Employers are allowed to give a bad reference in Canada.
The law is clear: If an employer wants to communicate negative comments about a past or present employee, it is free to do so.
There are no employment standards rules or regulations about job references in Canada. Rather, the legal framework for reference letters is the age-old common law of “defamation”.
Bad references are defamatory by nature. It is defamatory to say someone “lacked work ethic” or “did not meet the requirements of the job” just like it is defamatory to say someone “was guilty of sexual harassment at work”.
Accordingly, in line with the law of defamation, the law of bad references is this: Employers are allowed to make defamatory statements (i.e., bad references) about past or present employees so long as they have one or two of the classic common law defences to defamation.
There are two classic common law defences to defamation:
- The defence that the statement was true (Justification).
- The defence that the statement was made in a protected context (Privilege).
In short, the defamation defences Justification and Privilege can be summarized as follows:
Justification defeats defamation when the bad reference is substantially true.
For the defence of justification, the employer needs to be sure the facts in the bad reference are true. To that effect, the employer should conduct a reasonable investigation before stating some negative fact about someone in some correspondence to future employees. For example, if it were to say an employee was guilty of theft, it had better be sure the employee committed the theft.
Privilege defeats defamation when the bad reference reflects an honestly held belief and the bad reference was not motivated by malice or a reckless disregard for the truth. In other words, a person who gives a reference does not have to prove their comments for a fact and they are entitled to hold a negative opinion, so long as their bad reference is not motivated by malice.
The test for malice is set out in the dissenting opinion of Korach v. Moore 1991 CanLII 7367 (ON CA) at paragraphs 25 and 26:
Evidence of malice may be extrinsic or intrinsic. Extrinsic evidence is evidence of surrounding circumstances. Intrinsic evidence is the wording of the document itself. The wording may be so violent, outrageous or disproportionate to the facts that it furnishes strong evidence of malice.
Extrinsic evidence that the defendant made the defamatory statements knowing them to be untrue will ordinarily be conclusive evidence that the defendant lacked an honest belief in the truth of what he wrote. But the evidence need not go that far. If the defendant was reckless in making the statements, that will be sufficient. “Recklessness” in this branch of the law means indifference to the truth or falsity of what was said.
To avoid a finding of malice, employers should write the reference professionally, reasonably considered and without emotion. They should simply state what they believe their employee did or failed to do without expressing some kind of hurtful ill will.
Is it illegal to give a bad reference?
As discussed above, it is not illegal to give a bad reference so long as the reference is factual or an honest opinion not motivated by malice.
To avoid any liability for a bad reference, an employer had better make sure to:
- Investigate to determine the truth of the contents of the reference; and
- Write the reference as if a judge might read it.
A bad reference will usually cost job seekers a job. Thus, employers should take time to consider whether they truly want to send a bad reference. Just because someone did not do a great job doesn’t mean they should be given a bad reference. Still, if a bad reference must be given, employers should try to mix negatives with positives unless there is some glaring character deficiency. If an employee was truly problematic, it’s worth warning the next would-be employer.
Note: I have never heard of an employer suing a person’s former employer for giving a positive reference that they relied on to hire that person when that person turned out to be problematic.
Can you sue for a bad reference?
As discussed above, an employee can sue for a bad reference because generally bad references are per se defamatory. However, unless the bad reference was a lie or a strongly negative opinion written in bad faith, then the employee will lose and have to pay the employer’s legal fees. Hence, even though an employee can technically sue for a bad reference, it had better seriously examine whether it is worth the risk. If the bad reference is clearly a lie, it might be worth it, but, if not, it could be a huge waste of time and money. Employers have classic defences to defamation at their disposal and because of that, it is important to appreciate that defamation is very difficult to successfully prove.
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.