Do employers have to provide a reference to departing staff?

Question: What obligations does an employer have to provide a reference to a departing employee?

Answer: An employer has no legal obligation to provide a former employee with a reference, whether the employee resigned or was dismissed with or without cause. Nonetheless, a failure to provide a reference to a terminated employee may result in serious repercussions for an employer.

For example, a refusal can result in an increased award of damages in a successful action for wrongful dismissal brought by a terminated employee. Similarly, there have been wrongful dismissal cases where the employer’s defence of failure to mitigate (for example, the employer claimed the wrongfully dismissed employee was not entitled to damages because he did not comply with his legal obligation to make a reasonable effort to find other employment) was rejected because the employer had not given the employee a letter of reference.

On the other hand, an employer’s claim that there was just cause for dismissal can be nullified by a favourable reference. Courts have held that an employer’s offer to recommend an employee to other employers was an acknowledgement it had not terminated the employee for incompetence.

Providing a reference can also be a benefit to an employer where an employee has resigned or been terminated with a severance package, since an employer’s financial obligations will be reduced if the employee is able to mitigate damages by finding replacement employment.

Thus, while an employer is under no legal obligation to give a reference, this can be a difficult area to navigate and so caution is required. In particular, in situations where litigation is pending it is advisable that an employer consult a lawyer before providing a reference.

Peter Israel is counsel to Goodman and Carr LLP in Toronto and is head of the firm’s Human Resource Management Group. Peter can be reached at [email protected] or (416) 595-2323.

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