What Is a Factual Reference? Employment Reference Rules in New Zealand

If you’ve ever had a former employee ask for a reference, you’ve probably had the same thought most business owners do: what can I safely say?

References feel simple - until you’re worried about getting it wrong. Say too much, and you risk a dispute. Say too little, and you might not be helping the person (or the prospective employer) in a meaningful way. That’s where giving a factual reference can be a practical middle-ground.

In this guide, we’ll break down what a factual reference is, why many New Zealand businesses choose them, and how to give them in a way that’s fair, consistent, and legally sensible.

What Is A Factual Reference?

A factual reference is a reference that sticks to objective, verifiable information about a person’s employment, rather than opinions or character assessments.

In practice, a factual reference usually confirms things like:

• their job title
• dates of employment (start and finish)
• employment status (full-time, part-time, fixed-term, casual)
• a high-level summary of key duties
• final salary (sometimes) or confirmation of salary range (sometimes)
• whether there was any formal disciplinary process on record (only if you can state this accurately, it’s appropriately documented, and you have a clear basis to disclose it)

What it generally doesn’t include is commentary like “they were amazing”, “they were unreliable”, or “I wouldn’t rehire them”. Those statements are more subjective, and that’s where legal and practical risk can creep in.

For many small businesses, factual references are appealing because they are:

• consistent (easier to standardise across all staff)
• lower risk (less likely to be disputed)
• faster (simple to produce)
• fair (reduces concerns about unconscious bias)

Why Do Employers Use Factual References?

From a business owner’s perspective, the goal is usually to provide a reference that is helpful but doesn’t create unnecessary exposure for your business.

A factual reference can help you strike that balance, especially when:

• the employment relationship ended on difficult terms
• there were performance issues, but you want to avoid debating details later
• you’re concerned about privacy and only want to disclose what’s necessary
• different managers have different “styles” of giving references and you want consistency
• you want a clear internal process (especially if you’re growing and hiring more staff)

It’s also worth remembering that references can become “evidence” later in a dispute - for example, if an employee brings a personal grievance and your reference contradicts the story on file, that inconsistency can cause problems.

Having clear internal documentation (like an Employment Contract and a consistent exit process) makes it much easier to provide accurate factual references without scrambling later.

Are Employers Legally Required To Provide A Reference In New Zealand?

In many cases, there’s no general legal requirement for an employer to provide a reference.

However, there are a few important “real world” considerations:

• Employment agreements or policies: sometimes your employment agreement, HR policies, or settlement terms might deal with references.
• Consistency and fairness: if you provide references for some employees but not others, you can create perceptions of unfairness (and in some circumstances, this can feed into wider employment issues).
• Be clear and don’t mislead: even where you’re not obliged to provide a reference, if you choose to provide one it should be accurate and not misleading. (Some obligations can also continue after employment ends - for example, confidentiality and privacy obligations.)

If you want a clean approach that your team can follow, it can help to include your reference process in a workplace policy or staff handbook, so everyone knows what to expect.

What Are The Legal Risks If You Get A Reference Wrong?

References are one of those business tasks that feels informal, but they can carry legal risk if handled poorly.

Here are the main risk areas for employers in New Zealand.

1) Defamation Risk

If you provide negative information that harms someone’s reputation, and it isn’t true (or can’t be supported), you could potentially face a defamation risk.

Even if you believe what you said is true, disputes often come down to what you can prove and whether the information was communicated responsibly.

This is one reason many employers prefer a factual reference - it reduces the chance you’ll be pulled into an argument about personal views or “tone”.

2) Misleading Or Inaccurate Statements

A reference should be accurate. If you say something that isn’t correct (even by accident), it can create issues for you later.

Common examples include:

• giving incorrect employment dates
• stating the wrong job title
• suggesting someone resigned when they were actually dismissed (or vice versa)
• implying performance outcomes that aren’t supported by records

Accuracy is also why it’s smart to have a process about who is authorised to give references (for example, only the owner, HR manager, or a designated director).

3) Privacy Issues

Employment information is personal information, and you’ll often be handling it alongside other sensitive details (performance history, reasons for leaving, disciplinary steps, health information, and so on).

Under the Privacy Act 2020, you generally need to think about:

• whether you have a lawful basis to share the information
• whether the employee has consented (explicitly or implicitly) to you giving a reference
• whether you’re sharing only what’s necessary and appropriate
• how you store and send the reference (especially if it contains personal details)

If your business already collects and uses personal information as part of operations, having a properly drafted Privacy Policy can help you align internal practices across the board (not just for customers, but also for staff-related information handling).

4) Employment Relationship Fallout

Even where a reference doesn’t lead to a formal claim, it can create conflict that costs you time and energy - especially if the employee disputes what you said, or if your reference doesn’t match your internal records.

This can be particularly sensitive when a role ended after a structured process (performance management, disciplinary steps, or dismissal). If you’re ever unsure about what you can properly confirm, it’s worth getting tailored advice first, rather than trying to “wing it”.

What Should A Factual Reference Include (And Avoid)?

If you’re going to offer a factual reference as your standard approach, the key is to make it genuinely factual, not a disguised performance review.

