Resignation during a formal process

If an employee tenders his/her resignation during a formal process (disciplinary/investigation etc) it is important that the employer follows the correct procedure to ensure that the Company is not exposed to the risk of a personal grievance for constructive dismissal.

Disciplinary procedures or investigations can be very stressful for employees and as a result they may make a decision to resign in the heat of the moment. In most circumstances it is best for the employer to first allow the employee some time to fully consider their intention to resign, by giving them a period of reflection (often referred to as a cooling off).  A period of at least 24 hours is recommended.

To assist further in defending a potential claim of constructive dismissal, we also recommend the employer require the employee to provide their confirmed resignation in writing, and ensure all correspondence is followed up in writing.

There are however some situations where the employer may not wish to accept the employee’s resignation e.g. allegations of serious misconduct. In these circumstances there are usually two options available:

  1. Proceed with the disciplinary process.
  2. Accept the resignation, on the condition that it has immediate effect.

It is important that before any process is initiated or any resignation accepted, that you check the employment agreement to ensure compliance.

Please note, the above is a guide only, and as the facts of any situation are always different we recommend you seek advice if an employee tenders his/her resignation during any formal process, to ensure you minimise the risk of a successful personal grievance claim.

Below is an example of a case where the employee gave (and the employer accepted) his resignation in the heat of the moment, and the Court found the termination of his employment unjustified.  This mistake cost the employer the equivalent of six weeks wages plus $500 compensation so it pays to get it right!

Recent Case

An Authority decision was recently challenged in the Employment Court. Mr Taylor challenged the decision that he resigned from his employment with Milburn Lime Limited (“MLL”). He claimed that he was unjustifiably dismissed.

On 23 October 2008 Mr Taylor had an argument with another employee after the ute he was driving stopped suddenly causing the employee on the back to almost fall, after which an argument ensued.

Another employee, Mr Manson, stepped in and told everyone to calm down. After a period of tense silence Mr Taylor said he was leaving. Each of the four witnesses to the argument gave a different account of the exact words used, but it was very likely that Mr Taylor said “I’m out of here”. As he was leaving Mr Taylor told Mr Manson that he should organise someone to pick up the Company ute he was provided with for the purpose of driving to and from work.

Mr Manson then called Mr Mahan, the owner and manager of MML, telling him what had happened and that Mr Taylor had left saying “I’m out of here. I’m finished”. Mr Mahan then sought advice and called his office assistant to dictate a letter to Mr Taylor acknowledging that Mr Taylor had walked off the job and had ceased employment with MML.

Mr Taylor received this letter on 24 October. He sought legal advice on 28 October and he was advised to talk to Mr Mahan. He spoke to him on 29 October. Mr Taylor told Mr Mahan that he had not intended to resign but to take some time and “cool off” from the tense situation. Mr Mahan stated that he had spoken to employees that had been present and that they confirmed that Mr Taylor had resigned. That evidence was contradicted by all four employees called as witnesses for the defendant. They were certain Mr Mahan did not speak to them about the issue at all.

The Court found that MML were required to be more responsive and communicative under the good faith obligations to determine what was actually meant by Mr Taylor’s actions on 23 October. The Court found that Mr Taylor had been unjustifiably dismissed and ordered MML to pay Mr Taylor three months’ lost wages and $1,000 compensation.  Both remedies were reduced by half to allow for Mr Taylor’s contribution to the event.

Taylor v Milburn Lime Limited [[2011] NZEmpC 164; 07/12/2011; Judge Couch]