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Employee References - What do you need to know

A glowing reference could be what gives job hunters the edge they need to succeed over the competition, especially when hiring the wrong person costs so much money.

Businesses over time have become ‘gun shy’ and taken the decision to implement a policy of ‘no references’ being provided for exiting employees.  Whilst this is completely okay in that there is no obligation for an employer to provide a reference, it does make it really difficult for job seekers and recruiters alike when hiring requires successful reference checking be completed.

Providing references for former employees is easy if you parted on good terms.  If you had to terminate an employee, however, it can be a difficult decision about how honest you should be with the former employee’s potential new employer.  If you disclose to that potential employer anything about the former employee that you can’t verify as factually accurate, you may be facing a lawsuit.

When terminating employees it is a good practice to advise them that you will not be able to provide a positive reference.  This alone can avoid a bad situation as they would be unlikely to request references from you.  Remember a prospective employer may only approach a referee with the applicant’s permission.

It is important to document this advice also as should a lawsuit occur later; it will be helpful to show that you in fact told the employee that you would not provide a positive reference. Tell other employees that you simply had to ‘let the employee go’ and don’t provide any further detail.  Inform them who will be responsible for the former employees duties.

Finally consider having the employee sign a release to protect yourself from lawsuits.  Include a clause where the employee grants you permission to provide information to prospective employers and promises not to sue you for providing such information.

If a potential employer calls asking for a reference, ensure you only provide facts and avoid making unflattering comments that may come back to haunt you.  However in seeking a reference, potential employers cannot ask for personal information or conjecture about the applicant.  The reference questions should relate to the candidates abilities and aptitude for the job.

Some simple guidelines: -

  1. Keep it brief: the best tactic for providing a reference for a ‘questionable’ former employee is to keep it short.  Give the dates of employment, position title, final salary and leave it at that.  If you feel pressure to provide more, ask the caller about the role they are hiring for and provide information regarding the relevance of the position performed in your business with the hiring position.
  1. Be Factual: don’t speculate or hint at any potential wrong doing that you may honestly believe happened but cannot prove.
  1. Don’t be unnecessarily negative: don’t start ranting or inflating any misconduct, just offer the information you can in good faith. Providing the information in good faith can be a shield to a defamation case.
  1. Don’t Cover-up: while you shouldn’t start speculating and bad mouthing the former employee, at the same time you shouldn’t cover-up.  If you outright lie and cover-up for a former employee, you can be sued by the new employer for failing to warn you about serious employee misconduct.
  1. If you are asked to provide a reference for an employee who you have terminated, seek advice as to how you should handle the process.
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