Navigating Notice Periods: An Employer’s Right to Discipline Following Resignation - Labournet

When an employee resigns – especially “with immediate effect” – many assume that the employment relationship ends instantly and that disciplinary action is no longer possible. This belief is widespread, but it is incorrect under South African law. Employers often feel powerless when misconduct surfaces just as an employee resigns, but the law provides clear guidance.

Let’s look at what happens when an employee resigns – whether “with immediate effect” or with notice – and how employers can navigate disciplinary action during the notice period.

The Legal Reality of Resigning Without Notice

Resignation does not necessarily end the employment relationship immediately.

While resignation is a way for an employee to terminate their contract, it must comply with the agreed notice period in the employment contract or the minimum periods set by the Basic Conditions of Employment Act (BCEA). This requires notice of at least one week if employed for six months or less, two weeks if employed for more than six months but less than a year, and four weeks if employed for a year or more.

If an employee resigns “with immediate effect” without serving the required notice, they are in breach of the employment contract, and it is not terminated automatically. The employer then has two options, namely accepting the breach and letting the employee leave immediately, or rejecting the breach and insisting that the employee serves the notice period.

It is critical to choose the option very carefully because if the notice period is enforced, the employee remains employed during that time and disciplinary action can proceed, whether the employee chooses to participate in the proceedings or not.

The Landmark Case: Standard Bank v Chiloane

The Labour Appeal Court clarified the notice period issue in Standard Bank of SA Ltd v Chiloane (2021) 42 ILJ 863 (LAC). Here’s what happened:

Ms Chiloane worked for the bank and had cashed a cheque without following proper procedures. It was later uncovered that the cheque was fraudulent, causing the bank a loss of just under R30,000 – a serious breach of fiduciary duty and banking protocol.

On the day that Ms Chiloane received a notice to attend a disciplinary hearing, she handed in a letter of resignation stating that she was resigning “with immediate effect”. The bank’s human resources department immediately responded by informing her that she was contractually required to serve a four-week notice period. The bank further informed her that the disciplinary hearing would proceed during this notice period, as she was still considered an employee.

Ms Chiloane and her representative attended the scheduled disciplinary hearing on 11 June 2018 but immediately objected to the hearing’s continuation on the grounds that her resignation “with immediate effect” had terminated the employment relationship. They argued that, as there was no employment relationship, the employer did not have the right to proceed. The disciplinary chairperson rejected this argument and proceeded with the hearing. Ms Chiloane and her representative then withdrew from the proceedings, and the hearing continued in their absence.

She was found guilty of misconduct and summarily dismissed. Ms Chiloane then approached the Labour Court seeking an urgent order declaring her dismissal null and void. The Labour Court accepted Ms Chiloane’s argument. The Court held that once an employee tenders a resignation “with immediate effect”, the employment relationship terminates immediately, and the employer has no right to insist that the employee serves the notice period or to proceed with disciplinary action.

This decision was appealed to the Labour Appeal Court, which reversed the Labour Court’s order and held that the bank was correct in its approach.

The Labour Appeal Court emphasised that employers have the right to enforce notice periods and maintain disciplinary authority during that time.

Why This Matters

Employees sometimes resign to avoid disciplinary hearings, hoping to leave without consequences. Employers often feel they have no choice but to let these employees go. This judgment changes that dynamic. Employers can hold employees to their notice period, disciplinary hearings can take place during the notice period, and dismissal for misconduct remains possible, provided that the process is fair.

Employer’s Options Unpacked

As mentioned above, an employer faced with an employee’s “immediate effect” resignation has a choice to make:

Option 1: Hold the employee to the notice period: The employer can choose to reject the employee’s repudiation of the contract and insist that the employee serves the contractual or statutory notice period. During this period, the employee remains an employee, and all the normal rights and obligations of the employment relationship continue. The employer can require the employee to work (though practically many employers grant “garden leave” and pay the employee to remain away from the workplace). Most importantly, the employer can proceed with disciplinary investigations and hearings if warranted.

Option 2: Accept the immediate resignation: The employer can choose to accept the employee’s breach of the notice requirement and permit the employment relationship to terminate immediately (or on some other agreed date). In doing so, the employer would be waiving its right to enforce the notice period and accepting the employee’s repudiation. If the employer takes this route, the employer generally loses the right to proceed with disciplinary action, as the employment relationship will have terminated.

The employer must make the election clear. Silence or inaction may be interpreted as an acceptance of the resignation, particularly if the employer communicates with the employee in a manner suggesting that the termination has taken immediate effect.

Best practice dictates that employers who wish to hold an employee to the notice period should clearly communicate this decision in writing. For example, an employer might respond to an “immediate effect” resignation with language such as: “We acknowledge receipt of your resignation. However, your employment contract requires you to serve four weeks’ notice of termination. We do not accept your resignation with immediate effect and require you to serve the full notice period in accordance with your contract. During this period, you remain an employee, and all terms of your employment remain in force.”

This communication crystallises the employer’s election and minimises the risk of subsequent disputes about whether the resignation was accepted.

Practical tips to ensure as seamless a process as possible as an employer include:

Act quickly: Schedule hearings promptly within the notice period.

Document everything: Keep records of communications, hearing notices, and decisions.

Consider practicality: Sometimes accepting the resignation is easier than pursuing discipline, especially if the relationship is irreparably damaged.

Also remember that even during a notice period, fairness still applies. Employers must follow fair procedures in taking disciplinary action against employees:

Notify the employee of allegations in clear terms and invite them to attend a hearing.

Give reasonable time to prepare (usually at least 48 hours).

Allow representation by a colleague or union representative.

Conduct an impartial hearing and provide a written decision with reasons.

Failure to follow these steps can lead to an unfair dismissal claim at the Commission for Conciliation, Mediation and Arbitration (CCMA).

Bottom Line

Resignation is not a loophole to avoid accountability. Employers have the right to maintain discipline, and employees retain the right to fairness – even when the relationship is ending.

Labournet Durban

Address: 3 Abrey Road, Kloof, Durban, Fairway Green Office Park (Erica Building)

Tel: +27 31 266 6570

Email: kzninfo@labournet.com

solutions@labournet.com

Office Hours: Monday to Friday, 08:00 – 17:00