What To Include In A Factual Reference

A solid factual reference often covers:

• Employee’s full name (as recorded in your employment file)
• Business name and contact details
• Your name and position (and confirmation you’re authorised to provide the reference)
• Job title
• Employment dates (start and end)
• Employment type (permanent, fixed-term, casual)
• Hours of work (if relevant and straightforward)
• Brief duties summary (high-level and role-based, not personal commentary)

You can also include factual statements like:

• “X reported to the Operations Manager.”
• “X’s role involved handling cash, closing the store, and supervising junior staff.”
• “X held a forklift licence while employed with us.” (if true and documented)

What To Avoid (Or Be Very Careful With)

Be careful about including:

• opinions (e.g. “great attitude”, “lazy”, “difficult”)
• medical or health information (this is especially sensitive)
• gossip or unverified allegations
• details about disputes unless you have a clear, lawful reason, it’s documented, and it’s appropriate to disclose
• coded language (e.g. “we can only provide a factual reference” as a hint that something was wrong)

Even if something is technically “true”, you should still consider whether it is necessary, fair, and appropriate to disclose in a reference context.

If your team needs a consistent foundation for employment documentation generally, having properly drafted Employment Contract templates for your different roles can make factual references easier, because role details and status are already recorded clearly.

How To Set Up A Low-Risk Reference Process For Your Business

A good reference process protects your business in two ways: it reduces legal risk, and it reduces the chance of messy back-and-forth later.

Here’s a practical process many small businesses use.

1) Decide Your Default Position: Factual Only Vs Full Reference

First, choose a consistent policy:

• Factual references only (most consistent, lower risk)
• Factual reference plus limited comment (only where appropriate and supported)
• Case-by-case (more flexible, but higher risk of inconsistency)

If you do case-by-case, make sure the decision-maker is consistent and you document why the approach differs.

2) Restrict Who Can Give References

It’s common to limit references to a specific person (for example, the owner, office manager, or a director). This avoids well-meaning supervisors accidentally oversharing or giving inconsistent information.

This is particularly useful where more than one person can speak “for the business” - having a clear internal delegation helps avoid confusion about who is authorised to respond. If you operate through a company, your governance documents (like a Company Constitution) can help clarify decision-making and authority.

3) Get Consent (And Keep It Simple)

Often, consent is implied when an employee provides your details as a referee. But implied consent can get messy if the person didn’t actually intend you to share certain information.

A practical approach is:

• ask the employee to email you confirming they consent to you providing a reference
• confirm who the reference is going to (the new employer’s name, if possible)
• confirm the format (phone call vs written factual reference)

This small step can save you a lot of trouble later.

4) Use A Standard Factual Reference Template

Templates can be risky when used for contracts - but for internal admin documents like factual reference letters, a standard template is often a good idea.

A template helps you:

• stay consistent
• avoid forgetting key facts
• avoid “freestyling” into opinion or unnecessary details

Just make sure someone checks the details carefully each time before it goes out.

5) Keep Records Of What You Said

If you provide a reference over the phone, consider making a short file note: date, who called, what you confirmed.

If you provide a written factual reference, keep a copy on file.

This is a simple risk-management step - especially if there’s a chance the reference could be questioned later.

Special Situations: References After Settlement Agreements, Redundancies, And Business Sales

Some situations require extra care because they’re more likely to be sensitive or legally complex.

References As Part Of A Settlement

If you’ve resolved an employment dispute with a deed of settlement, it may include an agreed reference (sometimes even the exact wording).

In that situation, you should follow the settlement terms carefully. If you’re unsure what you’re allowed (or required) to say, get advice before responding to any reference request.

This is one of those areas where a properly drafted Deed of Settlement can prevent misunderstandings later, because it can clearly set expectations about references and communications.

References After Redundancy

Redundancy can be emotional, but it doesn’t automatically mean the employee’s performance was an issue.

If you’re providing a factual reference after redundancy, be especially careful not to imply poor performance if that wasn’t the reason for termination.

If you’re planning a restructure and want to reduce the chance of problems later, it’s worth getting advice on the process early. That includes ensuring your communications and documentation are consistent right through to any references you might later provide.

References When You’ve Sold Your Business

If you’ve sold your business, you may still receive reference requests for former staff.

This can raise tricky questions, like:

• Which entity was actually the employer at the time?
• Who holds the employment records now?
• Are you disclosing information you’re still entitled to disclose?

These issues often come up when employment arrangements change as part of a sale. Having a clear business sale process and documentation can make it easier to know who should respond and what records apply.

Key Takeaways

• A factual reference focuses on objective, verifiable employment information (like role, dates, and duties), rather than opinion-based commentary.
• Many New Zealand employers use factual references because they’re consistent, efficient, and generally lower risk than subjective references.
• Key legal risk areas include defamation, privacy issues under the Privacy Act 2020, and disputes caused by inaccurate or inconsistent statements.
• A good reference process usually includes limiting who can provide references, confirming consent, using a standard factual reference template, and keeping records of what you said.
• Be extra careful with references connected to settlements, redundancies, or business sales, where wording and context matter a lot.

If you’d like help setting up a clear reference process, reviewing your employment documentation, or managing a sensitive exit (so you’re protected from day one), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.