Employment references: Practical guidelines to avoid delictual liability

February 1st, 2019
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By Martie Bloem

The high unemployment rate in South Africa (SA) has the inevitable effect of high numbers of job applications in different employment sectors. The fact that there are currently more prospective job applicants than employment opportunities, often has the result that employers are inundated with applications by job seekers who do not meet the specific minimum requirements or falsely claim that they do. It is for this reason that employers have become wary of appointing an employee without a reliable reference.

Understanding the importance of employment references

Mistakes in employment selection can be very costly, with serious implications for both the individual and for the organisation. From an employer’s perspective it is important to understand that, once an applicant has been appointed, a process of dismissal in terms of labour law legislation is very lengthy and burdensome. Besides the burdensome process of dismissal, the negative impact of appointing an unsuitable candidate may lead to unproductivity, additional training costs, wasted expenditure and overall decreased profitability.

It is in this context that the requirement of a reliable reference will be investigated. The importance of references in the employment context is obvious, although certain aspects thereof are not clearly defined in South African law. The current situation is that considerable uncertainty exists in practice and a number of aspects require clarity.

One of these aspects is that it is currently not certain whether a former employer has an obligation to provide an employment reference. The existence, or not, of such an obligation will be investigated in this article, as well as the nature of such possible obligation and the extent of the information that must or should be contained in such a reference.

The typical problem that arises from employment references is that the information provided by a former employer is either inaccurate or constitutes an unsubstantiated subjective opinion about the employee, which should be irrelevant. Such an opinion may nevertheless create the risk of a negative inference being made by the prospective employer and lead to the eventual non-employment of the applicant based on the unfavourable reference.

Apart from the risk of not being employed, the employee’s right to a good name (fama) may also be infringed by the unfavourable reference (whether it be true or false) and the employee, depending on their status in a particular employment sector, might suffer considerable reputational damage.

A job applicant, therefore, risks incurring two types of damages by a negative employment reference, namely –

  • prospective patrimonial loss caused by their non-employment; and
  • defamation.

The fact that a prospective employee suffers damages does not necessarily mean that they will be able to claim such damages. It will obviously depend on whether the other delictual elements, besides damages, can be proven.

With regard to the element of wrongfulness, the question of whether a former employer is obliged to provide a reference, whether they owe a legal duty towards a former employee and possibly also towards a prospective employer, has to be considered. To this extent the nature of the relationship between the parties plays an important role.

The content of the reference, whether it is true or false, the intention of the former employer (bona fide or mala fide), as well as the relevance of the information will be of importance in establishing an element of fault. While negligence will be sufficient to establish a fault element for the aquilian action, intention (animus iniuriandi) is required in cases of defamation.

The appropriate action available to an aggrieved employee will, however, always depend on the circumstances of each case. The different delictual actions in South African law available are discussed below in order to determine their suitability in variable circumstances.

The types of damages that could potentially be claimed

According to existing common law principles, a job applicant could have a claim for prospective damages in the form of loss of prospective gains due to non-employment and/or a claim for defamation, should the content of the reference be defamatory in nature. There are, however, a number of qualifications and requirements for the successful institution of such claims.

When instituting a claim for a loss of prospective gains, the employee will have to prove that there was a reasonable possibility that they would have been appointed, had it not been for the unfavourable employment reference issued to their prospective employer, that the issuing of this reference was wrongful and negligent and that they suffered damages due to non-employment.

In order to prove a claim for defamation, the job applicant will have to provide evidence to the effect that the reference issued by their former employer constituted a wrongful, intentional publication, which resulted in the injuring of their status, good name or reputation. Even true publications can constitute defamation depending on the circumstances, and the job applicant will have to prove that the publication is defamatory (and that it actually refers to them) to constitute a prima facie case of wrongfulness.

The main question that will arise in matters where an employer has made defamatory remarks in an employment reference – which led to non-employment and damage to the employee’s good name and reputation – is whether the employer was protected by privilege in the form of discharge of a duty or furtherance of an interest. If this is indeed the case, then I submit that the publication cannot be contra bonos mores and that the job applicant will not be able to succeed with either of their prospective claims.

In addition, and contrary to the possible claims of the employee, the prospective employer who appointed an unsuitable employee based on an overly favourable and false employment reference, might also be able to institute an action for negligent misrepresentation against the provider of such reference. This action will be available if the plaintiff can prove that they acted on the negligent misrepresentation of the defendant (a former employer) to their detriment, and suffered damages as a result.

It is doubtful whether this action will be available to the employee who was the subject of an unfavourable employment reference, since it is a third party who acted on the misrepresentation to their detriment of not being appointed.

