Where an employee resigns without giving the employer notice as required in terms of the employment contract, this amounts to a repudiation of the contract (except where the employee resigns in response to the employer’s breach of the employment contract). As with any other contract, the employer can elect to accept the employee’s repudiation and claim damages, or reject it and claim specific performance from the employee.

It follows then that when an employee resigns in the face of disciplinary action without giving notice (i.e. the employee resigns ‘with immediate effect’ and leaves straightaway), an employer has a choice:

• accept the employee’s repudiation by accepting the resignation ‘with immediate effect’ (without proper notice); or
• or reject the employee’s repudiation, hold the employee to the notice period and proceed to hold the hearing during the notice period, even if the employee chooses not to attend.

Case causes confusion

However, the recent case of Mtati v KPMG Services (Pty) Ltd (2017) (LC) has created some confusion on this issue. The case concerned an employee’s resignation ‘with immediate effect’. When the employer informed the employee about an investigation into certain allegations of misconduct against her, the employee tendered her resignation on notice, and the employer accepted her resignation. The employer indicated that it would still proceed with the disciplinary hearing against her, and the employee then submitted a second letter of resignation ‘with immediate effect’. 

The employer considered the second letter invalid because the employee had already resigned and her first resignation (on notice) had been accepted. The employer proceeded with the disciplinary hearing and the employee was dismissed. The employee then brought an urgent application to interdict the employer from proceeding with the hearing and her dismissal. The Labour Court declared the outcome of the disciplinary hearing to be null and void and set it aside, even though her disciplinary hearing was held during the notice period she should have served. It ruled that employers are entitled to institute disciplinary action against employees during the resignation notice period, as the resignation has not taken effect. However, employees are entitled to resign ‘with immediate effect’ and, if they do, this precludes the employer from taking disciplinary action against them because they are no longer employed by the employer.

Repudiation of the contract not considered

The Mtati case is correct in providing that when an employee resigns on notice, employers can take disciplinary action against the employee during the resignation notice period, as the employee’s resignation only takes effect when employment terminates at the end of the notice period. However, what is not correct, in our view, is the Court’s finding that employees can avoid disciplinary action by resigning ‘with immediate effect’, in breach of their contractual obligations to give notice. We say this because the Court did not consider whether such a resignation is in fact a repudiation of the contract that permits employers to elect to hold the employee to his/ her obligation to give notice of termination. If an employer elects to hold the employee to the contract after receiving a resignation ‘with immediate effect’, it follows that the employee remains employed during the notice period and can face disciplinary action.

Our view is that resignations ‘with immediate effect’ do not automatically preclude employers from taking disciplinary action during the employee’s notice period. Instead, it is the employer’s subsequent election that is the determining factor.

The Mtati decision has added to the uncertainty around this issue and it will be seen whether subsequent cases will clarify the uncertainty. 

If you require any further information or specific advice on this topic, please contact the Bowmans Employment team.