Ludwig Frahm-Arp and Siphamandla Dube analyse a Labour Law case in an effort to explain an employer’s rights in dealing with employees who resign while facing disciplinary action.
What can you do when an employee resigns while facing disciplinary action? The question hinges on two issues. When does the employee’s resignation take effect and does the employer retain the right to continue with a disciplinary action against the employee?
These questions were highlighted in a Labour Court case between KPMG and an employee, Ms Mtati, who had resigned while facing a disciplinary action.
An employee who resigns with notice informs the employer of their intention to end the employment relationship following the notice period agreed to in their contract of employment. In a resignation with immediate effect, the employee does not work for the notice period set out in the employment contract but stops work immediately after informing the employer of their intention to do so.
The Labour Court had to determine the question of whether a disciplinary process can continue once an employee has resigned in Mtati v KPMG Services (Pty) Ltd [2017] 3 BLLR 315 (LC). In this case, Ms Mtati brought an urgent application seeking an order to interdict KPMG from proceeding with a disciplinary hearing after her resignation with immediate effect.
This case was complicated by the fact that Ms Mtati had submitted two letters of resignation to KPMG. The first letter was submitted after KPMG informed her that it was conducting an investigation into allegations related to conflict of interest and failing to disclose her directorship in several competitor companies. Ms Mtati denied all the allegations against her.
In Ms Mtati’s first resignation letter, she submitted her resignation in line with her contractual notice. After KPMG informed her it would be commencing with the disciplinary proceedings, Ms Mtati submitted the second resignation letter indicating that she was resigning with immediate effect.
KPMG disputed the validity of Ms Mtati’s second resignation letter, arguing there was only one resignation letter, which was the first one in which she gave notice. KPMG decided to continue with the disciplinary process and invited Ms Mtati to make representations to the chairperson of the disciplinary hearing.
At the disciplinary hearing, Ms Mtati objected to the chairperson’s jurisdiction to preside over her hearing, given her resignation with immediate effect. She informed the chairperson that should the hearing proceed, she would seek urgent interdictory relief to stop proceedings. The chairperson ruled that she had jurisdiction to chair the hearing and Ms Mtati walked out, leaving the hearing to proceed in her absence. She was found guilty in absentia and the chairperson imposed the sanction of a summary dismissal.
In the Labour Court, KPMG argued that it had accepted Ms Mtati’s first resignation letter in which she ended the employment relationship while agreeing to work her notice period in line with her employment contract. KPMG said it never agreed to the second resignation and, therefore, it had no effect. Ms Mtati argued that once the relationship was ended by her resignation, KPMG did not have the right to discipline her. On this basis, Ms Mtati argued that the disciplinary hearing chairperson’s decision was null and void.
In determining the matter, the Labour Court relied on the minority judgment of the Constitutional Court in Toyota SA Motors (Pty) Ltd v CCMA and others1 where Zondo J held that:
“Another context of resignation is the normal resignation. Where an employee resigns from the employ of his employer and does so voluntarily, the employer may not discipline that employee after the resignation has taken effect. That is because, once the resignation has taken effect, the employee is no longer an employee of that employer and that employer does not have jurisdiction over the employee anymore.” (Own emphasis)
The Labour Court concluded that an employer has no authority or power to discipline an employee who has resigned once the resignation has taken effect. In other words, where the employee resigns with immediate effect, the employer then loses the right to discipline the employee.
The Labour Court also held that there is no requirement in law that an employee who resigns on notice, cannot resign with immediate effect during the notice period.
The Labour Court clarified the principles that apply when an employee resigns:
- An employee who resigns and then wishes to revoke the resignation cannot do so unless the employer agrees to this.
- Resignation is a unilateral act and does not require the acceptance or consent of the employer to take effect. All that is required is for the employer to receive the notification that the employee plans to resign.
- If the employee resigns by giving notice but does not work the notice period, the employer does not have to pay the employee for the notice period based on the principle of no work no pay.
In summary:
- If an employee resigns and gives notice the employer is entitled to convene a disciplinary hearing during the notice period.
- If the hearing is concluded before the notice period ends and the employee is found guilty and dismissed, the reason for the termination of employment would be dismissal and not resignation.
- If the hearing is not concluded before the end of the notice period the employer will lose the right to discipline the employee when the employment relationship terminates.
- As resignation is a unilateral act, the employer would have no authority to discipline an employee who resigns with immediate effect. The resignation ends the employment relationship immediately.
The court’s finding in this matter, in our view, is correct.
Bear in mind that should an employer continue with disciplinary proceedings that leads to dismissal during the employee’s notice period, the employer takes the risk that the employee might challenge the fairness of the dismissal.
If the employer accepts the resignation and drops the disciplinary action, the employee may allege they were constructively dismissed. It would then be up to the employee to prove that the employer had made it intolerable to continue working for them.
If the employer does not want the employee at work, they can accept the employee’s resignation and pay the employee for the notice period without requiring that the employee come to work.
[1] (2016) 37 IJL 313 (CC) at 142
