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Escape route: “Resignation with immediate effect”

By Michael Yeates, Director and Kirstin Swanepoel, Candidate Attorney, Employment, Cliffe Dekker Hofmeyr

 

The latest case in the ‘disciplining employees who have resigned with immediate effect’ saga has brought about more uncertainty as to whether an employee who resigns with immediate effect shortly before a disciplinary hearing can avoid disciplinary action and subsequent dismissal. In Naidoo and Another v Standard Bank SA Ltd and SBG Securities (Pty) Ltd (Case No: J1177/190 [Delivered 24 May 2019], the Labour Court ruled that an employer has no power to discipline employees who have been charged with acts of misconduct and dishonesty but who have resigned with immediate effect before the date of their disciplinary hearings. The correct way to proceed, according to the court, is to hold the employee to his or her contract by seeking an order for specific performance. 

 

The Coetzee judgment

The ruling in the Standard Bank matter goes directly against the decision in Coetzee v Zeitz MOCCA Foundation Trust and Others (2018) 39 ILJ 2529 LC where the Labour Court held that an employer may proceed with a disciplinary hearing even where the employee has resigned. The court in Coetzee emphasised that resignation with immediate effect is only permissible where there is a preceding material breach of contract by the employer or where the employer accepts the resignation with immediate effect. The court further held that statutorily and contractually, an employee is bound to give at least four weeks’ notice of his or her resignation and that there is no legal impediment to the prosecution of disciplinary proceedings and subsequent dismissal during an employee’s notice period. What the judgment in Coetzee ultimately says, is that an employee’s employment contract only comes to an end through resignation and at the end of the notice period.

 

The KPMG judgment

The judgment in Coetzee however, came hot on the heels of Kalipi Mtati v KPMG Services (Pty) Ltd (2017) 38 ILJ 1362 (LC) where the Labour Court had a different view to that in Coetzee, but one that is more in line with the latest judgment in the Standard Bank case. In the KPMG matter, an employee first submitted a resignation with notice after she was informed of an investigation regarding allegations of serious misconduct against her. The employer informed her that it would nonetheless continue with the disciplinary proceedings against her and as a result, the employee submitted a second resignation but this time, with immediate effect. The employer proceeded with the disciplinary hearing in her absence, finding her guilty and subsequently dismissing her. This caused the employee to approach the court on an urgent basis on the contention that the employer could not discipline her as she had resigned and that the chairperson’s decision was as a result, null and void.

The court in KPMG distinguished between situations where there is resignation with notice, in which case the employer may discipline the employee during the notice period, and situations where there is resignation with immediate effect, in which case the employer may not discipline the employee by virtue of the employment contract being terminated by the employee’s resignation with immediate effect. The court therefore concluded that the employer’s decision to dismiss the employee was a nullity as the employee could not be disciplined after resigning with immediate effect.

 

The Standard Bank judgment

In the Standard Bank matter the employees sought to challenge the employer’s jurisdiction to continue with their disciplinary hearings relating to charges of gross misconduct and dishonesty, post their resignation with immediate effect. Upon receipt of the employees’ resignation with immediate effect, the employer responded by stating that it did not accept the resignations and sought to hold them to their notice periods. The employees then approached the court on an urgent basis.

In looking at the effect of the resignation in this matter, the court held that where an employee resigns without giving notice, the employee is in breach of the employment contract, as was the scenario in this case. In concluding that there was in fact a contractual breach by the employees by resigning without notice, the court referred to the matter of Vodacom (Pty) Ltd v Motsa and Another (2016) 5 BLLR 523 (LC) which states that in such an instance, an employer may hold the employee to the contract by seeking an order for specific performance. The court in Standard Bank then went on to state that there is no legal basis for an approach whereby an employer may proceed with a disciplinary hearing without first approaching the court for an order for specific performance, as was followed in the Coetzee judgment.

In concluding its analysis, the court in the Standard Bank matter held that resignation with immediate effect brings about an end to the employment relationship, albeit in breach of the termination clause. The result was thus that the employer has no power to discipline the employees after their resignation with immediate effect. The employer was consequently interdicted from continuing with the intended disciplinary enquiries against the employees.

 

Conclusion

The position on whether an employer may continue disciplining an employee post resignation with immediate effect is at this point uncertain considering the three conflicting judgments discussed above. However, if following the latest case law, the position is that an employer may not discipline employees post resignation with immediate effect. Employers who insist on taking disciplinary action where an employee has resigned with immediate effect, will have to resort to the common law remedies available and seek orders for specific performance to hold such an employee to his or her notice period.

 

For more information contact Michael Yeates at

Article published with the kind courtesy of Cliffe Dekker Hofmeyr www.cliffedekkerhofmeyr.com

 

 

 

 

 

 

 

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