“This is off the record, right?” The perils of providing an employee reference

recent survey found that 31 January is the most popular day for employees to quit their jobs. The New Year is a time for reflection: New Year, new career!

When an employee wants to move on and you’re asked to provide a reference, it’s not always easy to work out how honest you should be. You may be able to provide a glowing reference for a star performer with a clean record, but what should you say about a poor performer or an employee  accused of misconduct? What about employees who required extensive leave for family or health reasons, or those who raised complaints? Legally and morally, where’s the line?

This article explores the legal, moral and practical considerations of providing a reference.

Privacy obligations

Organisations that are bound by the Privacy Act 1988 (Cth) (the Act) will be bound by the obligations it imposes, including the Australian Privacy Principles (APPs). In general terms, this requires organisations to collect, handle and disclose personal information (including sensitive information) in accordance with the Act.

While an individual’s employment record will contain personal information, and sensitive information, there is an exemption under the Act for “employee records”.

This means that employers can disclose an employee record “in the scope of an employment relationship”. An employee record is defined by the Act as a record of personal information relating to the employment of a current or former employee.

The exemption will only apply to acts that are directly related to a current or former employment relationship, not prospective employees.

This has some important ramifications:

  • the fact that an employee does not have the right of access and correction under the Act does not mean they cannot access their employment record.  Remember also that employees have rights to their records under workplace laws, so keeping accurate records which are complete and adhere to best practice record is still important.
  • contrary to popular belief, “off the record” conversations with referees can be discoverable. Unsuccessful job seekers are permitted to seek records/transcripts of referee interviews, because they do not relate to a current or former employment relationship.  So, it’s key to remain factual, objective and avoid straying into territory which would be discriminatory, such as talking about the person’s illnesses or injuries, family situation. If you have concerns about the employee’s conduct or performance, focus on the objective facts rather than your opinion. What you disclose may be recorded and discovered.
  • acts outside of the current or former employment relationship are not caught – for example, selling personal information to another organisation for marketing purposes would not fall under the exemption, as it is not related to the employment relationship, and therefore could still be a breach of the Privacy Act.
  • volunteers and contractors are not considered employees.  Therefore, employers should seek consent from volunteers or contractors before they disclose information in a reference check.  If the individual has provided the organisation’s contact details for a reference check, you may be able to rely on implied consent.

What can I say?

As a result of the exemption above, organisations can provide the following personal information when providing a reference check for an individual:

  • the engagement, training, disciplining or resignation of the employee;
  • the termination of the employment;
  • the terms and conditions of employment;
  • the employee’s:
    • personal and emergency contact details;
    • performance or conduct;
    • hours of employment;
    • salary or wages;
    • membership of a professional or trade association;
    • trade union membership;
    • recreation, long service, sick, personal, maternity, paternity or other leave; and
    • taxation, banking or superannuation affairs.

What should I not say?

Avoid overly personal or discriminatory statements and any griping. If you can’t provide an employee with a favourable reference, consider letting them know.  

Where a person feels that their reputation has been damaged by a reference check, they may seek damages for defamation. The recent case of Bowden v KSMC Holdings Pty Ltd t/a Hubba Bubba Childcare on Haig & Chapman [2019] NSWDC 98 demonstrated the potentially costly consequences of making disparaging comments about former employees. In that case, the director of the organisation made comments alleging that the staff member was not truthful about his studies and not suitable to work in childcare. The Court found the comments to be false and rather, the organisation was simply dissatisfied that the employee was taking longer than the organisation expected to finish his course. The employee was awarded $237,970 in damages.

Keep in mind that employees are entitled to take leave for personal and family reasons, and to raise grievances and complaints. Avoid any disparaging comments about the employee’s personal leave, requests for flexibility or complaints, as this may expose you to a claim of adverse action or victimisation.

We recommend that employers limit the information they provide in reference checks to the facts. While opinion about a person could be personal information (and therefore fall into the exemption), inability to substantiate such an opinion may create risks of defamation or workers’ compensation claims. It is also preferable for reference checks to be provided verbally to ensure that information is not taken out of context.

Can I say nothing? Will I will liable for omissions?  What if the employee poses a risk?

There is no requirement that an employer provide an employee with a reference check beyond confirming the key details (e.g. length of time with the organisation, role, and responsibilities).

There may be difficult situations where employers choose to stay silent in their response to a question rather than say anything. For example, where there were unsubstantiated allegations against an employee. Similarly, personality differences or grievances between employees can be difficult to explain when it is matter of opinion. In these situations, it is open to you to say nothing when asked direct questions such as “would you hire this person again?” or “do you have any concerns about this person’s ability to work with vulnerable persons?” If you choose to elaborate, qualify your comments carefully.

Some organisations may be concerned that they owe a duty to advise a prospective employer about an employee where they have concerns about the employee posing a risk to, for example, children. If you are asked for a reference for an employee moving into a child facing role, you should be honest regarding any child safety concerns, especially if asked a direct question about the person’s suitability to work with children. However, it’s extremely important to:

  • be careful not to over disclose or spread gossip. Stick to the facts and your personal observations;
  • qualify any negative or disparaging statements carefully; and
  • watch your language. Avoid using emotive words such as “paedophile” or “bully” unless this has been proven.

Next steps

Employers need to be mindful of their responses to reference checks, keeping in mind an environment of increased litigation regarding defamation.

We recommend that organisations mitigate their risk by taking the following actions.  

  1. Ensure you have a policy and provide training to your HR team and managers setting out who is authorised to give references, with Dos and Don’ts.
  2. Review your privacy policy to ensure it clearly sets out when the organisation will disclose employee records and the personal information of employees, contractors and volunteers.
  3. Ensure the personal information in your employee records are contained to the facts and limit the amount of opinion or personal commentary in your records.
  4. Seek advice when providing reference checks in difficult situations such as where there is an ongoing dispute with a current or former employee or it relates to sexual harassment, bullying, discrimination or child safety etc.

Contact us

For further information or guidance, please do not hesitate to contact us.