Can Employers Legally Refuse To Provide A Reference In NZ?

Reference requests can feel like a “small admin task” that pops up after an employee leaves - until it turns into a risk issue.

Maybe you’ve had an employee exit on good terms and you’re happy to help. Or maybe you’ve had a difficult performance process, a contentious resignation, or a termination where you’re worried that anything you say could come back to bite you.

Either way, it’s worth knowing where you stand. In New Zealand, giving a reference isn’t just a courtesy - it can raise legal, privacy, and practical workplace issues if it’s handled poorly.

In this guide, we’ll walk through whether you can refuse to give a reference, when you should consider declining, and how to respond in a way that protects your business while still being fair.

Is An Employer Required To Provide An Employment Reference In New Zealand?

In most cases, no - New Zealand employers are generally not legally required to provide an employment reference.

That said, whether you must provide one can depend on your specific situation, including:

• The employment agreement (some contracts may include a reference clause or post-employment obligations).
• Any settlement terms (for example, if a dispute is resolved and the parties agree on the wording of an agreed reference).
• Your workplace policies or past practice (for example, if your business has a consistent approach of providing “confirmation of employment” letters).

As a practical matter, many employers do provide at least a basic “statement of service” (confirming dates of employment and job title), even if they don’t provide character or performance commentary.

If you’re not sure what you’ve committed to, it’s a good time to check your Employment Contract and any exit documents before responding.

Can You Legally Refuse To Provide A Reference?

In general, yes - you can usually refuse to provide a reference in New Zealand.

But it’s important to separate two different things:

• Refusing to provide a reference at all (often permitted), and
• Providing a reference in a way that is misleading, unfair, or careless (which can create legal risk).

While there’s typically no blanket legal obligation to give a reference, the way you handle a request can still matter. For example, refusing a reference:

• might be questioned if it appears retaliatory (especially if there has been a recent dispute), or
• could cause issues if you previously agreed (in writing) to provide one.

Also, even when you’re allowed to refuse, it’s usually best to do it consistently and professionally. The safest approach is to have a clear internal process and a consistent “default” response that your managers follow.

When Refusing A Reference Is Usually The Smart Option

There are plenty of situations where declining to give a reference is the most risk-managed decision, such as:

• you didn’t supervise the employee closely and can’t confidently comment on performance
• there were serious performance concerns and you’re worried about disputes over what you say
• there were misconduct allegations or an unresolved investigation
• the employee left in contentious circumstances and you want to avoid escalating things
• you don’t have a consistent reference policy and different managers might say inconsistent things

If you do refuse, consider offering a neutral alternative (like confirmation of employment details). This often meets the practical needs of the employee and the prospective employer, without you stepping into a “character assessment” role.

What Are The Legal Risks If You Do Provide An Employment Reference?

If you choose to provide a reference, the bigger question becomes: what could go wrong?

Even a well-intentioned reference can create exposure if it’s not handled carefully. Common risk areas include defamation, privacy issues, and employment relationship issues (including disputes if the reference is perceived as punitive). In some cases, there can also be risk around inaccurate statements that others rely on - although claims of this kind are generally fact-specific and not straightforward.

Defamation And Unfairly Negative References

If you make statements that harm someone’s reputation, and those statements can’t be justified, you may be exposed to defamation risk.

This doesn’t mean you can’t be honest. But it does mean you should be careful about:

• speculation (“I think they were stealing”)
• rumour (“people said they weren’t trustworthy”)
• emotive or exaggerated language (“they were hopeless”)
• statements you can’t back up with records or examples

A good rule of thumb: if you can’t comfortably support the statement with documented facts (performance reviews, warning letters, investigation outcomes), it’s often safer not to include it.

Inaccurate Or Overly Positive References (Yes, Positive References Can Be Risky Too)

It’s easy to assume the risk is only with negative references, but overly positive references can also cause problems.

If you provide a glowing reference that you know is inaccurate (for example, to “help them move on”), and the new employer relies on it, that can create legal and practical risk. Whether a claim could be brought, and how strong it would be, depends on the circumstances (including what was said, who relied on it, and whether it was reasonable to do so).

From a business perspective, the safest reference is one that is:

• truthful
• fair
• based on what you actually observed
• limited to what you can confidently support

Privacy And Consent Issues Under The Privacy Act 2020

References almost always involve personal information.

Under the Privacy Act 2020, you need to handle personal information in a way that’s lawful and not overly intrusive. While there are situations where you can share information without express written consent, in practice it’s usually best to:

• confirm you have the employee’s consent to speak to the referee-checker, and
• limit what you disclose to what’s necessary and appropriate.

This is also where having a clear internal approach to employee information helps. Many small businesses document their approach to personal information through a Privacy Policy (and supporting internal procedures), even if the business isn’t “tech-heavy”.

Employment Relationship Issues (Including Ongoing Disputes)

Even after an employee leaves, the way you communicate about them can feed into disputes - especially where there’s an ongoing personal grievance, settlement discussions, or a sensitive termination.

For example, if an employee claims you gave a deliberately damaging reference because they raised a complaint or took sick leave, it can quickly become part of a wider conflict.

This is why it’s worth treating references as part of your overall employment risk management - alongside having proper employment documents and processes, such as an up-to-date Workplace Policy framework.

