DOES RESIGNING IN THE FACE OF DISCIPLINARY ACTION ‘LET YOU OFF THE HOOK’?

By Sibusiso Dube Wednesday, October 14, 2020
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A question that has been the subject of numerous conflicting judgments in the Labour Court in recent years relates to what the legal implications are where an employee resigns with immediate effect in the face of disciplinary action.

It is a well-established principle that resignation is a unilateral act that does not require the acceptance of an employer. When an employee resigns, the employment relationship terminates.

The questions that our courts have been grappling with relate to the timing of such a termination of the employment contract, that is, when does it become effective and what are the legal implications thereof?

Employees, in trying to escape facing the consequences of disciplinary processes, typically for allegations relating to misconduct, opt to resign with immediate effect.

This decision often denies the employer the opportunity to conduct and conclude a fact-finding inquiry in the form of a disciplinary hearing and further denies the employer the opportunity to have the contractual or statutory notice period honoured by the employee.

The most recent judgement of the Labour Court on this topic confirms, as a principle, that an employer has a right to hold an employee to his/her notice period in terms of the employment contract and has made clear the manner in which the employer can enforce its right in this regard.

Despite this recent case law, previous judgments from the Labour Court on this topic remain relevant and a court of a higher status will in the future be required to make a pronouncement on the correct and final legal position. As things stand, employers and employees may still advance differing arguments based on the available jurisprudence.

In the case of Vodacom (Pty) Ltd v Motsa and Another, the Court’s position was that when an employee resigns and gives the required notice, the contract terminates at the end of the notice period. Further that when an employee does not give the required notice period, this amounts to a breach of the contract and the employer may hold the employee to the contract and/or seek an order for specific performance requiring the employee to serve the period of notice

In the case of Coetzee v Zeitz Mocaa Foundation Trust, the Court held that resignation takes full effect at the end of the notice period and that resigning with immediate effect constitutes a breach of the employment contract. An employer is not bound to accept a resignation with immediate effect.

In terms of this case, if an employer elects to hold the employee to the notice period, then the employer is entitled to proceed to discipline an employee during the subsistence of the employee’s notice period.

Pursuant to the two cases above, there was a shift in the law and a more cumbersome legal process was provided for in instances where an employer sought to enforce its right to hold an employee to the notice period arising from a resignation with immediate effect.

This shift was introduced in the case of Naidoo and Another v Standard Bank of SA Ltd and Another. In terms of the Court’s position in this case, an employer was no longer entitled to continue with any disciplinary action taken against an employee who had resigned with immediate effect unless that employer had taken the step of approaching the court for an order for specific performance against the employee who had tendered a resignation with immediate effect.

This shift in the in the law meant that employers were left with the impractical and costly burden of going to court on an urgent basis for an order for specific performance in instances where they wished to proceed with disciplinary action against employees who had resigned with immediate effect.

The potential result of this, for example, would mean that employees who are alleged to have committed serious acts of misconduct (including but not limited to fraud, theft, sexual harassment and gross dishonesty, for example), could never be called to account for their actions.

This could pose a significant risk for future employers, especially in industries such as the banking sector.

The difficulty highlighted above has now been done away with by the recent decision in the case of Mthimkhulu v Standard Bank, which departed from the Naidoo judgement and essentially held that where an employee seeks to terminate his/her employment contract prematurely, that amounts to a repudiation of the contract.

The employer will thereafter have an election to accept the repudiation, thereby bringing the contract to an end; alternatively, not to accept the repudiation and hold the employee to his/her notice period.

Importantly, the Court held that an employer is not required to obtain an order for specific performance in order to exercise its election to hold an employee to his/her notice period.

The effect of the Mthimkhulu judgment is that where an employee resigns with immediate effect in the face of a disciplinary process, an employer may hold that employee to his/her notice period and proceed with taking disciplinary action against the employee during the subsistence of that employee’s notice period

The employer in this instance will merely be required to notify the employee that it wishes to hold him/her to the notice period, thus rejecting the employee’s repudiation.

This approach ensures that employees who commit acts of gross misconduct are held accountable for their actions.