Resigning with immediate effect



Can an employee avoid disciplinary action and potential dismissal by resigning "with immediate effect" when served with a disciplinary notice? This issue is complicated due to the fact that an employment contract is a hybrid situation where both labour law as well as purely contractual principles apply. Navigating these two fields of law in practice is not always easy. For most of our time in the labour relations field, we had applied the principle that whilst an employee is still under notice, his/her employment has not terminated and hence disciplinary action could be proceeded with despite a resignation. Case law supported this. However, then came a few Labour Court judgements that upset the apple cart and stated the contrary, indicating that the employment relationship (and therefore the right to discipline) automatically ends on the date the employee stipulates in their resignation letter - even if this is contrary to the notice requirements in their contract or in terms of the BCEA. Other Labour Court judgements disagreed, however, and so we have had a very confusing time of it for a while, waiting for one of these cases to go to the Labour Appeal Court to provide clarity on this issue. Finally, the Labour Appeal Court had its say on 10 December 2020 in the case of Standard Bank of South Africa Limited v Chiloane [2021] 42 ILJ 863 (LAC), essentially confirming the original position: ♦️️ Resignation with immediate effect does not terminate the employment relationship when a notice period still applies, and the employment relationship will only terminate upon completion of the notice period - unless the employer specifically waives notice or does not seek to enforce it. ♦️️ The employer can therefore legally continue with (and should complete) disciplinary proceedings during the notice period, despite the employee's attempted unlawful early termination / repudiation of the employment contract. It is therefore up to the employer to decide, when an employee resigns 'with immediate effect' under these circumstances, what it wants to do:

  • Accepting the short notice (and the employee's repudiation of the employment contract) and waiving the employee's notice obligations - effectively parting ways by agreement. and only paying the employee's salary up to the date of resignation, plus accrued leave, etc..

OR

  • [Contractual law] Accepting the repudiation, cancelling the contract and suing the employee in civil court for damages - if actual damages can be proved by the employer.

OR

  • Electing to keep the employee to the relevant notice period - in which case disciplinary action can be proceeded with, as long as it is finalised prior to the end of the notice period. This may well mean that an employee's reason for termination may end up being dismissal as opposed to resignation - which they will then of course be entitled to refer to the CCMA. If the employee elects not to participate in the disciplinary proceedings, the employer's disciplinary procedure should normally make provision for it being conducted in the employee's absence if he/she had been advised that this would be the case. 'No work no pay' will also apply if the employee does not attend the disciplinary process and does not offer his/her services during the notice period.

Whatever the employer's election in terms of the above - it is crucial that this election is properly communicated to the employee and that there is a proper record of this. This will especially be important if there is further legal action by either party, e.g. by the employee claiming unfair dismissal, or if the employer wishes to sue the employee for damages.


Remember that none of this means that an employer is entitled to do things such as unilateral set-off of accrued leave or other amounts against the notice not worked by the employee. That is another debate altogether.


For the purposes of discipline, however, this is a welcome decision by the Labour Appeal Court and provides much-needed certainty. Many employers may prefer to call it quits if an employee chooses to resign rather than to face a disciplinary hearing - but there are occasions (such as dishonesty) where it is necessary for employees not to be allowed to get away with a clean record and be let loose on the next unsuspecting employer.


© Judith Griessel