Did I resign or was I dismissed?
Johanette Rheeder

This year has had its fair share of disputes regarding arguments between employers and employees as to whether the employment relationship came to an end due to a resignation or a dismissal. Employees resign, change their minds, want to withdraw resignations and the employer wants to move on. Had the employee resigned, then the CCMA will not have jurisdiction, so whenever there is doubt, the employer will claim resignation to stay out of the CCMA.

With new technology, comes the resignation via SMS as well. In 2008 the Labour Court held that a binding and valid employment contract can come into existence if the prospective employee communicates his or her acceptance of the employer’s offer of employment to the employer by means of a SMS text message. In this year, the Labour Court had to consider whether an employee can terminate his employment by sending a SMS text message.

In Mafika v SA Broadcasting Corporation Ltd (2010) 19 LC 7.1.1 and [2010] 5 BLLR 542 (LC), the employee was employed as legal advisor on a three year fixed-term contract. About half way through his contract period he was suspended pending disciplinary action. The applicant immediately sent an SMS to the respondent’s CEO stating that he had “quit with immediate effect”. Thereafter, the applicant had second thoughts. Some weeks later he informed the CEO via email that his contract had not been terminated and that he was prepared to defend himself at a disciplinary hearing. The CEO was away but by that time, the CEO had already written a letter, which had not yet been sent to the employee stating that the resignation had been accepted. This letter reached him one day after he send the email. The employee claimed that the SMS did not constitute a valid resignation because it was not in writing and he withdrew it before the employer accepted his resignation. The employer contended that the applicant had resigned, alternatively, that he had repudiated the contract by failing to render service after sending the message.

The court had a look at various authorities on the subject and confirmed that a resignation is a unilateral termination of a contract of employment by the employee. The Courts (in the past) have held that the employee must show a clear and unambiguous intention not to go on with the contract of employment, by words or conduct that would lead a reasonable person to believe that the employee harboured such an intention. Notice of termination of employment given by an employee is a final unilateral act which once given cannot be withdrawn without the employer’s consent. In other words, it is not necessary for the employer to accept any resignation that is tendered by an employee or to concur in it, nor is the employer party entitled to refuse to accept a resignation or decline to act on it. If a resignation is to be valid only once it is accepted by an employer, the latter would in effect be entitled, by a simple stratagem of refusing to accept a tendered resignation, to require an employee to remain in employment against his or her will. This cannot be said the court – it would reduce the employment relationship to a form of indentured labour.

This is not to say that a resignation need not be communicated to the employer party to be effective – indeed, it must, at least in the absence of a contrary stipulation. A resignation is established by a subjective intention to terminate the employment relationship, and words or conduct by the employee that objectively viewed clearly and unambiguously show that intention. The Courts generally look for unambiguous, unequivocal words that amount to a resignation. The employee has to “act in such a way as to lead a reasonable person to the conclusion that he did not intend to fulfil his part of the contract.

In this case, the employee testified that he made the decision to terminate his employment in stressful circumstances and in an angry response to his suspension, but did not claim that he was incapable of appreciating what he was doing, or the consequences of his actions. On the contrary, his testimony was that when he sent the SMS, he intended to resign but that some six weeks later he regretted the decision as he considered his continued employment a means to the end of his restored reputation. The court found that however, noble this motive may be, it cannot in law serve as a basis to resurrect the applicant’s contract of employment some six weeks after its termination in circumstances where the demise of the contract was brought about by his applicant’s voluntary and deliberate conduct. In the courts mind, the SMS sent by the employee to the CEO constituted a clear statement of the applicant’s intention to terminate his employment. There is nothing unclear or equivocal about the communication and its terms are not ambiguous.

The employer also argued that the personnel regulations requires the notice to be in writing, however the court was not convinced that where there is a resignation in the form of a clear and unequivocal intention by an employee not to continue with the employment contract, it is invalid only because it was not reduced to writing, however a communication by SMS is a communication in writing in terms of section 12 of the Electronic Communications and Transactions Act 25 of 2002 and Jafta v Ezemvelo KZN Wildlife [2008] 10 BLLR 954 (LC)).

