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The Truth Will Set You Free – A Bad Reference is Not Necessarily Defamatory

The Divisional Court recently upheld a trial decision finding that an employer did not defame a former employee when it gave him a bad reference.

The Facts

The employee in Papp v. Stokes was terminated by his employer, and subsequently asked whether he could list them as a reference when applying for new employment. His former employer agreed. The employee submitted applications and was ranked first among candidates for a job with a new employer. The new employer asked for his references before making a formal offer, and so the employee contacted his former employer to let them know they would be receiving a call.

At some point after agreeing to act as a reference, his former employer discovered that there had been issues with the employee’s performance that had not previously come to light. His co-workers complained that he was difficult to work with and did not get along with others on the team because he saw himself as superior. The former employer conveyed this information to the new employer when asked, but emphasized that the employee had good technical skills. As a result, the new employer revoked the conditional job offer and gave the job to someone else.

The employee sued his former employer, requesting damages for defamation, punitive, exemplary and aggravated damages, and damages for the tort of intentional infliction of mental suffering.

The Decision

The Divisional Court upheld the trial judge’s finding that what the former employer had said to the new employer was substantially true. Although the employee was technically skilled, he did not work well in a team and his colleagues found it difficult to work with him. In order to defend an action in defamation, the defendant need only establish that it had a reasonable, bona fide belief in the truth of the comments.  As such, the Divisional Court upheld the ruling that the former employer had a complete defence to defamation.

The trial judge also found that the employee failed to prove, on a balance of probabilities, that his former employer acted with malice in reporting truthfully to the prospective employer.

The Takeaway

Employers may be surprised to learn that they may be defaming former employees by providing negative references. Technically, what is required to make out the tort of defamation is 1) that the words in question referred to the former employee, 2) that the words would lower the former employee’s reputation in the eyes of a reasonable person, and 3) that the words were published, meaning that they were communicated to at least one person other than the former employee. If a former employee can prove these elements, then the law presumes the falsehood of the words, and assumes that damage resulted.

Employers can defend themselves in two ways: firstly, if the substance of the negative reference was true, then an employer may be able to make out the defence of “justification”. Secondly, the courts have noted that job references enjoy what is called “qualified privilege”. This reflects the fact that we believe it is important in society for former employers to be able to communicate honestly about employees. Qualified privilege is so named because it can be defeated if the former employer acted maliciously to harm the employee when giving the bad reference.

This decision should provide some comfort to employers. While it may be wise in some situations to decline to act as a reference for certain employees, overall the law recognizes that organizations require frank and honest feedback when making hiring decisions.

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