When an employee hands in an immediate resignation, does this mean the employment relationship ends immediately and can the employer insist that the employee serves his/her notice period?

In the matter of Standard Bank of South Africa Limited v Chiloane (JA 85/18) [2020] ZALAC the Labour Court was confronted with the issue of whether an employee can by a letter of resignation immediately end his/her relationship with his/her employer irrespective of the contractual or statutory provisions which provide for notice to be given before termination can take effect.

In this matter, the employee was charged and given a notice to attend a disciplinary enquiry for cashing a cheque without following proper procedures which caused the employer a loss of just under R30 000.00. Upon receipt of the notice to attend the disciplinary enquiry, the employee submitted a letter of resignation which stated that she was resigning with “immediate effect”.

The Human Resources Department indicated that the employee would have to serve her notice period as per her contract of employment. The disciplinary enquiry was set to continue as it was within the employee’s notice period and she was still deemed an employee. The employee and her attorney attended the disciplinary enquiry and argued against its continuation on the grounds of the absence of an employment relationship. The argument was rejected by the chairperson of the hearing and the enquiry proceeded in their absence as the employee refused to participate after the ruling made by the chairperson.  The employee was found guilty and dismissed, to which the matter thereafter proceeded to the Labour Court.  

The court held that once an employee hands in a resignation indicating that the resignation is with immediate effect, the employment relationship comes to an immediate end and the employer has no right to insist that the employee serves his/her notice period. The Labour Court went on to declare the employee’s dismissal pursuant to the disciplinary hearing “null and void”.

The employer proceeded to Labour Appeal Court. The appeal court held that the labour court was incorrect in their findings. The employee’s argument that her resignation was with “immediate effect” was of no consequence because it did not comply with the contract which governed her relationship with her employer and the employer was thus correct to read into the resignation a four-week notice period, within which period it was free to proceed with the disciplinary hearing. The Labour Court judgement was set aside.

Conclusion: As per the Labour Appeal Court, where a contract or even in terms of statute prescribes a period of notice, the party resigning is obliged to give notice for the period prescribed either in the contract, or in statute. However, the employer can decide either to accept the repudiatory breach and terminate the contract summarily, otherwise the employment relationship continues until the notice period is over.