Thinking of resigning with immediate effect? Think again.

Thinking of resigning with immediate effect? Think again.
11 Feb 2021

Our labour courts and labour appeal courts have repeatedly been asked to determine whether an employee may resign with immediate effect (in other words, circumvent his/her notice period) without the employer’s agreement and, relatedly, what the effect of such act has on the employment relationship. Often a resignation with immediate effect occurs in a situation where an employee is undergoing disciplinary proceedings and he/she elects to resign immediately in a bid to avoid being dismissed for misconduct.

Our labour courts have vacillated in their approach to answering these questions. In some decisions, our courts have found that an employee may resign with immediate effect and that the employer cannot hold an employee to his/her notice period, whereas in other decisions our courts have found that the employer can indeed hold the employee to his/her notice period. This issue again recently found its way before the labour appeal court in the matter of Standard Bank of South Africa Limited v Nombulelo Cynthia Chiloane (JA 85/18) [2020].

In this matter, the employee was charged with cashing a cheque without following proper procedures. The cheque turned out to be fraudulent and caused a loss of about R30 000 for Standard Bank. Consequently, the employee was given notice to attend a disciplinary hearing. On the same day, the employee handed a letter to her superior in terms of which she tendered her resignation with immediate effect. The superior consulted with an official in the human resources department and was told that the employee was required to serve a four-week notice period as provided for in her contract of employment.

Standard Bank then proceeded with the employee’s disciplinary hearing during her notice period. The employee argued that her resignation (with immediate effect) terminated the employment relationship immediately and that Standard Bank was therefore not entitled to proceed with her disciplinary hearing. The chairperson of the disciplinary hearing rejected that argument and proceeded with the hearing. The employee and her attorney then left her disciplinary hearing, which proceeded in her absence. The employee was ultimately found guilty of the misconduct and dismissed.

Subsequently, the employee launched an urgent application in the labour court to challenge the validity of her dismissal. The labour court held that a resignation with immediate effect terminates the employment relationship immediately and Standard Bank was not permitted to hold the employee to her notice period. Accordingly, the labour court declared that the employee’s dismissal was null and void.

Dissatisfied with the labour court’s decision, Standard Bank appealed the decision to the labour appeal court which upheld its appeal. The labour appeal court held that if the contract provides for a notice period (as was the case here), the party that seeks to terminate the contract must give or serve the requisite notice. The labour appeal court found that the employee’s reliance on her resignation being with immediate effect was of no assistance to her. Standard Bank was therefore within its rights to hold the employee to her notice period and proceed with her disciplinary hearing during that period.

The effect of this significant judgement is that an employee’s failure to abide by his/her notice period amounts to a repudiation of the contract of employment. In those circumstances, an employer has an election. An employer may either waive the notice period and terminate the contract of employment, alternatively, reject the repudiation and hold the employee to his/her notice period. If an employer chooses the latter, it may discipline the employee during his/her notice period.

See also:

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Sandro Milo
Sandro Milo

Sandro Milo is a partner at Eversheds Sutherland's litigation group. He specialises in all aspects of litigation and arbitration, employment, and black economic empowerment law. Sandro is also an expert... Read more about Sandro Milo

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