19 Oct 2020

Who's First on the Ball when a Resignation is Tactical?

by Cameron Wilson, Senior Associate, Durban,
Practice Area(s): Employment |

Resignation is a unilateral act by an Employee, it does not require acceptance by an Employer before it comes into effect. What then is the correct process to adopt when an Employee has resigned before, or in the midst, of a disciplinary process? Previous case law  has unfortunately not been consistent and Employers have had to make the difficult election to seek an order for specific performance before it can  hold an Employee to his notice period, during which a disciplinary enquiry can proceed.

More often than not, the sudden resignation of an Employee who is facing disciplinary action is not a coincidence. This is usually a common tactical manoeuvre by the Employee to avoid having a dismissal on their employment record.

A similar scenario that was recently explored and answered in the matter of Mthimkhulu v Standard Bank SA Ltd J928/20 (yet to be officially reported) is where an Employee resigned after being found guilty by the disciplinary process, but before a sanction has been issued against that Employee.

In this matter, an Employee was alleged to have conducted himself in a grossly dishonest and fraudulent manner. He was subject to, and participated in, a disciplinary enquiry and was found guilty of the charges against him. The chairperson of the enquiry allowed both the Employer and Employee to present mitigating factors which would influence the appropriate sanction that would be imposed on the Employee. Two days later, and before the issuing of the sanction, the Employee announced his resignation, with immediate effect. In response to this, however, the Employer dispatched an email to the Employee which stated the following: “in response to your purported resignation, we wish to bring to your attention that in terms of your contract of employment, you are required to serve 30-day notice therefore your resignation letter does not immediately terminate your obligations in terms of the contractual agreement between you and the Bank”, the effect of which meant that the Employee’s resignation no longer would be regarded as immediate.

Three days after the Employer’s response to the Employee’s resignation, a sanction dismissing the Employee was handed down. Upon receipt of this, the Employee contended that he was no longer an Employee at the time the sanction was handed down and so demanded that the Employer abandon and nullify the dismissal. In other words, the Employer had no jurisdiction to sanction him at that stage. The Employer rejected this demand and maintained its position as stated in its email. It is the Employee’s contention that raised an important question: what is the legal effect of the Employee’s resignation before the announcement of the sanction of dismissal? 

In answering the question, the Court found that the timing of the resignation was key.  Namely, that whilst the disciplinary steps were being taken against the Employee, he had not resigned. Instead, the Employee’s ‘tactical’ resignation only took place once the disciplinary steps had been completed. The Court held that the Employee was contractually obliged to serve a notice period and anything to the contrary by the Employee amounted to a repudiation of the contract. The Court also found that the Employer was entitled to accept the Employee’s repudiation and make an election to either cancel the contract or to either sue for damages, or to seek specific performance from the Employee.

Based on this finding, the Court found that the Employer’s reply to the Employee was a clear statement that the employment contract was not cancelled despite the Employee’s repudiation. More colloquially put, the Court concluded that although the Employee attempted to be “the first man on the ball”, the Employer “was still entitled to tackle the ball since it elected to keep the playing field – the contract of employment – alive or open for play.” Accordingly, the Court found that a resignation in these circumstances would have no legal effect. This judgment helps Employers looking to hold cunning Employees to disciplinary sanctions, even if they attempt to resign mid-way through the process. It is important for Employers to be mindful of the terms of the Employment contract and to clearly communicate the terms of the contract to Employee’s to keep the contract alive in the event that the Employee attempts to repudiate the contract.

We recommend that Employers seek legal advice in situations like this before responding to Employees attempting to resign during a disciplinary process.