In establishing wrongfulness in each of the possible claims described above, the respective rights of the parties involved have to be considered. This entails a weighing-up process of the rights infringed against the rights protected with due consideration of the possible impact of the Constitution in order to establish fairness of the infringement and boundaries of the privilege.

Limited authority in the South African context

The practice of employment referencing in SA is largely unregulated and discretionary in nature.

Although there has to date not been a reported South African case, which decided on the liability for damages suffered due to an unfavourable employment reference, employers are in general wary of the possibility of incurring liability. I submit that this can mainly be attributed to an increased awareness of human rights, particularly human dignity, and the right to a good name. Another contributing factor for the restricted information employers are prepared to provide might be the cautionary guidelines published by human resource consultants and legal practitioners. These guidelines seem to be drafted and provided from the point of view that the employer should rather stay on the safe side and provide as little information as possible. The problem is that this practice of providing as little information as possible or making use of extensive qualifying statements to avert liability, will eventually render the reference completely meaningless.

In the light of the importance of a well-functioning employment reference system, one expects that advice directed at employers would be based on adequate authority and proper consideration of the impact of such advice on the employment sector.

Employers should not from the onset be discouraged from providing employment references on the premise that liability is likely to follow. The fact that the value of employment references is undisputed and that it is undoubtedly in the best interest of all the parties concerned – that the most suitable candidate be employed – should lead to greater circumspection. Employers who seek as much information as possible but are not prepared to provide references in return, cannot sustain a well-functioning reference system.

It is important to understand that the purpose of an employment reference is to ensure that the appointed candidate possesses the required skills and competencies. The reference required from a previous employer should, therefore, never contain more information than is necessary to assess the skill and competency of a candidate.

Practical guidelines

As explained above, it is not recommended that employers simply refuse to provide employment references to avoid the risk of liability. Employers should instead ensure that they provide meaningful, truthful and relevant references, which will make a positive contribution to establishing a well-functioning and reliable reference system in the South African employment sector.

I suggest that an employer consider the following practical guidelines when preparing such references:

  • Since there is no general duty to provide an employment reference other than a certificate of service, an employer should confirm whether such an obligation is not created by legislation or regulations applicable in the sector or profession of operation.
  • Implement a workplace policy that specifies who is entitled to provide a reference, how references should be dealt with and which information should rather be avoided when providing a reference. The purpose of this policy must be to ensure consistency in the provision of references and to avoid references, which are falsely positive or negative about an employee.
  • Ensure that the prospective employer, who is requiring the reference, has obtained the necessary consent to do so from the job applicant.
  • To ensure compliance with Protection of Personal Information Act 4 of 2013 (POPI), include a provision in the employment contract at the commencement of an employee’s service, in terms of which they agree to specific information being published in an employment reference at termination of their service or otherwise on request.
  • In order to further comply with POPI, make sure that the reference is treated as private and confidential and that it is provided to the person who has consent to receive it, whether in writing or verbally.
  • Verify the information contained in the reference and make sure that it is a fair and accurate reflection of the employee’s skills and abilities. The reference should be brief and only contain information relevant to the inquiry. Avoid subjective personal views. Information or allegations, which cannot be substantiated, must not be included. Ensure that the reference is objective and minimises the risk of misinterpretation of statements by making use of plain language and terminology that is common in the specific industry.
  • Ensure that the contents of the reference are factual in nature and do not constitute an overly positive or negative opinion about the employee’s abilities.
  • Treat all employees equally and consistently and avoid comments that may be construed as discriminatory.
  • If necessary, provide a qualification to create a context in which the reference must be read and understood, for example, limited time that the referee has known the employee.
  • Consider including a disclaimer, which stipulates that the employee has consented to the provision of the reference and that both the employee and prospective employer accept exclusion of liability, even though the effectiveness of such a clause is unsure.
  • The same care should be taken in providing telephonic or verbal references as the care taken when providing a written reference.

Conclusion

The importance of a well-functioning referencing system in the employment context has been illustrated and emphasised above and more arguments can be made in favour thereof. It is, however, of equal importance that the employee’s rights are not ignored and that a less intrusive way of reaching the same outcome is always considered. The challenge seems to be developing clear guidelines for providing employment references, that are truthful, relevant and reliable (without exposure to possible liability), while simultaneously considering and protecting the different interests of the respective parties.

Martie Bloem LLB LLM (cum laude) (UFS) is a lecturer in the Department of Private Law at the University of the Free State in Bloemfontein.

This article was first published in De Rebus in 2019 (Jan/Feb) DR 18.