Resignation – A way out by choice – Part 1
Most contracts provide for an “escape clause” as part of the agreed contractual provisions. The employment contract is no exception. In order to ensure that exiting the employment contract by either party does not inflict undue prejudice, the necessary checks and balances are incorporated in employment law.
The way in which both employees and employers however have dealt with resignation over the years, rightfully and wrongfully, necessitates that the concept of resignation be approached and explained from different angles and manifestations associated with its utilisation in practice.
This is exactly what I intend to do in this blog, based on the results of my research on this topic.
Due to the number of aspects related to resignation as an employment contract exit mechanism, I decided to deliver this blog in two parts.
Part 1 will primarily focus on the more generic aspects of resignation, while Part 2 will mostly deal with practical manifestations of resignation in the course of everyday employment.
Resignation, as a concept, is not defined in labour legislation. The generic noun “termination” is used instead, while it is used with reference to both the employee and the employer as the initiator of the termination of the employment contract.
A descriptive definition of resignation is found in an academic publication of Barker & Holzhauzen titled: SA Labour Glossary (1996) describing resignation as follows:
“The termination of employment on the employee’s initiative, of his/her own volition and without employer coercion”.
A defining description of resignation, derived from the common law, which appears in several pieces of case law dealing with resignation as a concept, is that resignation on notice is a unilateral act on the part of the employee, which does not require the employer’s acceptance to give legal effect to it.
Common law principles related to resignation
Cross-referencing several pieces of relevant case law, the common law position on resignation is expounded upon in the Labour Court-case: Lottering & others v Stellenbosch Municipality (2010), which I summarise as follows:
- Notice of resignation must be unequivocal and must be so communicated.
A good pronouncement in this regard was made in the SCA-case: African National Congress v Municipal Manager George Local Municipality & others (2008).
In this case a resignation was submitted in a sealed envelope by a councillor, which resignation was later retracted. The recipient manager however never opened and never read the contents of the envelope but was told that it contained the employee’s resignation and hence the former declared the seat occupied by the councillor vacant, on the assumption that the councillor resigned.
The SCA held that in order for the intention to resign to be communicated in writing (as legally required) it has to be read by the recipient manager for the message to have reached the mind of the latter. Unequivocal communication of the intent to resign cannot result from a message contained in an unopened envelope.
- Once communicated, a notice of resignation cannot be withdrawn without the consent of the employer.
- Resignation on notice is a unilateral act, requiring no acceptance from the employer to become legally effective.
- The employment contract does not terminate on the day the notice is given, but on the date the notice expires.
- The “No work – No pay”-principle applies where the employee does not perform work during the notice period, without being exempt from performing duties by the employer.
- Notice not given in accordance with the employment contract constitutes breach of contract, entitling the employer to either require specific performance (holding the employee to the termination provision in the contract) or to “accept” the repudiation, cancel the contract and claim damages (More about these remedies for breach of contract later in Part 2 of this blog).
- Where notice is given late, for instance on the 2nd day of the month where a calendar months’ notice is required, and the employer elects to enforce specific performance in respect of the relevant contract provision, the employer is entitled to hold the employee to the full term of the notice period extending to the end of the following month.
The different obligations resting on employers and employees when utilising the escape clause in the employment contract
Usually, where the termination of a contract is contemplated by a party to that contract, the contract itself will specify the basis on which the contract will be exited. Failing such a contractual provision, the notice of termination must be reasonable.
The Basic Conditions of Employment Act (BCEA) specifies the minimum requirements in respect of termination notice in Section 37, requiring written notice to be given (unless the employee concerned is an illiterate person) ranging from 1 weeks’ notice up to 4 weeks’ notice, depending on the length of service.
Maybe a bit mischievously from my side, I draw your attention to an apparent drafting error on the part of the legislator occurring in Section 37(1)(b) and (c) where in both instances a 2 weeks’ notice period seem to apply in respect of a service tenure of one year. It seems that whichever party wants to enforce a statutory notice period serving its particular interests, that party will be spoiled for choice.
Significantly, the provisions of Section 37, at first glance, seem to apply to both parties to the employment contract, implying that either party may terminate the employment contract in accordance with the required notice provision. This “either party”-provision also appears frequently in employment contracts under the termination clause.
