Reference Letter Policies: Giving A Reference For Former Employees

When checking references, its important to try and get as much information about the potential employee as possible. But when giving references for a former employee many entrepreneurs aren’t as eager to provide the same information. Here’s some information about why it is important to give a reference no matter what the former staff member’s history with the company was, as well as some procedures for every small business to follow to avoid legal ramifications.

How To Protect The Company When Writing A Letter Of Reference

When offering letters of reference or giving references over the phone, sharing a former employee’s negative experience can have serious legal and financial consequences. Yet keeping mum isn’t the answer either, as entrepreneurs have been taken to court for staying quiet on this very subject. Why? Because the former company didn’t disclose important information to the potential employer. Therefore, keep the following information in mind when writing a letter of reference:

  • Offer information in a letter of reference that only covers factual information that can be backed up.
  • Ensure the information provided is limited and offered only by someone who is trained in providing letters of reference, preferably a human resources specialist.

Suggested Company Procedures For Letters Of Reference

Avoiding legal issues before they start is something all entrepreneurs strive for, no matter how large the business is. Providing references is one of those activities that can be highly litigious, so keeping in mind some policies and procedures before offering up a recommendation is sound advice. To establish a legal defense, an employer would have to prove one of the following points. Keep these in mind when creating a company-wide policy for giving references.


  1. The alleged statement was not made. To avoid this type of legal debate, make it a company policy to only provide a letter of reference with no exceptions.
  2. What was shared regarding the former employee in the reference letter is true. If this is the case, it will need to be backed up with lots of documentation, such as employee evaluation forms and performance reports.
  3. Occasionally a former employee will feel that a reference was defamatory. To avoid this situation, use a sample reference template that only offers information that was clearly documented, and that covers the former employee’s job skills, not character.
  4. To prove that the former employee gave consent to the letter of reference, entrepreneurs must get the employee to sign a letter of consent to release any job related performance information to potential future employers. Another way around this situation is to draft a letter of reference before the employee leaves the company and have the staff member review it before they leave the company, as well as making exit interviews with all members of the organization mandatory.
  5. Sometimes the wrong person will provide a letter of reference to another employer, which can open up a huge can of legal worms for small businesses. To dispute this allegation, ensure that company policy is to have only one person write the letters of reference, and never deviate from this practice.

Please note that this article does not construe legal advice, and does not replace the work of a qualified lawyer. Contact a lawyer regarding the laws in your jurisdiction regarding letters of reference should there be any concerns.