Employment law update – Resigning after disciplinary inquiry but before sanction handed down and Labour Court’s jurisdiction to hear a claim for unlawful dismissal

December 1st, 2020

Mthimkhulu v Standard Bank of SA (LC) (unreported case no J928/20, 18-9-2020) (Moshoana J)

Pursuant to the applicant employee being found guilty of certain acts of misconduct, described as gross dishonesty and fraud, the applicant tendered his immediate resignation on 21 August 2020, prior to a sanction being delivered.

Standard Bank, having reminded the applicant that he was contractually bound to serve a 30-day notice period, informed the applicant on 24 August 2020, that he had been dismissed.

The applicant demanded Standard Bank ‘abandon and nullify’ the sanction of dismissal on the basis that it did not have jurisdiction over him post resignation. Standard Bank’s refusal to do so, prompted the applicant to launch urgent proceedings in the Labour Court (LC) for an order that his dismissal was unlawful in that he was not an employee at the time the sanction had been delivered.

Prior to determining the court’s jurisdiction to determine the applicant’s claim, Moshoana J saw it necessary to weigh in on the vexing question of whether an employer can discipline an employee after the employee had resigned with immediate effect.

In approaching the question of when, under the above circumstances, the termination of the employment relationship took effect, the court referred to the Constitutional Court case in Toyota SA Motors (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2016) 37 ILJ 313 (CC). In this matter the majority of the court did not answer this question on the basis that, it was never an issue before the lower courts. However, writing for the minority, Zondo J, found that a valid resignation is incapable of being withdrawn, following which, once a resignation takes effect, an ex-employer has no right to discipline the ex-employee.

Even though the court in casu aligned itself with the approach adopted by Zondo J, which was at odds with the approach taken by the LC in Mzotsho v Standard Bank of South African Limited (LC) (unreported case no J2436-18, 24-7-2018) (Whitcher J), the distinguishing factor was that the employee in the Toyota case had resigned before their internal hearing commenced.

In this matter the applicant resigned after the disciplinary hearing was concluded and at a stage where the only thing left was for the sanction to be delivered. The court reiterated the contractual principle that an employee who does not serve their notice period, repudiates their employment contract. The employer has a right to accept the repudiation, and thereafter, make an election on whether to cancel the contract and sue for damages, or to seek for specific performance – which is what the employer did in this case.

Going further, the court stated that when electing to seek specific performance, it was not necessary to first approach a court for an order of specific performance. In making this point, the court was cognisant of the fact that its approach on this score differed from the judgment in Naidoo and Another v Standard Bank of SA Ltd and Another [2019] 9 BLLR 934 (LC), wherein the LC held that an employer must first obtain an order for specific performance before being allowed to discipline an employee who had resigned without serving their notice period. Moshoana J held that what keeps the employment contract alive is not an order for specific performance but rather an aggrieved party’s right to elect specific performance.

Having set out the above, the court found that a resignation prior to a sanction being delivered has no legal effect if the employer, as in this case, chose to hold the employee to their notice period.

Addressing the issue of whether it had jurisdiction to set aside a dismissal, the court held:

‘This court has exclusive jurisdiction in respect of all matters that elsewhere in terms of the LRA or in terms of any other law are to be determined by the Labour Court. Nowhere in the LRA is it stated that the Labour Court is empowered to determine the setting aside of a dismissal. However, in terms of the LRA, this court has powers to determine the fairness of certain types of dismissals. Of momentousness is that the Labour Court can only do so once a dispute has been subjected to a conciliation process. Significantly, this dismissal which Mthimkhulu wishes this court to set aside has not been subjected to a conciliatory process. This court lacks jurisdiction to entertain a dismissal dispute if it has not been referred to conciliation as required by the LRA.

… To the extent that Mthimkhulu alleges that his dismissal is unlawful because contractually the respondent has no powers to dismiss him, this court per Van Niekerk J in Lt General Shezi v SAPS and Others [unreported case no J852/2020, 15-9-2020] had the following to say:

“The effect of this judgment [Steenkamp v Edcon] is that when an applicant alleges that a dismissal is unlawful (as opposed to unfair), there is no remedy under the LRA and this court has no jurisdiction to make any determination of unlawfulness.”’

For reasons set out above, the court dismissed the application with costs, directing the applicant to approach the correct forum should he wish to challenge the fairness of his dismissal.

Moksha Naidoo BA (Wits) LLB (UKZN) is a legal practitioner holding chambers at the Johannesburg Bar (Sandton), as well as the KwaZulu-Natal Bar (Durban).

This article was first published in De Rebus in 2020 (Dec) DR 34.