Resignation with immediate effect –how does this affect pending disciplinary action?

It is not uncommon for an employee to resign “with immediate effect”, in the hopes of evading a disciplinary hearing.

The argument is that having resigned with immediate effect, the employment relationship is immediately terminated and thus the employer will have no right to pursue disciplinary action. Labour Court decisions on the correct legal position have not been consistent, but in the main support this argument.

So it was in the matter of Chiloane v Standard Bank of SA Ltd, the Labour Court finding that once Ms Chiloane had handed in her resignation indicating that the resignation was with immediate effect, the employment relationship came to an immediate end and her dismissal pursuant to a disciplinary hearing held thereafter was “null and void”. In terms of this view, an employer has no right to hold an employee to a notice period during which disciplinary action could be taken, on the basis that the resignation is a valid unilateral act.

On appeal to the Labour Appeal Court, this view was held to be misconceived. The court per Waglay JP emphasized that employment relationships are governed by either contract or statute or both. Regarding the notice period that would apply on termination of employment, where there is no contractual agreement on the period of notice to be given to each other, the notice provisions in the Basic Conditions of Employment Act provisions would apply. It is open to the party on the receiving end of a termination which is non-compliant with the agreed or statutory notice period not to enforce that term, but otherwise the term remains valid and binding and must be complied with. In other words, a resignation not in compliance with either the contractual or statutory notice period will not constitute a valid unilateral termination of the employment relationship.

In this matter, the employer and employee had contractually agreed to give each other four weeks’ notice of termination, and for the termination to be lawful, this is what the employee therefore had to do, said the judge. By giving notice with immediate effect, Ms Chiloane had effectively repudiated her contract, and that being so, the employer as the innocent party could elect not to accept the repudiation. The employer in this case had not accepted the repudiation; on the contrary, it had instructed Ms Chiloane to serve out her notice period, albeit remaining at home on suspension pending a disciplinary hearing set to take place within the notice period.

On this basis the appeal succeeded, and the decision of the Labour Court was set aside. This judgment of the Labour Appeal Court has provided much-needed clarity on the legal position following a resignation “with immediate effect”, as it pertains to disciplinary proceedings; employers may initiate or continue with a disciplinary hearing, provided that it is conducted within the agreed or statutory notice period.

This clarity will doubtless be cold comfort to employees who might wish to evade a disciplinary hearing by invoking the concept of resignation being a unilateral act, but conversely, as the court pointed out in Steenkamp & others v Edcon Ltd (National Union of Metalworkers of SA intervening)[2016] 4 BLLR 335 (CC); (2016) 37 ILJ 564 (CC), dismissing an employee is also a unilateral act, and except where summary dismissal is warranted, doing so without complying with the requisite notice period will not bring an end to the employment relationship unless accepted by the employee.

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