You can’t discipline me – I have resigned. Yes, I can.

The scenario is as follows: an employer discovers wrongdoing on the part of an employee and seeks to discipline them. Upon receiving notice of the employer’s intention, the employee elects to resign rather than to face disciplinary action. The employee purports to resign with immediate effect and fails to honour their notice period in terms of their contract of employment. May the employer nonetheless proceed with the disciplinary inquiry during the employee’s notice period?

3 Jul 2017 5 min read Employment Alert Article

The applicable legal principles are as follows: an employee’s failure to honour their contractual notice period amounts to a repudiation of the contract of employment. A repudiation is defined as one party demonstrating an unequivocal intention to no longer be bound by the terms of a contract. This gives rise to an election on the part of the innocent party (in this case the employer) to either accept the employee’s repudiation and cancel the contract, or alternatively to reject the repudiation and to hold the employee to their notice period. The latter applies in the case of an employer wanting to discipline an employee during their notice period. There is a further legal principle at play, namely the legal effect of a resignation in terms of South African law. In this regard, it is recognised that a resignation is a unilateral act on the part of the employee which has the effect of bringing about a termination to the contract of employment. It is unilateral in the sense that it does not rely on the consent or acceptance by the employer; it is the act of a resignation which has the effect of terminating the contract subject to the applicable statutory or contractual notice period. In other words, once an employee resigns, the contract is terminated, with the termination taking effect on the last day of the applicable notice period.

In 2016, the Labour Court in Kalipa Mtati v KPMG held that the dismissal of an employee who had resigned with immediate effect was null and void since the employee had brought about an immediate end to their contract of employment by resigning with immediate effect, ie without honouring their contractual notice period. The effect of this judgment was that employees who resigned with immediate effect prior to disciplinary action being instituted or concluded could not be disciplined as their employer lacked the requisite jurisdiction to discipline them pursuant to the immediate termination of their contract of employment. This decision gave weight to the aforementioned legal principle that resignations are unilateral acts on the part of an employee which don’t require acceptance on the part of the employer before becoming effective.

The obvious controversy created by this authority is that it affords employees facing disciplinary action the option of avoiding a possible dismissal by resigning with immediate effect thereby denying their employer the opportunity of taking disciplinary action against them. This situation may be undesirable for many employers who would, in the face of serious misconduct seemingly committed on the part of the employee, be forced to reflect the reason for termination as being that of a resignation as opposed to a dismissal for misconduct.

More recently, the High Court in Ngoduka v Minister of Department of Higher Education and Training was called upon to consider the application of the above-mentioned legal principles. The employee, a lecturer at a public further education and training college, was charged with various charges of misconduct. After being suspended with full pay, pending an investigation, he was subsequently served with a notice to attend a disciplinary enquiry. Two days prior to the date of the hearing the employee submitted a medical certificate the effect of which was to postpone the hearing to a later date. Prior to the enquiry reconvening, the employee served the college with a letter stating that he was resigning with immediate effect. The employee’s contract of employment required him to give one month’s notice of termination of employment. The college refused to accept his resignation with immediate effect and indicated its intention to proceed with the disciplinary enquiry during the employee’s notice period. The employee refused to attend the hearing and the chairperson proceeded with the hearing in his absence. The employee was found guilty of the allegations and subsequently dismissed prior to the expiry of his notice period.

The employee referred an application to the High Court to review and set aside the disciplinary proceedings on the basis that they were null and void. He argued that his resignation had brought about an immediate end to his contract of employment and, hence, the employer was not legally permitted to proceed with his disciplinary inquiry. The college opposed the application and argued that it derived authority to discipline the employee from his employment contract read with s16B(3) of Public Service Act of 1994 (the Act) which provides:

“if notice of disciplinary hearing was given to an employee, the relevant executive authority shall not agree to a period of notice of resignation which is shorter than the prescribed period of notice applicable to the employee”.

The court established jurisdiction to entertain this employment law dispute in terms of s77(3) of the Basic Conditions of Employment Act (BCEA) which gives the High Court concurrent jurisdiction with civil courts to determine any matters concerning employment contracts. The court held that s16B(3) of the Act was introduced inter alia to deal with scenarios where employees resign in order to avoid adverse disciplinary findings, thereby leaving their employment with a clean disciplinary record. The court held that the college was precluded by the Act from accepting the resignation of the employee which was not in compliance with the requisite contractual notice period pertaining to termination. The employee was thus obliged to serve his notice period. Accordingly, he was still an employee of the college at the time of the disciplinary proceedings and when the dismissal was handed down. He chose to not attend the hearing at his own peril and the finding of dismissal in his absence was thus binding on him. Accordingly, his dismissal was valid and his application was dismissed.

Employers will no doubt welcome the authority in Ngoduka notwithstanding that it was decided within the context of the Public Service Act and is therefore arguably of limited application within the private sector. The authority is surely correct, in the sense that notwithstanding an employee’s right to unilaterally terminate their contract of employment by means of a resignation (which is not dependent on an employer’s acceptance or otherwise) they nonetheless remain obligated in terms of contract to honour their notice period by giving their employer the requisite notice of their intention to resign. To not do so amounts to a repudiation of the contract of employment which an employer should be entitled to reject and in so doing, convene and finalise disciplinary proceedings prior to the last day of the employee’s notice period.

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