How to Write a Fair and Accurate Employee Reference Letter

Last updated on January 15, 2024

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When hiring, it is not uncommon for employers to require job applicants to provide references written by their former employers.

In the future, the Monetary Authority of Singapore (MAS) will also make it compulsory for financial institutions (FIs) to conduct reference checks and respond to reference check requests on employees, based on a set of minimum mandatory information within a specified period of time. This is to prevent individuals who engage in misconduct in one firm, from moving on to another firm without disclosing their earlier misconduct to the prospective employer.

As references usually play an important role in helping employers decide whether to hire an applicant, employers are legally obliged to prepare references in a fair and accurate manner. What does this involve?

Contents of the Reference

Employers are not required to include all material facts about the employee in the reference. Rather, employers only have to exercise reasonable care to disclose information related to what has already been disclosed. This is to the extent that to not disclose such related information would make the information already disclosed incomplete, inaccurate and unfair.

For example, if the reference mentions that the former employee had committed several disciplinary offences, relevant information to be stated in the reference would include:

  • The nature of the offences;
  • When the offences were committed; and
  • How the offences were dealt with.

Employers are also required to exercise reasonable care to ensure that the facts stated in the reference are true.

If the employer expresses any opinions in the reference, the opinions must be based on and supported by facts which are true.

In the case of FIs, once MAS’ proposal to mandate reference checks takes effect, FIs must minimally (request and) provide in a reference check the following information:

  • The former employee’s employment history with the FI, including:
    • The duration of employment;
    • The roles and job functions (including the last position held); and
    • The reason for the cessation of employment;
  • Compliance information relating to the former employee’s fitness and propriety (unless there is a risk of tipping off the former employee which may compromise the integrity of investigations) including any:
    • Concluded/ongoing investigations and the extent of consumer detriment from the wrongdoing if substantiated;
    • Breaches of legal and regulatory requirements;
    • Disciplinary action; and
    • Misconduct reports;
  • The last four balanced scorecard grades assigned to the former employee (where applicable); and
  • (For individuals working in the insurance sector), the persistency ratio of insurance policies sold by the former employee and the methodology used in computing the persistency ratio (where applicable and available).

Overall Impression of the Employee from the Reference

In providing facts which are accurate in the reference, the employer must exercise reasonable care to ensure that the reference does not give an unfair or misleading overall impression of the employee as a whole.

This may occur when the employer is unfairly selective about the information to be disclosed in the reference. For example, the employer may choose to describe the times when the employee makes mistakes, leaving out the times when the employee performed well.

This would give a misleading overall impression that the employee is incompetent, even though the individual facts disclosed are true.

Disclosure of Complaints Against the Employee in the Reference

Some industries have a practice of requiring employer references to disclose complaints against employees. These industries include the insurance industry and the financial advisory industry (as discussed above).

However, if no such industry practice exists, employers generally should not include complaints or allegations against the employee if the employee did not know of them and was not given the opportunity to explain or defend himself against them.

This is especially so for complaints which were unsubstantiated and therefore dismissed without the employee being informed of them.

If the employer is obliged, for whatever reason, to disclose unsubstantiated complaints, the employer should state explicitly in the reference that the complaints mentioned in the reference were unsubstantiated and that the employee was not made aware of them.

The employer should also inform the employee of such complaints when preparing the reference.

Further Disclosure of Information

The legal obligations of employers relating to the preparation of references continue even after the reference has been written.

For example, after reading the reference, a prospective employer may contact the former employer of an applicant for further information or clarification. The former employer will then be obliged to provide further details as required to provide a complete, accurate and fair picture of the employee.

Case Study

In Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd, the Court of Appeal held that an insurance company had been negligent in preparing a reference for one of its employees. This was because:

  • Between 2 financial measures relating to premium policies, the former employer had unfairly selected to disclose the measure giving the lower figure, even though the measure had never been used to assess the employee before. This gave rise to a false or mistaken inference (in the mind of a reasonable recipient of the reference) that the employee was incompetent. However, this was contrary to other evidence such as the accolades that the employee had won, indicating that he was one of the former employer’s best employees.
  • When the former employer was contacted repeatedly to provide further information on the financial measures used, it failed to provide this information.
  • The former employer made 3 bare statements regarding the disciplinary offences involving the employee. As the former employer failed to provide further details, the nature and severity of the offences and the outcome of the investigations was not clear. This gave the misleading impression that the employee had been involved in serious misconduct.
  • The former employer had deliberately used very strong words to describe the employee’s possible ethical violations, highlighting the negative information about the employee even though the recipient of the reference had not requested for this.

It is important for employers to familiarise themselves with this area of law to minimise incurring liability when writing references for their employees. The crux is to ensure the reference, both its overall impression and the individual facts it contains, is a fair and accurate representation of the employee.

While employers need not guarantee that all the facts are true, they are expected to exercise reasonable care to ascertain its truth when including them in the reference. For example, in describingthe employee’s role in a project that the writer of the reference was not involved in, the writer should corroborate the information with the people involved in the project.

In addition, employers should avoid choosing a certain type of facts to portray the employee in a certain manner which is untrue. Employers who wish to use strong, evocative words to describe the employee in a certain manner should be prepared to substantiate these claims as they will be subject to a higher level of scrutiny.

Finally, remember that these duties also extend to the disclosure of further information when requested for by prospective employers.

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