Resignation instead of disciplinary action

We recently had a client approach us because his former employee referred an unfair dismissal dispute to the CCMA. During the consultation the client informed us that after a heated discussion with the employee, the client indicated that he felt it was time to bring the employment relationship to an end. The following day the employee arrived at work and after a short discussion with our client he voluntarily chose to sign a letter of resignation as an alternative to disciplinary action. The letter of resignation had been drafted by the employer.

The employee then referred an unfair dismissal dispute to the CCMA. During the conciliation at the CCMA we raised a point in limine stating that the employee should not have referred an unfair dismissal dispute because he was never dismissed. He voluntarily resigned. The employee tried to argue that because the resignation letter was waiting for him when he returned to work the following day, he was forced to sign it. He further argued that the employer ‘put words in his mouth’ by having the letter already drafted. The commissioner supported our argument that an unfair dismissal could not have occurred as the employee chose to sign the letter of resignation and that he had even signed his reference letter and accepted payment from our client. The commissioner proceeded to ask the employee to explain how he was forced to sign the letter of resignation. The employee could not prove that he was forced to do so. Further proof that this employee was not unfairly dismissed, but rather that he resigned, was that he was paid out more than he was due because the employer decided to pay him a pro-rata bonus as well as all his statutory payments and benefits which included a pension that our client had set up.

The question that arises in these circumstances is: Does an employee have the right to resign in order to avoid disciplinary action being taken against him/her by the employer and thereafter refer an unfair dismissal dispute to the CCMA? This question was addressed in Kynoch Fertilizers Limited v Webster [1998] 1 BLLR 27 (LAC). The employee in this case had been found guilty of dishonesty at a disciplinary hearing and was dismissed as a result. After he had been found guilty of dishonesty at a disciplinary hearing and dismissed, the employee had written and signed a document in which he tendered his resignation. This was accepted by the employer. The Labour Appeal Court found that the resignation by the employee, and its acceptance by the employer, amounted to a settlement. The court held that the employee had made an informed choice between litigation and securing an unblemished reference.

Employers and employees should note that a resignation is irrevocable and cannot be withdrawn by the employee once the employer has accepted it. In Lottering and others v Stellenbosch Municipality [2010] 12 BLLR 1306 (LC) the Labour Court held that a resignation deprives the employee of the right to litigate further against the employer.

In Letsoalo v Cross Road Transport Agency [2007] 1 BALR 35 (CCMA) the commissioner found that the true reason for the applicant’s resignation was to avoid facing disciplinary action. He was not permitted to pursue his matter further.

It must be said that before an employee is given the opportunity to resign, instead of being charged, the employer must have already determined that an act of misconduct has occurred and an investigation into the matter should have been concluded. The employer should have already decided that disciplinary action is called for. In other words, the employer must be ready to proceed against the employee if he or she chooses not to resign.

Our advice in these circumstances is firstly that employees can never be lawfully dismissed without the employer following a proper process. Employers can however afford employees the opportunity to resign as a way of settling the matter between the parties. When giving employees the option to resign, our advice to employers is to always have a discussion first with the employee, wherein the employee is informed of the allegations against him/her and then given the option to resign.

During this discussion both parties should take notes and agree about the terms of the resignation including the outstanding payments due to the employee; this includes all statutory payments (such as leave days and/or notice pay) and any benefits (such as pension or provident fund benefits and/or medical aid benefits) due to the employee. After this discussion both parties must sign the letter of resignation and the employee be given a copy thereof. Employees have the right to resign in the aforesaid circumstances even if the employer does not offer this to the employee as an option. Employees should always specify whether they are resigning with or without notice. Parties should note that employees have the right to refuse to sign a letter of resignation, and rather opt to have a disciplinary hearing and defend themselves.

In the case of Mtati v KPMG Services (Pty) Ltd [2017] 3 BLLR 315 (LC) the employee terminated her employment contract by resigning. She submitted two letters of resignation to the employer. The first letter was submitted after the employer informed the employee that it was conducting an investigation into certain allegations against her. The second letter was submitted after the investigation when the employer indicated to the employee that it would be commencing with disciplinary proceedings against her.

In the first letter she gave notice of her resignation and in the second letter she resigned with immediate effect. The employee then sought an order on an urgent basis from the Labour Court to interdict the employer from proceeding with the disciplinary hearing after the employee’s resignation. The judge held that the fact that an employee has given notice to terminate the employment contract does not take away the right of the employer to discipline the employee serving his/her notice period. If an employee is serving a notice period, he/she is still subject to the authority and the power of the employer in as far as the employment relationship is concerned. If an employer takes disciplinary action against the employee and dismisses him/her before the end of the notice period, the employment relationship would be terminated at date of dismissal. The employee is still employed until his/her notice period ends in terms of a resignation. It was further held that the termination of the employment contract by way of resignation with immediate effect, took away the right of the employer to proceed with the disciplinary enquiry against the employee as there was no longer an employment relationship.

If an employee resigns with immediate effect, they are not entitled to notice pay. However in the case where an employer tells the employee they are not required to work their notice period, the employee must be paid their notice period.