Many companies face a dilemma: they cannot continue with disciplinary action against an employee if the person resigns with immediate effect.
The latest labour court decision held that when an employee resigns with immediate effect, the employment relationship ends. The employer then has to approach the courts for an order to have the employee serve their notice period to continue with the disciplinary action.
Johan Botes, head of Baker McKenzie’s employment practice in Johannesburg, says that in practice, courts are reluctant to issue an order for specific performance (to honour the employment contract by working the notice period) if it means holding someone against their will.
In the recent case between Tristyn Naidoo and Sedayshum Naidu versus Standard Bank and SBG Securities, the labour court was called to determine whether their resignations with immediate effect meant the employment relationships were immediately terminated. It found that they did.
It was also called to determine whether the employer had the right to hold the employees to their notice periods, and whether the employer could proceed with the disciplinary hearings despite them having left the building, so to speak.
The court found that if the employer wanted them to honour the contract by serving the notice period, it had to approach the court for the specific performance order.
The labour court came to the same conclusion in a 2017 case, but found in a 2018 case that an employment relationship only terminates once the notice period has been concluded. In the 2018 case, the court also held that resignations with immediate effect are only permitted where the employer has committed a material breach of the employment contract or if the employer accepts the resignation with immediate effect.
Botes says given the current uncertain legal position they are awaiting more clarity from a higher court such as the labour appeal court.
However, there are certain remedies available to employers who find themselves in this dilemma. If there has been evidence of fraud or theft, the employer can lay criminal charges and it is then up to the National Prosecuting Authority to decide whether it will prosecute or not.
The employer can also institute a civil claim for damages suffered. “If you have caused me harm or damaged my property, I have the right to recover it from you,” says Botes. “The fact that you worked for me does not give you the right to a get-out-of-jail-free card preventing me from claiming damages from you.”
The notice month’s remuneration cannot form part of the damages claim, even though the view is that the employee owes it to the company because the employer did not have the benefit of the their services for the notice period.
The court’s approach is that the employer does not have the benefit of the employee’s service, therefore there is no obligation to pay them.
However, if you had to call in an expert on short notice to do the work, and doing costs you more during that time, you are entitled to claim the differential. In many instances employers find that the damage suffered is not extensive enough to warrant the legal costs, says Botes.
Upside of a resignation …
Many employers may even be relieved when the employee resigns with immediate effect. There is no need for a disciplinary process, and no potential case before the Commission for Conciliation, Mediation and Arbitration because the employee was not fired.
And the downside
The other side of the coin is that the employee re-enters the workforce with a clean record. Botes says there is nothing preventing the employer from informing future prospective employers about the circumstances under which the person left. It will then be up to the employee to decide if they want to initiate a claim for defamation.
Prospective employers can be proactive by making sure that their employment process is designed to identify ‘bad leavers’ before any hiring takes place, and ensure that they have the right to fire the person if the true facts of their resignation surface.
Botes says employers may request a signed undertaking from new employees that they have made a full disclosure of all facts that may impact on the decision to employ them or not.
The employer is entitled to ask about previous charges, investigations, disciplinary action and the outcomes.