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Reference Letters: What You Need to Know

Marla Calvert
March 16, 2022

With many workers changing jobs or looking for new opportunities in recent months, the topic of reference letters is one that has been coming up frequently. 

There is no legal obligation for employers to provide departing employees with reference letters. Unfortunately, this lack of legal precedent tends to create some awkwardness. 

While providing an employee with a positive reference might seem like the “nice” thing to do, many employers fear that an overly flattering reference letter may land them in legal trouble with a future employer, when the employee in question doesn’t live up to the glowing reference. Or, conversely, employers fear that refusing to provide a reference letter will lead to a dispute with the employee.

In response to this fear, many employers opt to provide confirmatory letters, which corroborate the information on an employee’s resume, but stop short of providing any subjective information about the employee’s skills or job performance. But even these confirmatory letters may not be perceived as completely neutral. 

In reality, legal cases relating to misrepresentation of an employee via a reference letter are rare. Of course, it’s still in your best interest as an employer to provide a reference letter that accurately represents your employee’s performance.

 

Do I Have to Provide a Reference Letter?

The short answer is no. There is no legal requirement for employers to provide reference letters. 

That said, providing employees with reference letters may be beneficial not only to your former employee, but to your organization, in a couple of ways. 

Positive reference letters can be helpful for employees looking for work. Ensuring a departing employee finds new work quickly also benefits employers. 

In wrongful dismissal cases, for example, the employee needs to be able to show that they are actively looking for new work to recoup lost wages. Providing an employee with a reference letter can not only show that you’re doing what you can to assist the employee leaving your organization, but if an employee finds work quickly, that reduces the amount in lost wages that you would potentially owe to that employee if a wrongful dismissal suit were successful.

 

What are the Legal Risks?

Most of the legal risks associated with reference letters can be mitigated with a commitment to truthfulness and accuracy. 

Employers should be careful about what they write in a reference letter, especially for former or soon-to-be-former employees. The risks are different depending on whether the reference letter itself is positive, negative, or neutral. 

In a negative reference letter, there is a risk of the letter being construed as defamatory. This is particularly true in cases where the employee might have a differing opinion of their own performance. 

It is legal to issue a negative reference letter, but that letter should focus on provable facts about an employee’s job performance. Character judgements or subjective opinions about the employee, beyond how they conducted themselves in the workplace, are best avoided. 

This also demonstrates the importance of regular performance reviews – ensuring that an employee is aware of any performance issues during the course of their employment (and is given adequate opportunity to correct those issues) leaves less room for confusion at the end of a job. 

Arguments of defamation or bad faith tend to arise more when there’s a concern that the employer is being excessively harsh in their criticism, or making character judgements rather than presenting objective facts. 

With positive references, there’s always a concern that if the reference oversells the true abilities of the employee, then a former employer could potentially be found responsible for negligent representation by a future employer. Once again, the key is to represent your employee accurately, and point to quantifiable achievements and outcomes. 

Neutral letters, or confirmatory reference letters, are sometimes seen as a way to mitigate the risk of providing a reference that expresses an opinion of the employee’s performance. There is, however, some dispute as to whether confirmatory letters are actually helpful to employees in a job search. Some potential employers may view a confirmatory letter as an indication that the former employer is reluctant to provide a stronger reference in either a positive or negative direction. A confirmatory letter may thus unintentionally indicate that the employee’s performance was either poor or unremarkable. 

 

What Should be Included in a Reference Letter?

A reference letter should include a clear description of the employee’s:

  • Strengths

  • Qualifications

  • Experience and achievements

  • Title

  • Position and duties

  • Direct supervisor(s) or manager(s)

When describing strengths and weaknesses, it’s important to be as objective and accurate as possible. Use common sense – if you thought an employee did a truly exceptional job, it’s fine to say so. But avoid making grandiose statements, and stick to facts that can be backed up by performance metrics and provable achievements wherever possible.

 

Key Takeaways

The main point of all of this is: writing reference letters is encouraged, as long as they are based on honesty and truthfulness. Helping employees secure new employment when the time comes for them to leave your organization generally doesn’t cost you anything, and it can be beneficial. 

Good reference letters can help mitigate loss in cases of potential wrongful dismissal, and they can also give former employees a more positive final impression of your organization, which can make it easier for you when you need to hire someone.

Concerned about providing reference letters for your employees? Wondering how to write a compelling yet accurate reference? Contact Ascent today – we’re happy to help.