30 July 2018 Employment Alert

‘The untouchables – disciplining employees after resignation’

It is an increasingly frequent occurrence that when an employee is faced with disciplinary action, the employee elects to resign, with immediate effect, just before the disciplinary hearing takes place.

The question, therefore, is whether the employer can or should institute, or proceed with, a disciplinary hearing against an employee who resigns with “immediate effect” before or during the disciplinary hearing?

In Sihlali v SA Broadcasting Corporation Ltd (2010) 31 ICJ 1477 (LC) it was held that resignation is a ‘unilateral’ act and its effectiveness is dependent on whether or not the resignation is lawful, ie whether it complies with the notice requirements of the employment contract or, in the absence of that, the provisions of the Basic Conditions of Employment Act, No 75 of 1997 (BCEA).

Almost all contracts of employment require the employee to give notice of termination of employment. The BCEA prescribes the minimum notice period, therefore an employee who resigns with immediate effect is in breach of contract and/or the BCEA.

In Mtati v KPMG Services (Pty) Ltd (2017) 38 ILJ 1362 (LC), the company was investigating allegations of serious misconduct against an employee. The employee decided to resign by giving notice. When the company indicated its intention to take disciplinary action, the employee resigned again, this time ‘with immediate effect’.

At the disciplinary hearing the employee raised the point that the chairperson did not have jurisdiction to continue with disciplinary proceedings, as she had resigned. The employee indicated that, if the company intended to continue with the disciplinary hearing, she would take steps to interdict the proceedings. The chairperson, however, ruled that the hearing would continue. The employee “walked out” and the disciplinary proceedings continued in her absence. She was found guilty of the allegations against her and dismissed. The employee approached the Labour Court on an urgent basis to obtain an interdict. The Judge held:

“In my view, the second letter of resignation of the applicant changed the status of the employee from that of being an employee, in the ordinary sense of the word, to that of being the erstwhile employee of the respondent (company). This means that the termination of the employment contract with immediate effect took away the right of the first respondent (company) to proceed with the disciplinary hearing against her.”

The court thus declared the disciplinary hearing null and void and set it aside. However, Mtati judgment was taken on appeal by KPMG. The Labour Appeal Court (LAC) dismissed the appeal on the basis that the point raised on appeal was moot.

Most recently, the LC in Coetzee v The Zeitz MOCCA Foundation Trust and Others [2018] (heard on 8 June 2018), Judge Rabkin-Naicker held as follows:

  1. An employee is entitled to resign with immediate effect only in the case of a preceding material breach of contract by the employer or where the employer accepts the resignation with immediate effect.
  2. Statutorily and contractually, the employee is bound to give at least four weeks’ notice of his resignation.
  3. During an employee’s notice period, there is no legal impediment to the prosecution of disciplinary proceeding and if warranted, the subsequent dismissal of an employee for misconduct.

The employer is entitled to proceed with the disciplinary hearing even if the employee has resigned. Employees must remember that when they tender a letter of resignation, their employment contract does not immediately terminate upon handing the resignation letter to the employer.

Employers must equally be cognisant of ‘accepting’, whether expressly or tacitly, a resignation with immediate effect from an employee as this may result in the court finding that the employer has waived its right to proceed with disciplinary proceedings. In cases of serious misconduct, employers are advised to expeditiously commence disciplinary hearings, should they intend to do so, despite the employee resigning so as to conclude the disciplinary hearing process within the employee’s notice period.

Lastly, employees should also remember that, in the face of allegations involving a criminal element, such as assault, theft or fraud, the employer is still entitled to report such conduct to the relevant authorities, despite the fact that the employee may have tendered his/her resignation.

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