What to do when an employee resigns before their disciplinary hearing?
We have found that very often an employee will resign “with immediate effect” in response to a notice to attend a disciplinary hearing. They do this in the hope of evading the disciplinary hearing and its possible consequences. The rationale is that having resigned with immediate effect, the employment relationship is immediately terminated. Labour Court decisions on the correct legal position have not been consistent, but in the main supported the view that once the employee resigns, the employment relationship is terminated and thus the employer will have no right to pursue disciplinary action. This short note will provide clarity on what an employer should do when faced with an employee who resigns with immediate effect before the disciplinary hearing, thanks to a recent decision of the Labour Appeal Court (LAC).
In the matter of Chiloane v Standard Bank of SA Ltd, the Labour Court held 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 LAC, this view was held to be incorrect. The LAC emphasized that employment relationships are governed by either contract or statute or both. The Basic Conditions of Employment Act (BCEA) stipulates the minimum notice period which applies to the termination of an employment relationship. When the individual employment contract is silent on what notice period would apply on termination of employment, the notice provisions in the BCEA 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 contract law, when one party attempts to terminate a contract in a manner which they are not entitled to, their act is called an act of repudiation. The “innocent party” has an election of whether to accept the repudiation, terminate the contract and claim damages, or reject the repudiation and hold the other party to the contract.
In the Chiloane matter, the parties had contractually agreed to give each other four weeks’ notice of termination. 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 LAC 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 article is for general information should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact an attorney for specific and detailed advice. Errors and omissions excepted (E&OE)