RESIGNATION TO AVOID DISCIPLINARY STEPS

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It commonly happens that employees resign after receiving a Notice to attend a Disciplinary Hearing, to avoid being dismissed (and to avoid the embarrassment of going through the disciplinary hearing.) Such resignations are usually summary and with immediate effect.

It hardly makes sense for an employee who wants to avoid disciplinary steps, to resign on notice, and tender to work out the notice period, because the employment relationship remains intact during the notice period and the employer would still be lawfully entitled to proceed with disciplinary hearing, regardless of the notice of resignation, and possibly to dismiss the employee before the end of the notice period.

I’ve always advised employers to accept a resignation with immediate effect in a situation where the employer was seeking to dismiss the employee anyway, because it resolves an issue quickly, has the same financial effect as a summary dismissal (and may even be more advantageous because the resignation is earlier than the dismissal and will give the employer a saving) and will protect the employer against an alleged unfair dismissal case at the CCMA or a Bargaining Council. Most employees who resign in these circumstances don’t refer disputes but, strange as it may seem, some do and if  the resignation was in the face of disciplinary action,  a claim for constructive dismissal (which is the only correct claim in the circumstances, as the employer did not dismiss the employee) will fail.

So, if an employee resigns with immediate effect to avoid a disciplinary process in which you were seeking dismissal in the first place, let them go. If the resignation is on notice and the dismissible offence was relatively minor, such as continued late coming, I would also advise employers to accept the notice; if you really don’t want the employee on the premises anymore, send them home and pay in lieu of notice.

This advice is predicated on the statistic that most employees who are dismissed, refer unfair dismissal disputes to the CCMA or Bargaining Councils, and if one can avoid having to deal with that by accepting a resignation, it’s probably better all round.

However, there are employers who don’t want to let go and insist on taking disciplinary steps anyway. Usually it’s because the misconduct is quite serious and the employer wants to make an example of the accused, or wants to create a personnel record that will ensure the dismissed employee will not be re-employed somewhere in the future or, especially with financial institutions, the employer wants to be able to “blacklist” the person from ever working in financial services again.

The principle is that a resignation is a unilateral termination of an employment contract by the employee. When an employee resigns, they cease to be an employee from the moment the resignation takes effect.

Our Courts have considered the question whether an employer can reject a summary resignation where a contractual notice period is required and carry on with the disciplinary process as if the employee, who’s resigned summarily, remains employed, provided that these steps are taken within the required notice period.

There have been conflicting views.

InMtati v KPMG Services (Pty) Ltd (J2277/16) [2016] (LC) the Labour Court found that an employer no longer has employment jurisdiction over an employee who’s resigned with immediate effect.

In Coetzee v Zeitz Mocaa Foundation Trust [2018] 9 BLLR 909 (LC), the Labour Court found the opposite, namely that the employee’s obligation to give notice and therefore to remain in service, sustained the employer’s disciplinary authority over the employee during the required notice period. You could say that the employee remains a “deemed employee” during a contractual notice period the employee refuses to work out.

An employer loses its disciplinary jurisdiction and authority over an employee when a resignation becomes effective, for after all, an employer has authority only over its employees. When does a resignation become effective, if an employee resigns summarily in breach of an obligation to give notice of resignation?

In the KPMGcase, the Court found that a resignation is effective from the moment it’s  given. Whether the resignation breaches an obligation to give notice, is immaterial.

In Zeitz Mocaa, the Court found that a resignation can be effective only once the notice period has run its course.

The decision in Naidoo and another v Standard Bank SA Ltd and another (J1177/19), dated 24 May 2019, is the latest to deal with this issue.

Ms Naidoo and a colleague resigned summarily immediately after receiving charges of misconduct. Standard Bank pointed out that the employees were required to give 28 days’ notice and told them that the disciplinary hearing would continue as scheduled.

The employees immediately brought an application for an urgent interdict against Standard Bank, to restrain it from proceeding with the hearing.

In the Standard Bank case, the Court’s view is that termination of the employment relationship, after a resignation on notice, takes effect at the end of the notice period but that a summary resignation is immediately effective.

That should be the end of it. Once the employees had resigned, Standard Bank had no further jurisdiction over them.

To avoid this undesirable (from the employer’s perspective) conclusion to the matter, it has been argued that a failure to give the contractual notice is a breach of contract and that an employer has the usual remedies for breach of contract. One remedy is to reject the repudiation of the employer (by resigning summarily) of the contract of employment, or at least one term of it, to uphold the contract and to hold the employee liable for specific performance, i.e. to require the employee to do what the contract requires them to do.

 In this argument, if one simply tells the employee that the employer holds them to the contract, the employer retains its disciplinary jurisdiction over the employee at least for the balance of the contractual notice period.

In Standard Bank, the Court rejected this simplistic solution.  Specific performance cannot simply be claimed in a letter. An employer, like Standard Bank, who wants to rely on this remedy, must make an application to court for an order of specific performance. If a court grants the order, an employer may continue with disciplinary proceedings after the employee’s summary resignation but only during the stipulated period of notice.

Standard Bank had not even sought, much less obtained, an order of specific performance against Ms Naidoo and her colleague.

The application for an interdict against Standard Bank was successful.

The principle that a summary resignation is immediately effective has been restated.

Employers who really want to proceed with disciplinary steps after a summary resignation, can approach the Court for an order of specific performance to confirm continued disciplinary jurisdiction over the employee, but this process will be expensive and employers should think twice whether it’s worth the candle just to be able to dismiss an employee.

In general, my advice would still be to let the person go and close the chapter.

Neels van Rooyen
Labour Law Consultant
Hayes Incorporated

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