What’s The Best Practice Approach To Employment References For Small Businesses?

If you’re running a small business, you want a process that’s consistent, easy for your team to follow, and reduces the chance of an “off the cuff” reference creating a headache later.

A strong approach usually includes:

• centralising references (e.g. only the owner, HR, or a nominated manager provides them)
• limiting the format (written references only, or a standard script for phone references)
• sticking to facts (role, dates, duties, and - if appropriate - objective performance information)
• keeping records (save what you provided, and to whom, in case it’s later disputed)

Neutral Reference vs Detailed Reference

You don’t have to choose between “say everything” and “say nothing”. Many employers choose a middle ground.

Common options include:

• Confirmation of employment: job title, dates, and sometimes whether employment was full-time/part-time.
• Duties-based reference: a brief outline of key responsibilities and systems used (without personal commentary).
• Performance-based reference: only if you have solid, documented performance information and are comfortable standing behind it.

If you’re going to provide performance commentary, make sure it aligns with what you have already communicated to the employee during employment (for example, in reviews or performance management). Inconsistency is where disputes often start.

Make Sure Managers Don’t Go Off-Script

One of the most common risks for SMEs is a well-meaning supervisor giving an informal phone reference that includes:

• personal opinions stated as facts
• health or family information (which can be sensitive personal information)
• comments about why the employee left, without context
• inconsistent details compared to what the business would formally confirm

If you have multiple managers, you’ll usually benefit from a simple internal rule: reference requests get directed to one person, and everyone else politely declines.

How Should You Refuse A Reference (Without Creating Drama)?

If you decide not to provide a reference, you can still respond in a way that’s professional and fair.

In most situations, you’ll want to:

• respond promptly (silence can escalate tension)
• be polite and consistent (don’t get drawn into rehashing employment issues)
• offer a neutral confirmation of employment instead

A Simple Script You Can Use

Here’s a neutral template you can adapt:

• “Thanks for your request. Our policy is to provide confirmation of employment only (role and dates). We’re not able to provide a character or performance reference. If you’d like, we can confirm the employee’s job title and employment dates in writing.”

That approach does two useful things:

• it frames the decision as policy-based (not personal), and
• it still provides something practically useful.

Be Careful If There’s A Settlement Or Dispute In The Background

If an employee has raised a personal grievance, there are active settlement discussions, or you’ve entered into a settlement deed, the reference can become a negotiated issue.

In those situations, it’s common to agree on:

• whether a reference will be provided at all
• the exact wording of a reference
• who can provide it (and how future reference checks are handled)

This is one of those areas where it’s worth getting tailored legal advice, because a small misstep (or a manager giving an inconsistent verbal reference) can undermine what you thought was resolved.

If you’re documenting separation arrangements, a lawyer-drafted Deed of Settlement can help make sure everyone is on the same page about what can and can’t be said moving forward.

What Documents And Processes Help You Manage Reference Risk?

References aren’t usually where the “real” employment risk begins - they’re often where it shows up after the fact.

The best way to protect your business is to build strong foundations from day one, including clear documentation, consistent communication, and proper internal procedures.

Employment Agreements That Match Your Real-World Practices

Your employment agreement sets expectations and supports consistency. If you’re hiring (or updating contracts), it’s worth making sure you have the right structure and clauses for your workforce - and that you’re not relying on an outdated template.

For example, if you regularly engage casual staff, you might want a proper Employment Contract that reflects how those working arrangements actually operate.

Good Performance Management Records

If you ever do need to provide a performance-based reference, good records make it much easier to be fair, accurate, and consistent.

Even if you never give detailed references, strong performance documentation helps protect you if an employee later alleges that a poor reference was “made up” or retaliatory.

Privacy And Information Handling Systems

Because references involve personal information, it’s worth ensuring your business handles employee data carefully and consistently.

That might include things like:

• only sharing information with consent (or where clearly permitted)
• limiting who can access personnel files
• keeping records of who you spoke to and what you said

For some businesses, having clear internal privacy procedures and manager training can make it easier to avoid accidental oversharing.

Clear Exit Processes

When someone leaves, a simple checklist can reduce the chance of loose ends, misunderstandings, or inconsistent communications.

Your exit process might cover:

• final pay and outstanding entitlements
• return of company property
• reminders around confidentiality
• who to direct future reference requests to

If you’re already reviewing your termination and exit processes, it can help to align them with the documentation you use when employment ends, including any agreed outcomes and communications.

Key Takeaways

• In New Zealand, employers are generally not legally required to provide an employment reference, but your obligations can change if there is a contractual commitment or settlement agreement.
• You can usually refuse to provide a reference, and a consistent policy-based refusal is often the cleanest way to manage risk.
• If you do provide a reference, you should be careful about defamation risk and privacy obligations under the Privacy Act 2020, and avoid making statements you can’t support.
• A practical middle-ground approach is to provide a neutral confirmation of employment (role and dates) rather than a performance or character reference.
• Strong foundations - including clear employment agreements, documented performance management, and privacy processes - make reference requests much safer to handle.
• Where there’s a dispute or negotiated exit, it’s often best to document what will be said in future reference checks (and who is allowed to say it).

If you’d like help setting up a reference policy, reviewing your employment documents, or managing a tricky exit situation, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.