Home' HR Monthly : August 2017 Contents August 2017 HRM magazine 47
hile the vast majority of employers
take the provision of references
seriously and provide fair and
beneficial documents, a misleading or erroneous
reference can be costly. A candidate may require
more training than their reference suggests,
or may be entirely unsuited for the position.
A derogatory reference, meanwhile, can
considerably harm an individual’s job prospects.
Given the vulnerability of workers and
prospective employers to inaccu rate references,
it is perhaps surprising that employers have few
legal obligations to provide honest references.
Duty to give a reference?
If an employer is reluctant to provide a positive
reference, they may be tempted to not provide
one at all. Sometimes this will be the best
option: the employer does not openly criticise a
former employee, the worker is not burdened by
a poor report and prospective employers are free
to d raw their own inferences.
However, there are limited instances where
employers may be obliged to provide a reference.
In Australia, there is some judicial support for
the implication of a contractual term compelling
employers to provide references. If it is usual
practice in an industry to provide them, and the
worker is unlikely to find work without one,
the cou rts might imply such a term. This will,
however, be highly contex t-specific and there is
certainly no blanket legal duty on employers to
Defamation and negligence
Once a reference is given, employers may be
liable under defamation law if it is inaccurate
and damaging. A n aggrieved worker might seek
damages, or injunct the employer from making
further defamatory statements. Employers can
avoid liability by being honest and fair in their
assessment of the worker, and only making
negative statements supported by objective
evidence. Provided the negative reference was
not given for reasons of malice, the doctrine of
qualified privilege will provide a strong defence
to defamation lawsuits.
While a prospective employer has no
protection under defamation law for damage
caused to them by a false-positive reference, they
may be able to sue for negligence. Employers
might owe a duty of care to anyone who is
likely to suffer damage as a consequence of
(both negative and positive) misstatements in an
employment reference, which would encompass
the worker and possible future employers. This
is certainly the legal position in Britain where
one case saw an ex-employee successfully sue a
company for negligence following the provision
of a damagingly inaccurate reference.
The legal position is unsettled in Australia
– although some courts have endorsed the
British approach, differences in underlying law
means the question remains open. Until then,
employers would be well-advised to ensure they
are fair, honest and take reasonable care when
providing employment references.
It is not u ncommon for an employer and
employee to agree upon a reference if the
employment relationship breaks down and
the employee exits by way of a settlement
deed. These references are typically positive or
neutral, and might not reflect the employer’s
true sentiment. If Australian courts do establish
a duty to provide accurate references, employers
could be in breach of that duty by giving a
false-positive, albeit agreed, reference.
It is difficult to reconcile these competing
concerns, and while the law remains unsettled,
employers are in an uncomfortable position. As
it is far harder to attach liability for omissions
than positive statements, where possible,
employers should only include objectively
verifiable statements in an agreed reference.
While several legal risks arise when
organisations give employment references,
they can be mostly mitigated through common
sense. Provide accu rate information, do not
defame former employees and keep any negative
comments to oral communication. If these
precautions are followed, references need not be
a risky business. •••
The humble employment reference is an indispensable part
of recruitment, but HR managers should be aware of risks.
BY JOHN WILSON, MANAGING LEGAL DIRECTOR, BRADLEY ALLEN LOVE
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“It is not
an employer and
employee to agree
upon a reference
if the employee
exits by way of a
JOHN WILSON, MANAGING LEGAL
DIRECTOR, BRADLEY ALLEN LOVE
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