Issue: February 2021

SOUTH AFRICA - Employee’s Resignation for Misconduct Does Not Foreclose Disciplinary Proceedings

By: Hilary Mofsowitz, Mediator/Arbitrator from South Africa

Judgment from the Labour Appeal Court heard in Johannesburg, South Africa, In re: Standard Bank of South Africa & Nombulelo Cynthia Chiloane, Case no: JA 85/18 (Dec. 10, 2020).

  1. This judgment raises the rights of employers and employees in respect of discipline where an employee resigns in the face of pending disciplinary charges.
  2. The employee worked for a well-known bank and was alleged to have cashed a check without following proper procedures and it later transpired that the check was fraudulent.
  3. On the day the employee received notice to attend a disciplinary hearing, she handed in her letter of resignation in which she tendered her resignation with immediate effect.
  4. The employee was advised that she was to serve a four-week notice period, as provided in her contract of employment. The employee was suspended (with pay) and the disciplinary hearing was scheduled to continue within the employee’s notice period.
  5. The employee and her attorney, took the view that her resignation with immediate effect ended the employment relationship and therefore the employer was not entitled to proceed with the disciplinary hearing. The presiding officer of the disciplinary hearing, rejected this view and decided to proceed with the hearing. The employee and her attorney, left the hearing.
  6. The employee was found to have committed the misconduct, for which she was charged and the sanction of summary dismissal was imposed.
  7. The employee brought an urgent application to the Labour Court seeking: 1) An order declaring the decision to dismiss her, null and void. 2) Interdicting and restraining the employer from enlisting her name on the Banking Association of South Africa’s central database (known as the Register for Employees Dishonest System (REDS) and 3) Costs.
  8. The Labour Court held that once an employee tenders her resignation indicating that the resignation is with immediate effect, the employment relationship comes to an end and the employer has no right to insist that the employee serves his/her notice period. The employee’s dismissal was declared null and void. No costs were awarded.
  9. The matter came before the Labour Appeal Court. It was undisputed that the employer and employee had agreed that one would give the other four weeks’ notice of termination of their employment contract.
  10. The Labour Appeal Court confirmed that such an agreement requires, in express terms, that one party must give the other four weeks’ notice unless, the party receiving the notice of termination, does not seek to enforce that term of the agreement. The notice terms remain valid and binding as provided for in the Basic Conditions of Employment Act, 75 of 1997 as amended (“the BCEA”).
  11. The Labour Appeal Court found that resignation that is not in compliance with the contractual notice requirements, does not validly terminate the contract of employment unilaterally; it is only the resignation that complies with the notice requirements that serves unilaterally to terminate the contact.
  12. In the circumstances, where a contract prescribes a period of notice, the party resigning is obliged to give notice for the period prescribed in the contact. The contact and the reciprocal obligations contained in it, only terminate or take effect when the specified period runs out.
  13. The decision of the Labour Court was set aside, and the Labour Appeal Court found that the employee’s resignation with immediate effect, was of no consequence because it did not comply with the contract which governed her relationship with her employer. The employer was thus correct to read into the resignation a four-week notice period, within which the employer was free to proceed with a disciplinary hearing.
  14. The following order was made: 1) The appeal succeeds. 2) The order of the Labour Court is set aside. 3) The application is dismissed.
  15. There was no order of costs, as the matter was not opposed. 

Hilary Mofsowitz

Mediator/Arbitrator from South Africa