Is an employer liable when they provide a negative reference?

Over the last year, courts in Ontario have provided two important decisions regarding the consequences for providing negative references.  These are important decisions for employment law in both Ontario and Canada.

In both cases (Papp v Stokes Economic Consulting Inc. and Kanak v Riggin) the Ontario Superior Court of Justice found that the employer had made negative comments about their former employees, including in regard to their attitude and abilities, which caused them to lose job opportunities.

In both cases however, the employers were cleared of any liability.  In making these decisions, the court pointed to two instances in which the law protects employers that provide negative references: (1) where the statements are substantially truthful and (2) where the statements benefit from qualified privilege – a limited type of privilege which provides protection for conversations relating to employer references.

Relevant facts of the cases

In the first case, Papp, a fired employee lost out on an opportunity for a job with another company, at least in part because of a negative reference from his former employer.  The former employee then sued his employer and claimed that he was the victim of defamation and should be compensated for all related losses.

The employer representative stated that his communications were truthful, both on the positive and negative aspects.  This included positive comments about his technical computing abilities and negative comments about his team-working skills (based on both his own observations and comments he heard from others who reported to him).

In the second case, the employee was fired after his employer was acquired by another company.  The employee accepted a job offer a year later, which was later revoked after her former employer provided a partially negative performance review.  The former employee subsequently sued for all losses associated with the alleged defamation.

In this case the employer’s representative stated that he liked the former employee and that he spoke about both the individual’s strengths and weaknesses.  On the negative side, the representative stated that in his opinion the employee did not take directions or handle stress well, and that she was not an effective collaborator.  Despite this, he stated that he would consider hiring her, albeit in an independent capacity outside of the workplace.

Former employers cleared of liability

The court in Papp held that the employer was not liable.  Specifically, on defamation, the court held that the comments were essentially true and based on his experience with her and those which he verified with others.  The statements were also deemed to be protected on the basis of qualified privilege, the principle that an employer cannot be held liable for comments made during a reference review if they do not act maliciously (which includes recklessness).

In Kanak, the court held that the employer was not liable on the basis of qualified privilege. Again, the court held here that employer (through the representative) had provided what he believed to be an honest account of his experience with the former employee.  In agreeing that there was no malice, the court specifically pointed to the fact that the statements had both positive and negative elements and supported by examples.

The cases make clear that courts are prepared to protect employers where references are reasonable and that employees are not immune from negative comments as long as it’s based in truth or, alternatively, free from malice.