No obligation to provide glowing reference letter

B.C. court rejects notion that employers have a responsibility to give a positive reference

A good reference is invaluable in finding alternate employment. But for a host of reasons, there is usually nothing to compel an employer to provide a glowing reference, the British Columbia Supreme Court has ruled.

In February, 2004 Kent Ashby was hired by EPI Environmental Products Inc. as its chief legal officer.

Ashby became a member of the senior management team and was the second highest paid executive in the company. He reported directly to the company's chief executive officer, Mr. Gho.

On March 30, 2005, Ashby was told his employment was terminated because of a decision to outsource all the company's legal needs. Gho offered Ashby a good reference letter that would assist him in finding new employment.

A month later Ashby sent an e-mail to Gho attaching a draft of a reference letter. In testimony before the British Columbia Supreme Court, Ashby said Gho phoned him the next day. When Ashby asked about the reference letter Gho said he first wanted to know if Ashby agreed to accept a two-week severance payment as a "once and for all" settlement.

Ashby said he asked again about receiving a reference letter apart from the issue of severance, and Gho told him he would not provide one unless Ashby agreed to the two-week severance.

Ashby responded the next day by e-mail. He said he wanted six months' severance, a good reference letter and a positive reference if Gho was contacted by any future employer.

An executive secretary testified on behalf of Ashby. She said she read a reference letter for Ashby on EPI's letterhead that described him as an excellent employee who had performed well for EPI. This letter bore little resemblance to the letter he ultimately received: it mentioned Ashby's salary and benefits but made no reference to his abilities. It was of no help in securing alternate employment, Ashby said.

The company was using the reference letter to accept inadequate compensation in lieu, Ashby said. This prejudiced his job search, and was conducted in bad faith and entitled him to extra damages, he said

The company denied it attempted to coerce Ashby. It was unwilling to give him the rosy reference he'd composed on his own behalf, and was similarly unwilling to commit to giving only favourable responses should any future employers contact them, it said.

The court awarded Ashby five months' salary, at $8,750 per month for reasonable notice. On the issue of bad faith and the reference letter it ruled against him.

There is no obligation to provide an employee a positive reference letter, and there may be many valid reasons an employer may not wish to do so, the court ruled.

The risk of increased damages could lead to employers giving misleading references. The business world and employment litigation is not served by requiring employers to give good references.

"The evidence does not warrant a finding of bad faith… it is inappropriate to use the terms of a reference letter as a bargaining chip. In this case both parties attempted to (do so) to advance their position. In so doing neither distinguished themselves," said the court.

For more information see:

Ashby v. EPI Environmental Products Inc., 2005 CarswellBC 1954, 2005 BCSC 1190 (B.C. S.C.)

B.C. Court of Appeal’s 2001 decision

In this case, the British Columbia Supreme Court relied on the B.C. Court of Appeal’s 2001 decision in Shinn v. TBC Teletheatre B.C., a Partnership.

In Shinn the Court of Appeal said there was no obligation on the employer to provide a letter of reference. TBC Teletheatre did give the worker a letter, but the worker said it was not sufficiently favourable and as a result he never showed it to anyone.

“There could be many reasons why an employer may not wish to give a letter of reference, or a favourable letter of reference,” the court said. “In many cases … it would seldom be known if the employer could honestly give a favourable letter. The risk of increased damages could become an inducement to employers to give misleading references.

“Wrongful dismissal litigation should not be burdened by investigations into such matters unless the quality of the (worker’s) performance is already an issue in the case such as where there is a plea for dismissal for cause or the circumstances justify a special award under the decision in Wallace v. United Grain Growers Ltd.

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