Established fair labour practice regarding the termination of an employment contract however requires a clear distinction to be drawn between the employee’s entitlement to use the escape clause as opposed to the employer’s entitlement to use the very same escape clause.
For as long as the employee complies with the notice giving provision in the employment contract, he/she is not obliged to furnish any reason for exiting the employment contract. The employer, on the other hand, has to have a justifiable reason for terminating the employment contract and has to go about it in a procedurally and substantively fair manner. Simply giving the required notice to the employee will not suffice.
Resignation and constructive dismissal
The majority of cases which I researched dealt with resignation within context of constructive dismissal, where the legal argument centres around the question whether the claimed termination of the employment contract constituted a dismissal or a resignation.
On 06 October 2021 I presented a blog article on constructive dismissal, hence I do not intend to repeat here what I explained in such blog, save to say that constructive dismissal is in essence a dismissal in the guise of a “resignation” and therefore falls outside of the ambit of the subject matter of this blog dealing per se with the phenomenon of resignation proper.
By its very nature, being a unilateral act communicated in unequivocal terms, a valid resignation cannot be conditional or tentative.
For instance – an employee cannot submit his/her resignation (to become effective at a future date) while looking for another position during a leave period, but then make it subject to the condition that if another position is secured within this period, the resignation should be activated and must be formally processed, but if not, the resignation letter must be destroyed.
Legal certainty requires the termination of a contract of employment to be unambiguous.
Restrictions and deviations from the norm regarding contractual notice
- Section 37(2)(a) of the BCEA prohibits a collective agreement to allow shorter notice than specified in Section 37(1), presumably referring here exclusively to Section 37(1)(a) and (b).
Then, under Section 37(2)(b) reducing the 4 weeks’ notice period required in Section 37(1)(c) to no less than 2 weeks’ notice in consequence of a collective agreement is enabled.
- In terms of Section 37(3) no agreement may allow or permit the employee giving a period of notice longer than that required of the employer.
- The employer may elect to grant the employee, who resigned on notice, payment in lieu of notice, thereby quantifying all employment benefits (such as company contributions to UIF, pension fund and medical aid) and pay the aggregate sum out on termination. In this way, the employee’s service terminates immediately upon such payment being made (refer Section 38 of the BCEA).
- No notice of termination of the employment contract given by the employer may be given during any period of leave the employee is entitled to or may run concurrently with such period of leave, except sick leave (refer Section 37(5)).
- The employer may not request or demand that the employee submits his/her resignation. The norm here is that both parties to the employment contract have its own contractual provision by means of which to initiate the termination of the employment contract. As indicated above, the legal imperatives resting on the employer in this regard are far more onerous than those resting on the employee.
Requesting or demanding a resignation from an employee therefore flies in the face of fair procedure and fair labour practice. In fact, such a request, suggestion or demand constitutes a classical example of constructive dismissal or at least the attempt to perpetrate constructive dismissal.
Resignation should be a voluntary act borne out of the employee’s own volition and any coercion to resign should not be acceded to by the employee (refer LAC-case: Jonsson Uniform Solutions (Pty) Ltd v Lynette Brown & others – 2014).
Dismissal during the tenure of the resignation notice period
As indicated above, the employment contract terminates on the expiry date of the notice period of a resignation. This implies that the employee remains in the service of the employer for all intents and purposes until the said expiry date.
All rights and obligations which both the employer and the employee have in terms of the employment contract remain intact and notably, also the employer’s prerogative to discipline the employee who tendered his/her resignation – obviously, by means of fair procedure and for a fair reason.
A dismissal that takes effect prior to the expiry of the notice period of the resignation would take preference over the resignation. As in all dismissal cases, the employee however retains the extended legal status as employee for purposes of disputing the dismissal via the statutory dispute resolution mechanism (CCMA/Bargaining Council and labour courts).
Refer Standard Bank SA Ltd v Nombulelo Cynthia Chiloane (LAC) 2020
Reflecting on Part 1
In Part 1 the intention was to cover the more common characteristics related to the concept of resignation. I trust that it gave the reader at least a broad perspective on the phenomenon of resignation.