This case looked at various arguments based on constitutional court rulings as well and confirmed the legal principle to be that an employee who resigns, with clear intention can do so without consent of the employer and is bound by that resignation unless the employer agrees to withdrawal of the resignation.

The next case dealing with resignation is that of Lottering & others v Stellenbosch Municipality (2010) 19 LC 6.6.1 and [2010] 12 BLLR 1306 (LC). The labour court extensively summarised the common law requirements for different types of resignation, cancellation and repudiation.

After an opposition coalition took control of the respondent municipality’s council, the newly reinstated municipal manager withdrew the delegated powers of the applicant employees, who were all executive directors. They resigned on the same day, and the municipal manager accepted their resignations. The applicants appealed to the executive mayor against the municipal manager’s decision to accept their resignations. The mayor upheld their appeal, and the applicants withdrew their resignations. The mayor accepted and according to them their resignation was withdrawn. They reported for duty but were later informed that the mayor’s decision was withdrawn and that their resignations were accepted and posts would be advertised. The applicants launched an urgent application for an order directing the municipality to retain them in their posts.

The main argument was that despite their letters of resignation, their contracts of employment did not terminate because the notices were in breach of contract and in contravention of section 37 and 38 of the Basic Conditions of Employment Act 75 of 1997 (“BCEA”); Alternatively, the contracts did not terminate because the municipal manager’s decision to accept the applicants’ resignations was overturned on appeal to the executive mayor; Alternatively, if the contracts were terminated, the executive mayor agreed to the withdrawal of their resignations.

The Labour court confirmed the common law on resignation from employment:

“Resignation is the term ordinarily used to refer to the termination of employment by the employee just as dismissal is used to refer to termination by the employer. Like dismissal, resignation can take many forms. It can take the form of the cancellation for breach, which has long been understood to include the acceptance of repudiation. If the contract permits, it can take the form of termination on notice.

A resignation in the form of a cancellation of the contract will mean, in the case of a fixed-term contract, that the employee may terminate the contract before the expiry of the term; and, in the case of an indefinite contract, that the employee may terminate without giving notice. A resignation in the form of a cancellation is unilateral in the sense that one party can bring the contract to an end without the consent of the other. It however can only be exercised if the other party has committed a material breach. In other words, if no material breach is found to be committed then the party resiling from the contract is itself in breach. In other words, if the reason for the cancellation is bad, the cancellation itself is bad.

In an indefinite contract, either party may terminate the contract on notice. A resignation in this context is simply the termination by the employee on notice. There does not have to be a specific provision to that effect, it is an inherent feature of an indefinite contract and if there is no agreed notice, the notice must be reasonable (provided that it is not less than the minimum notice prescribed in section 37 of the BCEA). If the contract is for a fixed term, the contract may only be terminated on notice if there is a specific provision permitting termination on notice during the contractual period – it is not an inherent feature of this kind of contract and accordingly requires specific stipulation.

The common-law rules relating to termination on notice by an employee can be summarised as follows:
Notice of termination must be unequivocal (Putco Ltd v TV & Radio Guarantee Co (Pty) Ltd 1985 (4) SA 809 (SCA) at 830E).
Once communicated, a notice of termination cannot be withdrawn unless agreed (Rustenburg Town Council v Minister of Labour 1942 TPD 220 and Du Toit v Sasko (Pty) Ltd (1999) 20 ILJ 1253 (LC)).
Termination on notice is a unilateral act – it does not require acceptance by the employer (Wallis Labour and Employment Law paragraph 33 at 5–10).
Subject to the waiver of the notice period and the possible summary termination of the contract by the employer during the period of notice, the contract does not terminate on the date the notice is given but when the notice period expires (SALSTAFF obo Bezuidenhout v Metrorail [2001] 9 BALR 926 (AMSSA) at paragraph [6]).
If the employee having given notice does not work the notice, the employer is not obliged to pay the employee on the principle of no work no pay.
If notice is given late (or short), that notice is in breach of contract entitling the employer to either hold the employee to what is left of the contract or to cancel it summarily and sue for damages (SA Music Rights Organisation v Mphatsoe [2009] 7 BLLR 696 (LC) and Nationwide Airlines (Pty) Ltd v Roediger & another (2006) 27 ILJ 1469 (W) [also reported at [2006] JOL 17221 (W) – Ed]).
If notice is given late (or short) and the employer elects to hold the employee to the contract, the contract terminates when the full period of notice expires. In other words if a month’s notice is required on or before the first day of the month, notice given on the second day of the month will mean that the contract ends at the end of next month. (Honono v Willowvale Bantu School Board & another 1961 (4) SA 408 (AD) at 414H–415A [also reported at [1961] 4 All SA 452 (A) – Ed]).”

