic sense.



3. Positive reference letters can help to limit bad faith damages in a law suit.



The Supreme Court of Canada has suggested that there are a number of factors that can increase the damages owing to an employee who was fired by the employer. One such factor is when an employer refuses to provide an employee with a positive letter of reference. This factor on its own can cost employers tens of thousands of dollars in bad faith damages or other types of damages. If this factor is coupled with other bad faith factors, the damages can be extremely high and punitive in nature to employers.



4. Providing a positive reference letter may decrease hostility at termination time.



Firing an employee is a hostile situation. Feelings always get hurt. Many employees suffer mental distress and other psychological disorders after being fired. Providing a positive letter of reference to the employee can help to decrease the tension and bad feelings of the employee towards the employer. While it may not create a lasting friendship with the employee, it is generally seen as a show of good faith and best intentions towards the employee.



What items may be included in a positive letter of reference?



Most employers immediately feel like they will be lying about a terminated employee if they provide a positive letter of reference on behalf of the employee. This does not have to be the case. There are a number of positive things that can be said about an employee without lying about the employee's shortcomings or reasons for terminating the employee's employment. I have listed a few examples of things that can be said in a positive letter of reference even after a hostile termination of employment. My list is not exhaustive. Not all of the items in my list may be applicable, but a combination of some of them can be used to create a positive letter of reference.



• Last position held by the employee

• Length of service of the employee

• Chronology of the employee's positions held at the company

• The fact that the employee generally arrived for work on time

• Some of the good things the employee was able to do

• List the duties of the employee's position that the employee performed well

• Provide positive comments from previous performance evaluations



Be honest



If the employee was a thief, do not write a positive reference letter that refers to the employee as honest and trustworthy with other people's property. It is important to accurately convey attributes of the employee in a positive manner without telling a lie.



Do not embellish the truth



Employers sometimes get into trouble if they give the impression that the terminated employee has abilities or characteristics which simply do not exist in the employee. When a future employer reads a positive letter of reference, that employer is trying to assess the employee's capabilities and work product with the former employer. If a positive letter of reference embellishes the truth, it will be misleading. A future employer may hire your former employee based on skills and abilities that you have endorsed when they do not exist. Future employers rely on your letter of reference as the best indicator of the employee's capabilities.



Be practical



There is something positive to say about every single employee. After all, if you made the intelligent decision to hire the employee you must have seen something positive at that time. Secondly, refusing to provide a positive letter of reference to a long term employee is not practical or logical. There must be some good in the employee if he or she remained employed at your company for a long time. Employers who argue that they can not provide a positive letter of reference for long term employees are generally perceived to be insincere, untruthful and playing hardball.



Be willing to confirm everything in the reference letter in a telephone reference



Some employers will call a former employer to verify that the letter of reference is accurate. Employers should be willing to verbally confirm everything that is written in the positive reference letter. It often helps to have one central person who confirms the contents of the reference letter to ensure consistency and accuracy.



What could go wrong if my company provides a negative reference?



Unfortunately, it has been the case where a manager or other employee of a company has provided a negative reference regarding a former employee. In these situations, the former employee often has no choice but to take legal action against your company and the manager who provided the negative reference. Legal action may result in very costly damages being awarded against your company and the individual employee who provided the negative reference.



Damages against your company may arise in any number of ways. The company may have to pay for the loss of income suffered by the employee if the negative reference caused the former employee to lose a new job which was conditional on a positive reference check. If the reference was taken by a professional screening company, the employee may not be able to secure another job in the industry until the screening company's records are purged. This often requires a court order. Therefore your company may be required to compensate the employee for lost wages for many months or years while he or she remains unemployable plus the costs of obtaining an order from the court to purge the screening company's records. Over and above all of these costs, a court may order your company to pay punitive damages to the former employee and legal costs for the law suit. Finally, your company will have to pay for its own lawyer's fees for defending the company in the legal action.



Most times, these cases are settled out of court to avoid the embarrassment of having a Judgment registered against the company for such a terrible act against a former employee. However, the damages can reach the hundreds of thousands of dollars based on the factors discussed above. If your company is in the unfortunate position of having to defend against allegations of providing a negative reference, you should obtain legal advice immediately from Gary Bennett and protect your interests.



For more information on how to protect your interests, contact Gary Bennett at gary@bennettlaw.ca to book a consultation. For more information on legal services provided by Gary Bennett visit http://www.bennettlaw.ca

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