One of the ways that an employment relationship is terminated is through resignation by the employee. This usually requires the employee providing notice to the employer in line with his/her contract of employment, alternatively in terms of the minimum statutory notice periods prescribed by the Basic Conditions of Employment Act[1]. It is, however, not uncommon for employees to tender resignation letters with immediate effect, meaning the employee would cease work on the date the resignation is tendered.
The question then arises as to the impact such resignation may have in circumstances where an employer has discovered, investigated and charged the employee with misconduct.
In the controversial case of Mtati v KPMG Services Pty Ltd,[2] Mtati faced allegations of serious misconduct and in turn tendered her resignation with notice to the company. KPMG Services accepted the resignation but indicated that given the fact that the employee was still due to work her notice period, it intended to proceed with disciplinary action against her. Mtati then tendered a further, second resignation letter, indicating that she was now resigning with ‘immediate effect’. Notwithstanding the foregoing, the chairperson of the hearing proceeded with the hearing and dismissed Mtati in absentia. The Labour Court, in determining an application for an interdict to the disciplinary proceedings launched by Mtati, found that the second resignation by her, ‘with immediate effect’ restricted the employer’s right to proceed with disciplinary action against her, as the employment relationship had been severed. The decision of the Labour Court has subsequently been overturned, however, the Labour Appeal Court did not provide any clarity in respect of the issue at hand and simply set aside the prior finding on the grounds of mootness.
The question once again arose in the case of Coetzee v Zeitz MOCCA Foundation Trust and Others[3], where the Labour Court took a different view from that advanced in the case of Mtati. Coetzee, an Executive Director facing allegations of serious misconduct, tendered his resignation, which the employer disputed that it had accepted as a resignation with ‘immediate effect’. The Court found that the employer’s version of events was most probably in the circumstances. It, therefore, held that Coetzee was to serve his notice period during which time the employer could finalise the disciplinary process against him.
In reaching its decision, the court highlighted that an employer has an election to either accept the resignation, cancelling the contract of employment and sue for breach of contract and damages alternatively, hold the employee to the terms of the contract and seek specific performance.
The Labour Court has since caused further confusion in respect of the issue by way of the latest case of Naidoo and Another v Standard Bank SA Ltd and Another[4]. The Court concluded that an employer lacks the power to discipline an employee who has resigned with ‘immediate effect’. Whilst the employer could not discipline the employee in such circumstances the Court emphasised that the employer could nevertheless approach the court seeking an urgent order for specific performance.
Given the conflicting judgments made by the Labour Court throughout the years the position to be followed by an employer faced with such circumstances remains uncertain, until such time that the Labour Appeal Court comprehensively considers the matter. In the interim employers are urged to adhere to the finding of the court in the Standard Bank case and refrain from pursuing disciplinary action against those employees who resign with immediate effect. Employers should further have regard to the fact that seeking orders of specific performance or suing for breach of contract and damages out of the Labour Court may prove time-consuming and expensive. The potential loss must be weighed against the potential gain of such action before an employer seeking to exercise the remedies available to it.
For further assistance and advice please contact your nearest SEESA office.
About the author:
Candice Govender is an admitted attorney of the High Court of South Africa since 2016. She obtained her LLB degree in 2014 and her LLM degree in 2015 from the University of KwaZulu-Natal. Candice joined SEESA in 2018 after having practiced as a Civil Litigation associate attorney.
Resources:
- The Basic Condition of Employment Act, No. 75 of 1997
- Mtati v KPMG Services (Pty) Ltd [2017] 3 BLLR 315 (LC)
- Coetzee v The Zeitz MOCAA Foundation Trust and others [2018] ZALCCT 20
- Naidoo v Standard Bank SA Ltd (J1177/19) [2019] ZALCJHB 168; [2019] 9 BLLR 934