Termination on notice not in compliance with contractual notice period

The court then looked at termination with notice which does not comply with the contractual notice period. Does the fact that it is not in line with the contract (the notice period) mean that the whole resignation is defunct or does it constitute repudiation instead of resignation? The court found that it follows that the act of termination is a unilateral act permitted by the contract. Legally every employee has the right to resign, such resignation is not a breach of contract. The fact that the notice period is not in compliance with the contract and accordingly a breach does not mean that that breach should reach backwards and contaminate the act of termination (resignation). The act of termination and the notice period are two distinct processes. In the courts’ view, the act of resignation (the communication of the decision to terminate) is not a breach or a repudiation of the contract but an exercise of a right conferred by the contract. It is a legal act and its consequences for the date of termination are determined by the contract, not what might be stated in the notice.

That means in an indefinite contract, short notice to bring that contract to an end does not constitute repudiation – it is a unilateral legal act permitted by the nature or the specific terms of the contract for bringing the contract to an end at a future date – which date being determined by the contract. That is why an indefinite contract, often referred to as “permanent employment” because it contemplates employment for long periods of time sometimes from the whole of an employee’s working life, does not amount to servitude – as Mr Stelzner, for the respondent, pointed out, it is always open to being terminated unilaterally. In a fixed-term contract, a notice to bring the contract to an early end is a repudiation because it does not in itself constitute a contractually permissible act of termination. Being a repudiation, the employer has an election to hold the employee to the contract or to accept the repudiation and cancel the contract.

To sum up, there is a distinction between notification to terminate and the date of termination, which is determined by the notice period stipulated in or inferred from the contract of employment. A deficient notice does not negate the act of termination although it may constitute a breach with regard to the period of the notice to be worked still by the employee before he/she can leave the employ, which may entitle an employer or employee to either cancel the agreement summarily or hold the employer to the contract, which in its terminal state. This amounts to no more than requiring the employee to work notice or paying the employee in lieu of notice if the employer does not want the employee to work out the notice. If the employee leaves before the notice period expires, then the employer can sue the employee for breach of contract in a civil court. The BCEA precludes us from deducting money from the employee’s remuneration or accrued leave.

The application of sections 37 and 38 of the BCEA

The employees argued that it was also in breach of the BCEA: “It is now necessary to outline the application of sections 37 and 38 of the BCEA to resignations. Section 37(1)(c) states that a contract cannot be terminated at the instance of a party to the contract on notice less than four weeks if the employee has been employed for a year or more. It is common cause that the applicants have been employed for more than a year. Section 38(2) read with subsection (1) states that if an employee gives notice of termination and the employer waives any part of the notice, the employer must pay the remuneration the employee would have received if the employee worked the full notice. It follows that although section 37(1)(c) requires an employee to give a minimum period of notice, section 38(2) permits an employer to waive any part of that notice provided that it pays the employee an amount equal to what the employee would have earned for the unworked part of the notice.

