Dealing with disciplinary action

An employee is faced with disciplinary action, but then resigns with immediate effect. Should the employer continue with disciplinary action? 

The labour law seems to be silent on what the correct action by employers would be in such cases and has left it to the discretion of the courts to decide, says Ivan Israelstam, CEO of Labour Law Management Consulting. 

In the past three years there have been different decisions on the matter in the Labour Court. 

In the most recent case – Naidoo and Another v Standard Bank SA Ltd and Another – the Labour Court was called on to determine whether their resignation with immediate effect meant the employment relationship was immediately terminated. The court found that it was.

But in a 2018 case the same court found that an employment relationship only terminates once the notice period has been concluded. 

In that case the court also held that resignations with immediate effect are only permitted where the employer has committed a material breach of the employment contract, or if the employer accepts the resignation with immediate effect.

Johan Botes, head of Baker McKenzie’s Employment Practice in Johannesburg, says the effect of this recent case is that employers cannot simply continue with disciplinary action when the person resigns. 

The court found that if the employer wanted employees to honour the contract by serving their notice period, it had to approach the court for a specific “performance order” to hold the employees to the employment contract and finish their notice period. If the order is granted, the employer can continue with the disciplinary action. 

“In practice courts are reluctant to issue an order for specific performance if it means holding someone against their will,” says Botes.

Israelstam says if the employer has a good reason for a disciplinary hearing, he would advise them to continue with it. 

“You would be protecting yourself against a potential constructive dismissal claim and also be able to have on the employee’s record that they were fired.”

He says employees may suspect, and sometimes it is a genuine suspicion, that the employer has purposely charged them and called them to a hearing in order to provoke a resignation, and not really because the employee has done something wrong.

Employers who want to ensure that their action is not misconstrued, should go ahead with the hearing so that it is clear that it was not merely a ploy to get rid of the employee.

If the employer feels there is a “more than likely chance” of the employee claiming constructive dismissal by saying they were “coerced into resigning” because of the threat of disciplinary action, the employer may feel more comfortable holding the hearing and inviting the employee to attend, says Israelstam.  

But, according to Israelstam, until a higher court such as the Labour Appeal Court makes a ruling, things remain “really messy”. A much better option would be to institute criminal or civil action if there has been a loss suffered by the employer because of the employee’s conduct. 

What about criminal charges?

“If the employer suffered a material, quantifiable loss as a result of the premature departure of the employee, the employer is quite entitled to go to court and sue the employee for the amount of that loss,” says Israelstam.

Botes adds that if there has been evidence of fraud or theft, the employer can lay criminal charges. It is then up to the National Prosecuting Authority to decide whether it will prosecute or not. 

He says when an employer has to incur additional expenses by bringing in an expert on short notice to finish a project, or suffered a penalty because a project could not be finished on time due to the sudden resignation, it is entitled to claim the differential (between the employee’s pay and the additional costs). 

Be proactive

Employers can be proactive by making sure their employment process will be able to catch people whose conduct at a previous employer will not sit well with their business.

Botes says employers may request a signed undertaking from new employees that they have made a full disclosure of all the facts that may impact on the decision to employ them or not.

Israelstam advises his clients to request a signed undertaking on the application form from prospective employees that they will allow the employer to obtain references. 

The employer requesting the references should ask factual and not subjective questions, such as:

  • Was the person punctual?
  • Were they ever disciplined?
  • How did they perform their tasks?

The employer should avoid questions such as: 

  • Were they a troublemaker?
  • Did you like them?
  • Did they get along with everyone?

He says there are organisations that specialise in checking for criminal records, credit history and the authenticity of references and qualifications. 

The employer has to give a huge amount of thought, and do a lot of work, to make sure they are able to get the right references, rather than from bogus people who may be friends of the applicant, says Israelstam.

What happens if a less-favoured employee lists you as a reference, and you are eventually called by their potential future employer? Israelstam says you could remain “neutral” should you receive this call. To avoid jeopardising the person’s future employment, you could say that the company does not provide references. But you can also say that you are not prepared to give a reference in this particular case. That really says it all.   

This article originally appeared in the 15 August edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.


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