What most of those who oppose writing positive letters of reference fail to acknowledge are the potential benefits of doing so. Generally, the organization will have an interest in seeing the dismissed individual obtain new employment quickly. If the individual is in the midst of a period of working notice, or a period of salary continuance that will end (or be reduced) if they find new employment, the former employer will save money if the individual finds a new job. In some cases, this can result in a substantial savings to the employer. For example, consider the situation of an employee otherwise entitled to a notice period of 18 months. If they obtain comparable new employment after only four months, the notice obligations will, in most cases, come to an end, and the employer will have saved 14 months’ worth of compensation. For that reason, it is almost always beneficial to assist the individual in finding new employment. A letter of reference is one way to do so. Another is to provide outplacement counselling services through a reputable organization. While there is no legal obligation to do either, it will make good business sense in most cases.
Furthermore, failing to provide a reference letter can directly or indirectly increase the amount of notice that is required. If a wrongful dismissal claim goes to court, an employer will be hard-pressed to argue that the individual failed to make reasonable efforts to mitigate their damages by finding new employment if the employer did not even provide a letter of reference. As well, courts are entitled to consider all factors that may be relevant in assessing the period of reasonable notice. One factor that can be considered is the failure or refusal to provide a reference letter.
It is also possible that a court will find that an employer’s failure to provide a letter of reference amounted to bad faith in the course of dismissal. In the pre-Honda Canada era, there were a number of decisions in which Canadian courts extended the notice period as a result of such perceived bad faith. In light of recent changes to the law, including the “Damages Formerly Known as Wallace” (as I have dubbed them), it is questionable as to whether or not damages would be awarded in such circumstances. In a scenario where the individual could prove that they suffered actual damages as a result of the failure to provide a letter of reference, it is plausible that they could. This is an issue that has not yet been addressed by the courts since the decision in the Honda Canada case.
Consider revising your policy
The policies against providing letters of reference that I am aware of are typically based upon fear of potential liability which, as I have set out above, is not borne out by the jurisprudence. However, the potential benefits of providing a letter of reference are not typically considered. Balancing the risks and benefits, my advice is to provide letters of reference in dismissals that are made without just cause.
Letters of reference should not be drafted in a haphazard manner. Authors of reference letters, and those providing verbal references, should strive to portray the individual as positively as possible while ensuring that their comments are honest and accurate. In almost all cases, it is possible to come up with some positive attributes that can be referenced. Obviously, the reference provider should avoid any comments that are inaccurate, negligent or malicious. The same care should be taken for verbal references.
Organizations should have a policy with respect to who provides letters of reference, and also who requests for verbal references should be directed to. Care should be taken to ensure that verbal and written references are consistent. For that reason, anyone who is authorized to provide verbal references should ensure that they are aware of the contents of any letter of reference before they provide their comments. It is often advisable to advise the individual seeking the reference that their call will be returned once the individual providing the reference has the opportunity to review their file.
I encourage all readers to consider their own organization’s current policies in this regard, and think about whether or not they should be revised.
Stuart Rudner, Miller Thomson LLP