If notice is given and not waived, the contract terminates on the expiry of the notice. If the employer waives any part of notice, the contract terminates when the employee leaves work (i.e. at the commencement of the waived period). If an employee having given notice to terminate, fails to work the notice, that failure constitutes a breach of contract entitling the employer to hold the employee to the contract (i.e. work out the notice) or cancel the contract. Nothing in section 37 or 38 affects the application of common-law principles to the failure to comply with the contract until its expiry at the end of the notice period. If an employer fails to pay an employee who works the full notice period, the employee can sue the employer for the remuneration earned for that work. Sections 37 and 38 do not affect the common-law principles in respect of the failure of an employer to pay an employee for working out the notice period. The same would apply to an employee who tenders to work the full period but is not permitted by the employer to do so. Accordingly, what sections 37 and 38 do, for the purpose of this case, is to guarantee a minimum period of notice which may be waived by an employer. If waived, it must pay the employee an amount equivalent to what the employee would have earned had she worked out her full notice.”

The employees tried to argue repudiation. “The thrust of their contractual argument is that a notice of termination not in compliance with the terms of the contract, is not a lawful termination but a breach of contract. Being a breach of contract, the employer is put to an election: either to hold the employee to the contract or to cancel it on grounds of the breach. Since the respondent did not cancel on grounds of the breach, the applicants’ contracts remained in force”.
The court confirmed a very important principle in this regard. It held that as a matter of authority and principle, an employee has the right to unilaterally terminate the contract of employment on notice. “That means that even if the employee does not give the proper notice, the unilateral termination of the contract is not a breach or repudiation of the contract”. The notice of termination and the period thereof must be split. The employee is in breach with regard to the period, not the termination part of the notice. “The failure to give proper notice is a breach of contract in response to which the employer may elect to hold the employee to the contract, which having been terminated amounts to no more than holding the employee to work out the contractual period”.

Alternatively, it may elect to cancel the contract on grounds of breach. In any case, even if the employer did neither, the employer would not be obliged to pay the employee for that part of the contractual notice period not worked. It, accordingly, follows that the applicants’ acts of terminating the contracts of employment do not constitute a breach or a repudiation of the contract. They were doing no more than giving effect to a right accorded to them by their contracts, namely, the power to bring the contracts unilaterally to an end. It is quite clear that the notice given in their letters of termination is 6 days short of the 30 days’ notice required under clause 15.1. Although the applicants considered that their notice period [was] to terminate on 30 November this does not mean that as a matter of law it “has no effect”. Once notice is given the contract ends when the notice period contemplated in the contract expires. Acceptance is not necessary.

In Kgaile / Senforce Security Services (2010) 19 CCMA 7.1.9 and [2010] 12 BALR 1262 (CCMA) the employee claimed that he was unfairly retrenched when he was removed from the premises of one of the respondent’s clients and his salary was stopped. The employer claimed that the employee was employed on a fixed-term contract, which had expired, therefore not dismissal but automatic termination of the contract.

The employee had signed a contract which set a specific date for termination. That date had arrived. In the case of a fixed term contract, the duration of a contract of employment is pre-determined in advance by means of agreement between the parties. The period is determined by a specific date being reached or a specific task or project being completed. When the date arrives or the event occurs, the contract automatically expires in accordance with the agreement between the parties. The LRA regards the failure to renew a fixed term contract as a form of dismissal where there was a reasonable expectation for renewal on the same or similar terms (see section 186(1)(b) of the LRA). A commissioner should therefore determine whether or not a dismissal occurred despite normal principles of contract law. The Legislature has chosen to focus on the expectation of the employee and the critical issue in determining whether or not a dismissal has occurred within the parameters of the LRA, is whether or not a dissatisfied employee had a reasonable expectation of renewal. In essence, an employee would only be entitled to relief should a commissioner find that a dismissal occurred within the parameters of the LRA and such a dismissal would only occur if the employee had a reasonable expectation to renewal of his/her contract.

The applicant never raised any issues relating to any possible expectation of renewal, except vaguely stating that a certain Michael told him that they would attempt to place him elsewhere. He failed to explain who Michael is, when this was said and under which circumstances it was mentioned. There was no corroboration of the statement although he mentioned that they were two employees who were dismissed. He gave absolutely no evidence suggesting that he had any reasonable expectation of renewal. The contract of employment clearly spelled out the terms of employment. It was for a fixed period and contained a clause that no expectation of renewal is created. The applicant conceded that he understood the contract and that he signed without any undue force or influence.

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