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Can I sue over a bad reference? – Contract of Employment



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You miss out on getting a job and later find it was due to a bad
reference from the person you nominated to act as your referee.

Referees are supposed to give a prospective employer a full and
frank appraisal of their former employee’s work performance
while they were employed by the referee. They should give a fair
opinion of the applicant’s ability, suitability for the type of
work, and their performance in the workplace.

Can a manager give a bad reference?

If a referee isn’t keen on you and wants to warn your
prospective employer, they will usually damn with faint praise.

But what if you discover the referee effectively sabotaged your
chances of getting the job – or financial grant or scholarship – by
writing that you were incompetent, unreliable, untrustworthy,
disruptive, disliked by colleagues, lacking in drive or lazy?

Can you sue for defamation, or for an unfair work practice? Is
there a law which protects you from malicious statements that harm
your employment prospects?

Employers giving bad reference protected under Defamation
Act

Despite media reports of large payouts for defamation in the
courts, providing a job reference is protected under the
Defamation Act by the common law defence of
“qualified privilege”.

Qualified privilege applies in certain circumstances when an
individual’s right to protect their reputation must be
subordinated to a higher interest.

Since the 19th century, providing references has been
recognised in case law as necessary for the “common
convenience and welfare of society”.

It stems from a time when servants started suing their former
masters over bad references which destroyed their livelihoods.
British courts sided with a master’s right to give a full and
frank opinion of a servant’s performance to protect the next
master from a bad servant.

It was very much a product of the English class system. No doubt
some masters would take vengeance against an uppity maid or servant
and destroy their work prospects with a nasty reference.

Do employees have any protection from a bad reference?

Over time some safeguards have been introduced to protect
workers from malicious former bosses.

There are exceptions today that can pierce the defence of
qualified privilege. If the bad reference is passed to anyone who
is not involved in the recruitment process, the referee becomes
open to a defamation claim. The same applies if the referee makes
false statements or is motivated by malice.

This could be difficult to prove. The subject of the reference
has to establish malice and may need to prove the referee’s
state of mind when that person was giving the reference. The
subject needs to prove that the referee knew the negative
statements being made were false. These need to be false facts, not
opinions.

On the other hand, if a referee withholds needed information,
such as a history of criminal activity in the workplace by the
employee, or findings of harassment or bullying, it could lead to a
claim of misrepresentation against the referee by the hiring
company.

The availability of qualified protection for regulatory
authorities against defamation claims made against them was
recently upheld in the NSW Court of Appeal in Schlaepfer v Australian Securities &
Investments Commission
[2021] NSWCA 129
.

Tony Mitchell

Employment law

Stacks Law Firm

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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