Providing references for an ex-employee

by The FindLaw Team

When an employee leaves, employers are often asked to provide a reference for the employee by potential new employers. In New Zealand, phone references are generally preferred by employers over written references. This means that, potentially, the ex-employee’s manager, supervisor, or colleague may be faced with a phone call out of the blue asking for a reference.

This article looks at whether they have to provide a reference, privacy issues, and describes some relevant cases.

Legislation

Under the Employment Relations Act 2000, an employer must provide an employee with reasons for a dismissal if requested by the employee, so long as the request is made within 60 days of the date of dismissal. The statement must be provided within 14 days of receiving the request.

Other than that, there is no requirement on an employer to provide a reference for an employee, unless they’ve agreed to, for example in the employment agreement or as part of a settlement (eg following a personal grievance for dismissal).

Some employers avoid giving references, and prefer to only provide a statement of employment (the basic facts), because they are worried about a claim of defamation (by the employee) if they say anything negative and a claim of negligence (by the new employer) if the employee doesn’t live up to any positive comments made.

Any reference or statement of employment should be accurate - whether negative or positive.

Privacy

Any information provided when giving a reference must comply with the Privacy Act 1993 and can only be given with the (former) employee’s consent. When giving a reference, the employer should check that consent has been given.

It’s also important to only provide information for the purpose for which the permission was given, ie to help the prospective employer assess the person’s suitability for the job. Don’t talk about irrelevant personal details.

Under section 29 of the Privacy Act 1993, a reference given to a prospective employer can be withheld from the ex-employee if it can be said to be “evaluative material”.

Evaluative material is defined as information held to determine the suitability, eligibility, or qualifications of the individual for employment, promotion, continuance in, or removal from, employment. It can be withheld if its disclosure would breach an express or implied promise made to the person who supplied the information.

It’s therefore important that anyone giving a reference should make it very clear if they do not wish what is said to be disclosed.

In Case note 19740 [2002], Office of the Privacy Commissioner, a job applicant had provided a written reference and also nominated several other referees to a prospective employer. The employer phoned all the referees and also the person who had given the written reference.

The woman complained to the Privacy Commissioner that contacting the person who had given her a written reference breached her privacy (she didn’t get the job). However, the Commissioner felt that the purpose of providing the written reference was to allow the employer to assess her suitability for the job. Contacting the person who wrote the reference and telling them she had applied for a job was directly related to this.

Duty of care

The UK case of Spring v Guardian Assurance plc [1994] 3 All ER 129, is the leading case on the duty of care when employers provide employment references for former employees. Spring was a sales director and office manager who was dismissed when Guardian Assurance took over the company he worked for.

When a potential employer asked Guardian Assurance for a reference for Spring, the company alleged that he was selfish, lacked team spirit, lacked honesty, was in debt to the company and was incompetent. As a result of this damaging reference, Spring did not get the job.

The Court found that the reference was inaccurate and it was held that an employer who supplies an inaccurate reference can be liable in negligence to the person for whom it was supplied.

Raising a personal grievance for a negative reference

Whether or not an employee can raise a personal grievance for a negative reference will depend on whether the employment relationship has ended when the reference was given.

In Pettersen v The Salvation Army ERA Auckland AA295/08, 18 August 2008, the employer considered Pettersen to be a good employee in most respects, but dismissed him after he made mistakes in the administration of medication. After Pettersen’s dismissal, he started applying for alternative employment. He was told by an employment agency that he had been taken off their books because of the verbal reference received from The Salvation Army.

Pettersen raised a personal grievance, which included the claim that his previous employer had given “vindictive” verbal references. The Salvation Army claimed that the reference had been honest, not vindictive, and that they had said they would recommend Pettersen as an employee for roles that did not involve dispensing medication or having responsibility for the safety of vulnerable clients.

In relation to his claim about the vindictive references, the Employment Relations Authority determined that Pettersen could not raise a personal grievance in relation to the verbal references given by his former employer because the employment relationship had been terminated by then.



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