Member Article

The past year has seen a number of high-profile instances of employees resigning, allegedly to avoid disciplinary proceedings against them. This issue was dealt with in the case of Mtati v KPMG Services (Pty) Limited.

The employee in this matter was informed by her employer that an investigation was being conducted into allegations of misconduct levelled against her. She then provided her employer with a letter in which she tendered her notice of resignation. The employer took this to mean that she would serve out her notice period of one month. Ten days later, she was informed that disciplinary action would be taken against her. This prompted her to provide her employer with another letter in which she was resigning “with immediate effect”. 

The employer took the view that this second letter did not change the fact that she had resigned by giving notice of termination and that it was entitled to carry on with the disciplinary inquiry. She attended the inquiry and argued that the employer had no jurisdiction to proceed with it because she had resigned with immediate effect. When the chairperson of the disciplinary inquiry rejected this argument, she left the hearing and approached the Labour Court on an urgent basis for an order interdicting the employer from proceeding with the inquiry. 

The Labour Court ruled that if an employee resigns “with immediate effect”, the contract of employment comes to an end with immediate effect and the employer loses the right to proceed with a disciplinary hearing against that employee. Accordingly, if an employer proceeds with a disciplinary hearing, despite the employee’s immediate resignation, the disciplinary hearing will be considered to be null and void. This, according, to the court, must be distinguished from the situation where an employee gives notice to terminate the employment. Here, the employment contract would continue to run until the notice period expires and the employer may still discipline the employee during the notice period. Similarly, all obligations that arise from the contract are still binding between the employer and the employee during the notice period. This includes the duty of the employer to pay the salary of the employee. 

The Labour Court also held that an employee does not require consent from the employer to withdraw the initial resignation where the employee has previously shown or expressed an intention to serve the notice period. There is no requirement in law that an employee who resigns on notice, which is then accepted by the employer, cannot thereafter resign with immediate effect during the notice period.

However, the court did confirm that if notice is given late, or if short notice is given, it results in the employee being in breach of contract. This entitles the employer to either hold the employee to what remains of the contract or to cancel it summarily and sue for damages. If the employer elects to hold the employee to the contract, the contract terminates when the notice period expires. 

The court referred to the arbitration award in SALSTAFF obo Bezuidenhout v Metrorail, in which advocate John Grogan found that the effect of holding the employee to the notice period would not alter the legal consequences of the resignation (ie, that the employment relationship terminates as a result of the employee’s unilateral act). Therefore, holding the employee to the contract would mean no more than requiring the employee to work out her notice period (resulting in the actual date of termination being delayed). 

The Mtati judgment suggests that, when an employee resigns with immediate effect it takes away the employer’s right to discipline and dismiss the employee, even if the employer elects to hold the employee to the notice period. It is submitted,  however, that this is arguably incorrect. In particular, if the employer elects to hold the employee to the notice period, and the employee reports to work and continues tendering services, it cannot arguably be correct that the employer is then precluded from subsequently dismissing the employee for any serious misconduct committed while in its employ, simply by virtue of the fact that the employee had previously resigned with immediate effect. By holding the employee to the notice period, the effect is that the date of termination of the employment relationship is delayed to the end of the notice period. During that period, the employment relationship remains in existence and, arguably, there is no reason why the employer cannot then take steps to terminate such relationship during that period.  

In strict legal terms, if the employee does not report for work despite being informed by the employer that it is holding the employee to the notice period, and the employee therefore persists with his breach of the employment contract, it may be necessary for the employer to approach the court to obtain an order for specific performance. The granting of an order for specific performance in such instances is something that falls within the court’s discretion, and it may be disinclined to make such an order given the personal nature of the employment relationship, although that is not always the case and it may be possible to obtain such an order in appropriate instances. In practice, however, the employer may inform the employee that it will proceed with a disciplinary hearing in the employee’s absence should the employee not report for the hearing. 

Notwithstanding that the reasoning in the Mtati judgment in respect of the consequences of holding the employee to the notice period may not be correct, we suggest that employers carefully consider whether it is beneficial to continue with a disciplinary hearing when an employee has expressed his or her intention to resign with immediate effect.